🙀 Startup founder fears by funding round
Startup founders have a lot of fears. Some are afraid they won’t find a technical co-founder or attract angel investment. Others are afraid they won’t be accepted by startup accelerators or that they’ll run out of money before achieving product-market fit.
So here are some examples of the fears you can expect during each investment round.
Friends & Family Round: The fear of false-start
When you’re asking friends and family for money, the fear of not being able to pay them back is a huge stress factor. This can put a lot of strain on relationships and can even lead to ruined friendships.
At this stage, startup founders are often afraid that they won’t be able to find a technical co-founder who can help them build the product and realize their idea. This can result in the person hyping up his endeavor to their friends and failing to make even the smallest version of the product. The fear of failing is strong here. How can you move forward to the next rounds if you have disappointed your first believers?
Angel Investments: Fear of not being accepted
This is the stage where startup founders are afraid of not being accepted by accelerators and the startup world in general. This could be because the startup idea is not good enough or because the startup doesn’t have a solid business plan.
The founders get such thoughts as “Maybe I don’t fit in?” or “What if my idea isn’t good enough?”. This fear can keep you from taking risks and from putting your all into your business. It’s a fear that can stop you from achieving your dreams.
Pre-Seed Round: The fear of running out of money
Once you have the money, you’re afraid to spend it because there’s only so much of it. You’re constantly thinking about how to increase your runway to the max and how to find ways to generate more revenue.
You’re also worried about giving too big of a share to your investors and ending up with peanuts, where even after a successful exit it would not be worth the sacrifices that you’ve put in — years, sleepless nights, missed friend birthday parties.
Be well-informed and educated about funding deals. This will make your startup journey easier and help you focus on the journey itself rather than just the money.
Seed-Round: The fear of bad hires
You’re finally starting to gain some traction and are ready to scale. But as you begin to grow, you’re afraid of making the wrong hires. You don’t want to bring on someone who is going to slow down the company or who doesn’t share the same vision. You’ve put out an ad for Chief Marketing Officer and got 1000s of applicants, but you don’t know who’s good enough as you don’t have the expertise.
One wrong hire can set your startup back significantly and lead to its downfall. So it’s essential to be very careful about who you bring on board.
At this stage, it’s also common to be afraid of giving up too much equity. You don’t want to give away too much of the company to new hires, but you also understand that you need good people to scale the business.
Series A: Afraid of letting down investors
At this stage, founders are often afraid of not meeting the expectations of their investors. They think that if you’re not growing like a hockey stick, are you growing at all? They’re afraid that they won’t be able to generate enough revenue or get enough users, which will result in investors losing trust in them; hence, future money raises will be more challenging.
Series A founders also worry about their decisions. Will this decision eventually lead to the downfall of their company? This can be a fear of technology choices, marketing strategies, or anything else that could impact the business. Was the product decision I made three months ago worth it? Or are we cruising on the highway to doom and don’t even know it?
Series B: Afraid of mismanaging growth
You’ve been able to generate some buzz and you see some early signs of success. But you’re worried about not being able to sustain that growth. You don’t want to plateau too soon and are afraid of making the wrong decisions that could hurt the company in the long run.
You’re also afraid of making too many mistakes. At this stage, it’s common to be worried about mismanaging finances. You’re also scared of being unable to keep up with the competition. They’re always one step ahead, and you’re concerned that you’ll never be able to catch up.
Series C: The fear of becoming irrelevant
You’re losing your momentum, and growth is slowing down. You’re worried that you’re becoming irrelevant and that your company will eventually die. You don’t want to be a one-hit-wonder, and you’re afraid that a newer, cooler startup will ultimately replace your company. You had your first-mover advantage. Now it’s time to solidify your presence.
It’s important to remember that all companies go through ups and downs. Just because you’re not growing as quickly as you were before doesn’t mean you’re doomed.
Series X and beyond: All the other fears.
The fear of dilution. The fear of losing control. The fear of being acquired. The fear of not being able to sell the company. The fear of going public. The fear of SEC. The fear of the FDA. The fear of failure. The list goes on.
All of these fears are valid, and addressing them head-on is important. Otherwise, they will continue to haunt you and your company. Also, they might become a reality if you ignore them.
You’re not alone in your fears.
Many other startup founders have gone through the same thing. But it’s important to remember that you can overcome these fears. Just because you’re afraid of something doesn’t mean it will happen.
Take a deep breath and focus on what you need to do to make your company successful. And then do it and then do it again.
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