It’s clear that it is difficult to raise money from arm’s-length private investors. First of all it takes a lot of time – and second you have lots of other things to do. What’s more, most first-time entrepreneurs have no idea how to go about it….
- what do investors expect?
- how much is my company worth?
- how much money do we need?
- how likely is it that I can get funded?
- is my company suitable for private investors?
While companies may have a hard time finding investors, most angels will tell you that it is very hard to find companies worth investing in.
Startups invariably are missing some of the key ingredients necessary for a growth business. In fact most startups are really lifestyle businesses.
While there is nothing wrong with building a lifestyle business – they simply aren’t suitable candidates for angel investment.
Raising money is hard and it takes a lot of time. It is almost impossible if you are a lifestyle business – since you’ll have to convince someone that your business is a growth business, when it isn’t. The longer it takes, the clearer it becomes that your startup isn’t a good investment.
If on the other hand your company is a good candidate for exceptional growth, you’ll need funding quickly, or you may lose first (or second) mover advantage to someone else. Unless you’ve done it before, it simply doesn’t make sense to try and do it all yourself. You will need help.