Why do certain people effortlessly raise large amounts of money to start a business, while other people struggle and wait for years?

I have heard radio interviews and seen very successful social crowdraising campaigns, that raise their money and go onto become multi-million dollar companies, spoke with an entrepreneur who had 15 million to start for his business. While others struggle for years, or churning out idea after idea, or sit with $0 on gofundme or indiegogo. Is it luck? Talent, is it chance, a phase of astrology, is it the people you know, your credit score or earnings, the family you were born into, energy blocks. Is it neural pathways, is it if you nap like Einstein did? What is it?? I have pondered this for years. It is very hard to raise seed money. Yet some people know how to do it so well!


This is a very broad question on: 'what makes someone a successful entrepreneur?' and 'how to raise seed funding?'
Entire books have been written on how this is done, so any attempt to give you a professional answer in just a few lines would be unprofessional. Nevertheless, I will say that there are numerous factors that affect an entrepreneurs ability to raise early stage funding, among them are (in order of importance):
1. The team (how long they've been together, their skills, their past experience, their passion)/
2. existing customers / practical market research: how many existing users/clients are there. If your product/service doesn't exist yet, then how many people showed that they would buy the product/pay for the service (you can check this without actually having the product/service). this information is very important to investors (just throwing out potential numbers doesn't cut it).
3. The idea - yes, the idea only comes 3rd, as in most cases you will pivot (change the idea) at least once or twice before reaching the final version of the product/service.
4. Your connections / the amount of investors you approach.
5. Timing / luck.
If you give me more specific information (such as the type of product/service, the market, the team etc..basically your 'deck'), I will be happy to try advise you on the best way to raise money. For example, for a product, you should try avoid crowdfunding platforms unless you already have the entire manufacturing process and selling/shipping process ready. If not, you will be seeing 'fake'/copied versions of your product even before you hit the market.
Good luck

Answered 5 years ago

Great point to ponder, especially as you're eying raising money.
Assaf offers some excellent advice which I would complement with:
* being realistic about the amount you're raising, the venue for the fundraising and your company's niche in the marketplace is essential for keeping perspective
* raising money is a full-time job -- if you do not commit the time, your efforts will falter
* a concise, well-constructed pitch helps get to a quicker "no," which can be just as valuable as a drawn-out "maybe."
If you wish to discuss, send me a PM through Clarity for 15 free minutes.

Answered 5 years ago

Generally the answer is lack of action.

I remember having a talk with a person at an Internet Marketing Party in Austin (everyone should travel to Austin + attend a few of these) about her project.

She had determined she required $80K to launch.

She had wasted... er, invested... 2x+ years asking investors for money.

Over a 15 minute period, I mapped out how I'd use for $100/year to bootstrap a business like hers.

She did.

She was making 5x figures a month in a few months.

This was her first business + she had no previous experience.

Moral: Action trumps all else.

Tip: If you can't figure out how to turn an idea into 5x figures a month in a few months... Either hire someone to help you design your monetization or come up with another idea.

Answered 5 years ago

I'm gonna go on a completely different tangent here and start talking about the energetics of money and how it works.

Most people don't get the money they want because they're not energetically available for it.

It's the same as a woman always meeting guys who treat her like crap and another woman having the same guys treat her like a goddess.

One woman is available to that and the other isn't.

When you're available to the money you want coming into your experience, you don't settle for anything less and you do whatever it takes to create it.

There's no negotiating that and you become the person who creates it. It's simple, but not easy and that's why many fail.

Because they're not willing to do what it takes AND be who it takes to create that income.

The truth is, once you have a desire for a certain amount of cash, it's already happened in another dimension. All you need to do is bridge the gap by hopping timelines and being the person who has that.

Also, letting go of whatever doesn't align with the person who'd have that.

For example, if you wanna make $10,000 a month by next week. Think about what the $10,000 you would/wouldn't be available for.

Step onto him or her and create from that space. That's how serendipitous meetings happen, and you meet the exact person who hands you the money because of something you said.

It's not super logical. But logic doesn't create miracles and you definitely can't bend time with logic 😉

But you can with intuition and your intuition already knows how you get the money because it has access to the version of you on that other timeline who already has it.

Hope that helps. If you have any questions about this, you know where to find me 😘

Answered 5 years ago

Love the question! I also believe Maurice, Kerby and Assaf have done a great job answering it.

What I'd like to add is the consideration for these questions:

* Why are you raising the money? (why will it help? why can't you do it from profits? why now?)
* What do you need it for? (what are you buying, people's time? equipment? land? compute power?)
* When do you need it? (when is too late? when can you get started?)
* How are you going to manage it? (how will it be spent, tracked, reconciled, invested, returned, etc.)
* Where is the need? (where is the market for whatever you are building?)

If you answer vaguely to any of these, it might be a factor.

Answered 5 years ago

I think it wildly depends on a combination of
- the entrepreneur(s) way with words and people
- the idea's general "sexiness" & timing
- the country/ecosystem/networks entrepreneur + idea are in
- the idea's special connection/appeal to eventual money-givers

& General rule: People attract people & Money attracts money-
You see one restaurant full of people vs. the other restaurant which is empty- where do you choose to eat?
There is a person with USD 90'000.- who needs another USD 10'000.- to execute a customer delivery vs. there is a guy with an idea who needs USD 10'000.- to build a customer base- who do you support?

Sounds obvious, but core human functioning & reasoning like that explain the seeming "easiness" of how some people get money. Once they're in the right loop, have the right credentials out: support just calls more support (you may read about the "Pareto distribution" principle). Sure, that is unfair, but you can try to use it to your advantage also if you do not have much.

For example:
If you start a crowdfunding campaign you need at least all of your friends + family members to support your project publicly (on the platform, but also elsewhere), then once you have some initial dynamics, it makes sense to advertise the campaign on several, relevant* channels to strangers. The ones of them who get interested click on your campaign and can already see something going on there. Not just a blank space, stuff like "USD 0 of USD 10'000 funded"- huge turn off.

*you want to have your dog food project funded, then you need to communicate about the campaign where dog owners read/listen/learn. Just "Facebook" is too general.

Good luck!

Answered 5 years ago

This a topic I love to talk about. In general, I believe, everybody has her/his own history, knowledge, experience, talents, etc. I personally have many things done unsuccessfully and many others - successfully. When analyzing afterward, it seems that when unsuccessful, this was not my strength. Possibly I was influenced and wrongly excited by something or somebody, that is not for me. Many people love to read how Apple went up, or Microsoft, or Napoleon. But I am an individual, only one of the sort in the world. Others look like me, talk like me, but just partly.
In short, everybody must discover, what is her/his strength and talents and to put much effort to develop. As it is said - success is 1 % talent and 99 % of work. But all 2 parts must be presented.

Answered 5 years ago

They don't. That is a perception that is cultivated like an instagram image. You are only seeing the success. You are not seeing the countless hours of preparation, courting of fundings, and building a company worthy of funding. Not to mention the ridiculous amount of due diligence on the part of the funder to ensure that they are putting funding into something that is "fundable".

Answered 5 years ago

I have worked in a company like you have described who is trying to make money for the past 10 years and yet not successful. The success of any company lies in the following factors all coming together in perfect harmony:
1. Founders are driven by impact, resulting in passion and commitment
2. Commitment to stay the course and stick with a chosen path
3. Willingness to adjust, but not constantly adjusting
4. Patience and persistence due to the timing mismatch of expectations and reality
5. Willingness to observe, listen and learn
6. Develop the right mentoring relationships
7. Leadership with general and domain specific business knowledge
8. Implementing “Lean Start-up” principles: Raising just enough money in a funding round to hit the next set of key milestones
9. Balance of technical and business knowledge, with necessary technical expertise in product development
Companies who do not follow this process fail considerably to raise money and struggle for years. Let us look at the process of how to raise money:
1. Ideation/Pre-Seed Stage
This the stage where you, the entrepreneur, has an idea and are working on bringing it to life. At this stage, the amount of funds needed is generally small.
Given the fact that you are at such an initial stage in the start-up lifecycle, there are very limited and mostly informal channels available for raising funds. Common funding sources utilized by start-ups in this stage are:
a. Bootstrapping/Self-financing: Bootstrapping a start-up means growing your business with little or no venture capital or outside investment. It means relying on your own savings and revenue to operate and expand. This is the first recourse for most entrepreneurs as there is no pressure to pay back the funds or dilute control of your start-up.
b. Friends and Family: This is also a commonly utilized channel of funding by entrepreneurs still in the early stages. The major benefit of this source of investment is that there is an inherent level of trust between the entrepreneurs and the investors
c. Business Plan/Pitching Events: This is the prize money/grants/financial benefits that is provided by institutes or organizations that conduct business plan competitions and challenges. Even though the quantum of money is not generally large, it is usually enough at idea stage. What makes the difference at these events is having a good business plan.

2. Validation/Seed Stage
This is the stage where your start-up has a prototype ready and you need to validate the potential demand for your start-up’s product/service. This is called conducting a ‘Proof of Concept (PoC)’, after which comes the big market launch. To do this, the start-up will need to conduct field trials, test the product on a few potential customers, onboard mentors, and build a formal team. Common funding sources utilized by start-ups in this stage are:
a. Incubators: Incubators are organizations set-up with the specific goal of assisting entrepreneurs with building and launching their start-ups. Not only do incubators offer a lot of value-added services (office space, utilities, admin & legal assistance, etc.), they often also make grants/debt/equity investments
b. Government Loan Schemes: The government has initiated a few loan schemes to provide collateral-free debt to aspiring entrepreneurs and help them gain access to low-cost capital. Some such schemes include CGTMSE, MUDRA, and Stand-up India.
c. Angel Investors: Angel investors are individuals who invest their money into high potential start-ups in return for equity. Reach out to angel networks such as Indian Angel Network, Mumbai Angels, Lead Angels, Chennai Angels, etc. or relevant industrialists for this.
d. Crowd funding: Crowdfunding refers to raising money from many people who each contribute a relatively small amount. This is typically done via online crowdfunding platforms.

3. Early Traction/Series A Stage
This is the stage where your start-up’s products or services have been launched in the market. Key performance indicators such as customer base, revenue, app downloads, etc. become important at this stage. Funds are raised at this stage to further grow user base, product offerings, expand to new geographies, etc. Common funding sources utilized by start-ups in this stage are:
a. Venture Capital Funds: Venture capital (VC) funds are professionally managed investment funds that invest exclusively in high growth start-ups. Each VC fund has its own investment thesis – preferred sectors, stage of start-up, and funding amount – which should align with your start-up. VCs take start-up equity in return for their investments and actively engage in mentorship of their investee start-ups.
b. Banks/NBFCs: Formal debt can be raised from banks and NBFCs at this stage as the start-up can show market traction and revenue to validate their ability to finance interest payment obligations. This is especially applicable for working capital. Some entrepreneurs might prefer debt over equity as they debt funding does not dilute equity stake
c. Venture Debt Funds: Venture Debt funds are private investment funds that invest money in start-ups primarily in the form of debt. Debt funds typically invest along with an angel or VC round.
d. TReDs: To decrease the financing concerns faced by MSMEs in India, RBI introduced the concept of TReDS in 2014, an institutional mechanism for financing trade receivables on a secure digital platform. Trade Receivable Exchanges such as M1xchange, standardizes the process of funding MSMEs via Invoice Discounting. TReDS addresses the gaps in MSME industry as enterprises face challenges in getting their payments on time, thus creating working capital discrepancies. TReDS is a timely and effective solution to drive the MSME sector to the next phase of Indian economy.
4. Scaling/Series B & Above Stage
At this stage, the start-up is experiencing fast rate of market growth and increasing revenues. Common funding sources utilized by start-ups in this stage are:
a. Venture Capital Funds: VC funds with larger ticket size in their investment thesis provide funding for late stage start-ups. It is recommended to approach these funds only after the start-up has generated significant market traction. A pool of VCs may come together and fund a start-up as well.
b. Private Equity/Investment Firms: Private equity/Investment firms generally do not fund start-ups however, lately some private equity and investment firms have been providing funds for fast-growing late stage start-ups who have maintained a consistent growth record.

5. Initial Public Offering
Initial Public Offer (IPO) refers to the event where a start-up lists on stock market for the first time. Since the public listing process is elaborate and replete with statutory formalities, it is generally undertaken by start-ups with an impressive track record of profits and who are growing at a steady pace. One of the benefits of an IPO is that a public listing at times can increase the credibility of the start-up and be a good exit opportunity for stakeholders.
Besides if you do have any questions give me a call:

Answered 4 years ago

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