Its very hard to explain to an entrepreneur why another company got funded and they did not.
Or why they might not, even though they have “many boxes checked”.
It might seem fairly random. Correction – it probably fairly random.
Raise your hand if you have read a techcrunch post that mentions a startup that raised an obscene amount of money and after reading the post 3 times you are still not sure why they got that much money?
Raise your other hand if you have read about a startup in the
US Silicon Valley that is working on “pretty much” the “same idea” as your company is and you are schlepping code for 18 months and they have 45K daily users in less than 6 months (and funding to boot).
Now clap both your hands above your head. <Whatever>.
Related Article: The problem of “marketing spend” with Indian Tech Startups
Most Indian entrepreneurs (in the technology space) consider themselves fairly unlucky.
They are baffled that Indian angel investors ask for revenue and monetization plans when the company is 3-6 months old.
The only comfort I have to offer is that its the same deal outside the valley.
Ask the Boston entrepreneur, or the New York entrepreneur. They also claim that companies there “suffocate” because the local investor ecosystem is fairly risk averse.
The second piece of knowledge I will share is that for every techcrunch post that mentions a funding for a startup, there are at least 25 failed funding stories that do not get published in the same space and general “idea”.
What then separates the funded versus the ones that did not get funded?
This is the point in the discussion when the entrepreneur blames their “luck”.
There are a few things I’d say that are easy to spot among the funded companies versus ones that dont get funding in the same “space”.
1. They usually tell a story dramatically different from that mentioned on TechCrunch or Pluggd.In or any other startup blog. The story the media publishes about dropbox is file sync across multiple devices. The story the VC’s bought is document virtualization.
“That’s just positioning” is your claim. I agree. It is. Storytelling is an art. Learn it well.
2. The founders are very credible, have a lot of background in the space and understand their customers / users very well.
3. They product shows the most amount of traction in the shortest period of time.
Thanks to angel list you can now target and get funded by Silicon Valley investors in India. If you have the same 3 elements – credibility, a great story and traction, you dont need to depend on luck any more.