It is common to see larger companies with more funding and smaller startups with relatively restricted access to funds. Are there different types of investors for different-size startups? Do small startups have a disadvantage in the investment process because they need less money than their bigger counterparts? This blog post will explore how your startup’s size determines the type of funding you can get. We will also discuss what disadvantages come from being a smaller company when looking for investments.
Your Startup Focuses on an Extremely Specific Niche
If your startup’s market is tiny, you may need to find investors who focus on this investment type. For example, if you are creating a new web app for dog-shampoo enthusiasts, the majority of traditional VCs would not be interested in investing because it does not have broad appeal. However, there are angel groups whose sole purpose is to invest in companies with particular niches. Also, startup funding companies like Fundwise can help you when others turn you down.
Your Startup Focuses on Disrupting an Industry
When startups aim to disrupt existing industries by using technology or business model innovations, they often require more money than typical early-stage investments. This gives larger companies who already work within the industry an advantage when seeking funding because these more prominent organizations also know how much capital a startup requires. Startups disrupting typical supply chain models are eye candy for large investors, primarily when catering to a broader audience.
Startups Focusing on the Youth
Startups promising to deliver the next big thing for young consumers are alluring for investors because they can significantly impact their bottom line.
Investors want to invest in companies that appeal to people of any age and those that represent future trends and industry development. A great example of this would be Snapchat; they succeeded with an audience previously ignored by most brands, advertisers and represented younger demographics perfectly. These youth-focused startups require more money than typical early-stage investments due to the high costs of building demand for new products amongst existing audiences and working hard on product marketing strategies.
What Are My Expenses?
Your average daily, weekly, and monthly expenses also play a significant role in the funding you get. Investors want to determine the scale of your operations before making any decision. Startups with high costs are either told to curb the spending or get the funding they need depending on how well they justify those expenses.
If you’re looking to raise funds for your business, you should mention your expenses and spending. It is also essential to explain how those expenses help you earn decent revenue.
Fundwise, the premier startup funding and small business lender in Utah can provide you with more detailed insight into the world of startup investments. We help small businesses, and startups such as yours find their feet in the industry by securing the necessary funds to back your idea. Apply now in 30 seconds.