23 Aug 2021

6 Reasons Why Startups Should Seek Funding

Startup founder on laptop, smiling whilst working on tei

Starting your own business is now easier than ever. In the last ten years, the number of applications submitted for new businesses has grown by 74 percent in the U.S., with 4.35 million in 2020 alone. Whilst the current popularity of entrepreneurial ventures may suggest that anyone equipped with a good idea and strong motivation can make it, this is far from true.

The increased number of startups means more competition, making it harder for your business to stand out. The best way to increase your advantage over the thousands of other startups in the market is to secure adequate financial support. No matter how amazing your idea is, without funding it’s hard to get your foot through the door.

Approximately 9 out of 10 startups fail, and CBInsights have found that the most common reason for this is running out of cash. Read on to find out more about the benefits of gaining funding.

1. Ensure that Your Product is the Best it can be

Developing an excellent product requires innovation, and this is impossible without thorough market research, testing, and area expertise. Adequate funding provides working capital to allow you to dedicate the time, resources, and larger team that are needed to facilitate this extensive, but necessary, product development stage. Rushing this could be fatal for your business’ success. Moreover, some products, for example in biotech, are just expensive to produce.

2. Compete with Dominant Market Players

 Regardless of whether the market you are entering is saturated or not, being well-funded is critical for your business’ success. Being backed by VC or Angel investment is a way of establishing your startup before competitors enter the market. If there are already large companies in your space that have more resources, you can only possibly compete if you are backed by adequate funding.

3. Form Strong Connections with Market Experts

As VCs and angel investors specialise on an industry basis, they know the ins and outs of the market you are entering and can use their expertise to help your business. It’s an excellent advantage to have a strong relationship with someone who has connections and resources in your industry.

4. Demonstrate your Value to Future Investors & Customers

Being backed by funding validates your business for potential customers, as it shows your stability and potential. Moreover, having one investor believe in you provides a good indicator for future investors to also do so.

5. Have the Power to Upscale Rapidly

With working capital in your hands, you can cope with the increase in resources and staff that come with fast growth, enabling you to scale revenue, expand your business, and meet high goals quickly without putting pressure on your company.

6. Focus on Creating an Amazing Product & Business Model

With limited resources, your product is unlikely to reach its potential and your attention will be diverted. Retaining staff and partners without financial stability is difficult, and, as such, your business will struggle to get off the ground. If you don’t have to constantly worry about running out of cash, this will all be more stable, leaving you to concentrate on making your business the best it possibly can be.



Are thinking about securing funding for your startup? Check out how Floww can help you connect with potential funding partners within a few short clicks via our platform.

Header Image: Startup founder on a laptop, working on their business. Image via Unsplash.

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