Over time, I’ve spoken with a fairly a number of startup founders. Lots of them are good, likable and have actually nice concepts that they’re in a position to convey in a pitch deck. But lots of them battle to get funded. Why is it so onerous to get a time period sheet?
If every part appears to be going nicely, however you’re not getting the traction you assume you want in your fundraise, it’s most likely since you’ve run into one among these three issues.
The market is just too small
There are a variety of extremely cool merchandise that simply don’t have a market that’s large enough for basic adoption. For instance, it’s attainable that you’re constructing an adjunct that makes crop-dusting fields 30% extra environment friendly. On the floor, this may occasionally seem to be product in an important market. The individuals who wish to purchase your product are enthusiastic about it, and also you make gross sales fairly simply.
The issue, nevertheless: There are solely so many crop-dusting planes on the planet, which implies that when you’ve reached market saturation — that’s, each crop-dusting airplane on the planet is utilizing your product — you’re unlikely to make extra gross sales.
Crop dusting is clearly area of interest, however there are much less apparent examples, too.
I just lately spoke with a founder who had a very elegant resolution for the way to assist folks optimize their meal planning so the produce within the fridge that goes unhealthy the soonest will get eaten first. On the floor, it’s an vital downside: Lowering meals waste is objectively good. The founders had spoken to lots of potential prospects, and all people agreed — meals waste is an issue, and they’d like to have an answer. The pitfall was that the startup hadn’t requested its prospects what they have been keen to pay for the product. It seems that this was a $100 piece of {hardware}, and that was the issue: The Venn diagram displaying individuals who care sufficient about the issue to spend $100 on a chunk of kit to repair it and didn’t simply throw the meals out and purchase new meals when it went unhealthy turned out to be virtually nonexistent.