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Why Startup Ideas Fail To Get Investor Funding

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@shubhwaj
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Now a days you can find a pseudo entrepreneur claiming to be a potential future Elon Musk sitting in almost every other household, probably puffing balloons for his niece's birthday party.

Just because he thinks he has a great business idea that can turn into a money shower.

I have been into investor meetings. And I have worked with startups trying to procure funding. My last job was an investment banking profile.

If you have a startup idea or ever come up with one. And your next plan of action involves pitching it to investors and getting funded. Then probably you should think about it again.

There is a very high possibility that it'll turn out to be a wild goose chase.

Because millions of people piss off a dozen great ideas while taking a shower every morning and believe me yours is no different from them.

Ideas are cheap and abundant. They are just like an alone multiplication sign without any sight of numbers around it.

As far as I know people invest in other smart people or businesses with a pile of promising revenue streams, and not just ideas.

If you do not have a business in operations or bootstrapping phase, you associate the word ‘MVP’ only with that horrible looking WWE superstar and you are none of those with a proven and convincing track record of setting Thames on fire. You do not mean business.

And there is a negligible possibility of you to land even an investor meeting, getting funded is an altogether different story.

Investors know that brilliant execution can pivot the simplest of ideas into extraordinary. Whereas poor execution can make greatest of ideas to fell flat.

However let us assume that you were not a new face in the market and with some big fat connections in the corporate you somehow managed to work this out.

But even if you get the opportunity to pitch your idea no one is going to buy it.

Because most ideas have a non-existent or acutely flawed business model like without a market traction, profound scaling mechanisms , defensible technology/IP/trade secrets, timeliness, a strong team and a never-ending list of many more other factors.

Still let's say your stars were in place and you managed to carve out a perfect business model enticing enough to even leave some of the top venture capitalists gasping.

Before you can celebrate your accomplishment and start jumping like a monkey, there is a hard fact that should open your eyes.

Investors fund startups that they believe have a high chance of exit via M&A or IPO within a 3–5 year timespan with a return many multiples of their original investment.

Investors are one of the smarter breed of people with top of the line industry talent working for them. Whose only job is to find opportunities that can grow their money at an exponential rate.

Even an idiot with a half mind would agree that it is a waste to put money into something that even if being viable is hell lot riskier and can only promise lesser returns than what can be generated by investing it somewhere else.

And so at last the opportunity cost of giving a shot to your project screws your funding.

It implies that either you need to find a dumb investor or you need make them realize that your idea is a fucking moneymaking machine if you really want them to buy it.

I don’t think the latter is possible with just an idea.

What do you think?