To refer back to some data I quoted in a previous post, 21.5 percent of startups fail in the first year, 30 percent in the second year, 50 percent in the fifth year, and 70 percent in their 10th year. You may find it interesting to know that quite a lot of startups that have raised some sort of funding fall among the numbers. This means that securing funding does not necessarily mean that your business has become what it should be.
So really, the big question to answer is that after fundraising, what next? Do you just take an executive seat, sip some champagne while admiring your newly purchased suit? Does successful fundraising mean that it is now time to “chill with the big boys”?
Unofficially, I have sampled the thoughts of some successful entrepreneurs, from personal chats, reading and watching their interviews, and also following their stories. Here is what I discovered. More than half of entrepreneurs lose every single dime raised in their first fund rounds. It could be borrowed from friends or institutions, it could be the proceeds of a mortgaged property, it could even be money belonging to angel investors or partners who decided to back the ‘big idea’.
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Whatever the source of the funds, many founders will exhaust the first funds they raise without having much to show it. I think even investors are aware of this, and it is the reason they would often want you to start the business on your funds until you prove the concept. They want to be sure that you have eliminated some likelihood that the business would fail.
When you have successfully raised some funds to inject into your startup, activate all you need to drive towards the next phase of business growth. If there is are experts you need to get on your team, recruit them as soon as you can. Activate the strategy roadmap that you pitched to your investors and get running.
If you have been a part-time founder, probably running the business side by side a full-time job, after raising funds, you might consider going all in.
