A pitfall amongst entrepreneurs is starting to search for investors when they need funding. But finding the right investor is a time consuming process and requires a lot of persistence. So be sure to start talking to investors early on to build those relationships.
Lack of funding hinders growth
As shown in the Financieringsmonitor (2017-2) a lack of funding can slow down the growth of a company or stop it completely. There are dozens of examples where the lack of funding hindered the growth of the company. Also, in some more stringent cases a lack of growth capital even lead to a cash-poor position that caused the end of the business. This makes financial management and planning a key aspect of leading a startup. Your monthly burn rate and the date you will run out of cash should be at the tip of your tongue.
Follow your progress
From the perspective of the investor it is more interesting to get to know you early. Not that he is willing to put in money right away, but so that he can see where your company stands and follow its growth. This way he can see whether you master the process of rapid and validated learning, making step by step progress, and deserve his trust and capital as a future investor.
Raising capital takes time
On average, it takes a startup 6 to 18 months to find funding. During this time the founder spends 20-40 hours a week solely on raising capital. And that’s just for one round! This means that as a startup it requires a different view on fundraising. It shouldn’t be something you briefly focus on. Finding capital is a crucial part of your daily business routine. Therefore there is no better moment to start talking to investor than today during the Amsterdam Capital Week.
The Netherlands Chamber of Commerce is one of the main partners of Amsterdam Capital Week. With a series of blogs, I Martijn Lentz, entrepreneurial finance expert at KVK, share my lessons and pitfalls on how to get funding for your startup.