A Venture Capitalist’s Take on the Various Funding Sources For Startups
The unfortunate reality for most entrepreneurs with a lucrative idea is that they don’t have the funding to execute that idea to its fullest potential. Despite the wide array of available funding sources, most startups struggle to make the cut.
To get an insight into what it takes to make the cut, we spoke to Swish (Manu) Goswami; a 21-year-old serial entrepreneur, three-time TEDx speaker, LinkedIn Youth Editor, and UN Youth Ambassador.
In this short interview, he gives quick tips on the ground you must cover as a startup to get that funding.
What is the story behind your company, Trufan?
Before Trufan, I was working on a big media company called Dunk. We had over 11M followers on social and leveraged that to work with some brands, agencies, and teams, especially in the sports space.
I noticed that we had a major disconnect between our accounts and the people who followed them. So, I built an algorithm that could allow us to see who our most engaged and influential followers were.
After pitching the concept around to a few friends and a couple brand managers I decide to make it a stand-alone company and to invest in building the product up. That’s how Trufan came into the picture.
What should startups know about crowdfunding?
It’s extremely hard to crowdfund a product these days. Your idea needs to be spectacular– something that can capture the attention of the masses and have a tangible impact on people in the short term.
That being said, make sure to hire a team to do any marketing for you. It’s a lot easier and beneficial to outsource your marketing than to hire three or four people to do it internally.
As an entrepreneur, you need three ingredients to build a successful business from scratch: a brilliant idea, the drive to transform that idea into a profitable business, and the capital to get the wheels in motion. The last of the three is the hardest to acquire.
As a venture capitalist, what are the three top qualities that you look for before investing in a startup?
The three qualities that matter the most to me are:
- The team: how experienced they are, and do they get along with each other.
- Market size: does the solution target a market that is growing and does their distribution strategy matches the behavior of that market.
- Feedback: has the startup gone out of its way to get early feedback and build/better their product off that.
What advice would you give to a startup that’s having trouble getting funded?
- Look into non-traditional sources for funding. Just because traditional VCs didn’t show interest doesn’t mean that you can’t get a loan and go about getting funded that way.
- Join an incubator or accelerator if possible. It adds validation to your solution and will give you a bigger network to draw upon.
- Get your friends and family to put small cheques in. If VCs and institutional investors see that someone has already committed money the fear of being “first money” goes away.
In your opinion, does attending international events and conferences such as WebSummit, RISE, etc help startups make connections?
Attending startup events and tech conferences can definitely help. However, it all depends on how social you’re willing to be and whether you’re able to attend not just the conference but the events that go with it.
You have to actively look for opportunities and go out of your way to introduce yourself to the attendees there. Merely attending the event won’t cut it.
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