Image Source: Business Insider
Most Startup companies with great ideas are positioning their business for venture capitalists to invest a large sum of money after it must have survived the incubation stage. This means that the startup sells off part of their companies in order to expand by the funds provided by these capitalists almost immediately after incubation with the aim of disrupting the market and hitting it big time.
Every startup should consider the possibility of running a business without inviting venture capitalist for the first few years, learning ways of prudent spending with the company’s budget and managing tough times.
“If you want to run a successful company, you don’t have to follow the path of Silicon Valley. You can simply start a business, run it to serve your customers, and forget about outside investors and growth at any cost”.
Venture capitalists will definitely come with funds and expertise needed for “profit making”, but not without considering the long-term plans and giving up your decision making power in the process. The presence of these funds will place you under undue pressure to deliver in the short term, even if the company might collapse on the long run, it doesn’t matter; what matters to investors is the immediate profit margins.
Most times, start-ups running on investors’ funds embark on unsustainable growth, raising too much money than needed without learning how to survive hard times from the start. They neglect how to make income by focusing on the investors’ funds – which they will suffer for at the later stages. There are several examples of tech startups that rose to limelight with investor funds but collapsed after years of struggling to learn what they should have learned at their earlier stages.
Start-ups must also learn to re-purpose their ideas based on customers’ ideals in order to rise quickly. A targeted niche in business arena will propel startups than being a jack of all, especially where there are other large companies in the same area of specialty. The competition might be stiff at the early stages but start-ups should have their goals and ideals with targeted customers who will drive the business to the next level.