People decide to establish startups for various reasons; some see it as an avenue to solve certain problems they have identified in society while others just do it to feel good! Either way, the ultimate objective for any startup owner is to make a profit and stay in business for a long time. But unfortunately, this is not always the case because according to various reliable sources, 9 out of 10 start-ups fail because they scale up too early, they’re not implementing marketing plans, their efforts are inconsistent, they’re spending excessively, or the economy is sabotaging their efforts.
Nobody starts a business with the intention of not growing. In case you never thought along that line, the thriving business industries of today began as a collection of startups offering similar products and services until they became such an essential part of people’s lives and eventually merged themselves under the same umbrella. This trend will most likely continue for generations to come, for new business industries to be birthed. Some of the most trending startup industries of today include:
· EdTech (NutSpace, Coded Minds, CoachHub, etc.)
· E-commerce (Cazoo, Wheel, Verishop, Snackpass, etc.)
· FinTech (Securitize, Radpay, Hastee, etc.)
· Food & Beverages (Meatable, Kitopi, Chico, etc.)
· Health Care (Nuvo Air, Kindbody, iRise Mechanics, etc.)
Other trending startup industries include Software and SaaS, IoT, AI, Blockchain, Transport and Travel, Fashion, etc. A lot of startups are increasingly capitalizing on technology to convert wishes of yesterday into today’s realities. But although the rate at which they spring up is impressive, their failure rate is also increasing and this is a huge source of concern for Investors who hitherto invested lavishly in a myriad of startups at the slightest semblance of viability. These days, they put a lot more factors into consideration before delving into funding startups. Now, let’s examine some startup trends which are foundational indicators of the way forward:
We see a lot of experienced professionals leaving their employers to set up competing business ventures. Their employers may be established companies with standard structures in place but since these professionals-turned-entrepreneurs have been there and done that, they develop solutions to the problems yet untreated by their previous employers and make these solutions available to consumers with only a few clicks on an App. With some decent funding, they’ll have a fat budget set aside for publicity because they’re neither bearing the costs of physical infrastructure and operations nor are they paying many employees because their Apps do most of the work so minimal human intervention is required to complete transactions.
One good thing about tech-based Startups is the fact that they’re able to scale beyond borders and time zones, meaning that they can enter new markets quickly without too much to worry about. A little strategic publicity here and there is all they need to capture new markets and increase revenue. What’s more? They don’t even need to go through rigorous banking processes before they start receiving payments in any currency because payment integrators have done all that work already and all they have to do is plugin. Scaling is so much easier, little wonder they’re able to convince investors to part with funds to foot publicity and related bills.
Within the last decade, founders have been enjoying an abundance of funds to get their ideas up and running from scratch. This is especially true for Tech-based Startups with convincing projections and pitches. Once upon a time, Investors would want to see comprehensive evidence of operations by a business seeking funding before making commitments. Somewhere along the line, Investors grew more willing to bear the risk of investing in ideas that promise significant returns of investment after massive publicity funded by them. This has been the trend for a while now but the increasing failure rate of startups is forcing some investors to fall back on historical trends by spending more time on feasibility studies before making up their minds to Invest in Startups that approach them. There are different types of funding options available to Startup Founders, including Family Offices & Venture Capital Funding.
Family Office/Venture Capital Funding is a whole topic on its own, but we decided to merge it with Startup Trends because they’re closely related. If a startup needs $1,000,000 for example, obtaining funds from a single investor is proving difficult, they can approach a group of investors who are willing to contribute lesser amounts to make up some or all of the total sum required. Note that there are structured Venture Capital Funding organizations with pools of funds, and each one prefers to invest in certain business types. So before approaching a Family Office or Venture Capital Firm, research what sectors they’re interested in funding, in order to be as efficient as possible.
A startup founder may use family office or venture capital funding for things like early-stage set-up, expansion and acquisition or buyout. In any case, you should be ready to part with a share of your business. The goal is to convince investors that your startup has a high growth rate and you are the person that will deliver. Having skin in the game is one way to express your belief and dedication. Running a lean company is another key investors demand. Otherwise, your startup will be headed for troubled waters.
What must you do to prepare for your Venture Capital Funding journey? How do you convince Investors that funding your startup is a profitable decision? In addition to the measures mentioned above, you should do the following before approaching a Venture Capital Firm:
-Define the business goals you’re looking to fund
-Conduct research to find out possible improvements to your goals
-Calculate the total cost of resources required
-Identify Venture Capital Firms willing to fund your business type
-Document your findings and develop a Pitch Deck
-Complete fund application procedures
If you’re not sure how to do any of the above by yourself, it’s best to hire an investment banker. There are also individual service providers to assist . So that’s all about Startup Trends and Venture Capital Funding for today. We might do a follow-up article in future, so you should check our website frequently.