As per the IBM Institute for Business Value’s survey 90% of Indian startups fail in the first 5 years and as per the report, 65% of Venture Capitalists believe that funding is one of the major challenges for these companies. In spite of several start-up funding programs in India why is it that new ventures still struggle to raise capital?

Focusing more on the idea than the executionMany early stage investors in India say that they back good entrepreneurs. For a first time entrepreneur who does not have a track record, this statement could be quite disheartening. However they can still demonstrate their ability to execute by meeting business milestones and linking these to their fund-raising rounds. These can also prove to be a key differentiator when they go to fund raise in a highly competitive space as many people can have the same idea but only a few can execute them well.
Not understanding the importance of bringing on board the right set of early stage investors.The early investor would usually be the first outside money in a venture and bringing on board an investor partner that one can rely upon is critical. These investors more often than not, become your support network who not only bring in the capital for follow-on rounds but should ideally also bring their network of investors, industry contacts and business mentors when needed. So choosing them wisely and working well with them should be given as much importance as one would give when choosing a business partner or co-founder.
Challenges in defining your marketMost new ventures have big projections on market size and growth, but there are only few that raise enough capital to try and capture the entire market. For the rest, it is important to understand that you need to have year on year growth and that can only come by capturing a market share within your defined market, so the better you target your market, the better you can spend your money in trying to get your consumers on board.
While many factors can play a role in a venture’s ability to raise funds, keeping in mind some key reasons why failed ventures have not been able to raise capital successfully, can only help one avoid the same when planning one’s own venture’s fund raising.