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Risk Management: Bringing on venture capital helps startup founders manage the risk inherent in most startups. By having an experienced team oversee growth and operations, startups are more likely to avoid major issues. The rate of failure for startups is still 20% in the first year, but having someone to turn to for advice when a complex situation arises can improve the odds of making a good decision.

Increased Exposure and Publicity: Most venture capital firms have a PR group and media contacts, and it’s in their best interest to get exposure for your startup. Often being associated can add a great deal of credibility to a startup, especially for founders who haven’t built other successful companies. The increased publicity can lead to getting noticed by potential employees, customers, partners, and other venture capital firms interested in raising funding.

Aid for Subsequent Funding Rounds/Exit: Venture capital firms are interested in seeing your company raise additional funding at a higher valuation. They can introduce you to additional venture capital firms that can better assist you at later stages and provide additional funding. Venture capital firms often reserve the right to invest in future rounds of funding and often contribute additional capital as the startup grows.

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Networking Opportunities: Venture capitalists are typically well connected in the business community. Tapping into these connections could have tremendous benefits. Partners at a venture capital firm spend as much as 50% of their time building their network to assist the companies they invest in. Having access to this network can help forge new partnerships, build out clients, hire key employees, and raise future rounds of funding.

Raising Large Amounts of Capital: Many small business loans for startups are limited to a certain amount and qualifying can be difficult. However, venture capital is available in amounts as small as $100,000 for a seed-stage and more than $25 million for more mature startups in large markets. There is also a tendency for startups to raise venture capital several times, allowing companies to access a large amount of capital that would otherwise be impossible.

Business expertise: Venture capital is a tremendous source of consultation, expertise, and guidance. This can help with a variety of business decisions, including financial management and human resource management. Sometimes they help make technical strategies, industrial know-how, strategies on expansion and growth, and acquiring the right talent pool. Making better decisions in these key areas can be vitally important as your business grows.

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                                                                CURATOR 

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                                                                CURATOR 

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Backer Ventures founded Curator as a service provider to its portfolio companies. Curator is armed to the teeth with services ranging from workshops to mentoring from experts. In essence, Curator serves to Curate solutions for you.

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Curator's Mentorship scheme is led by the industry experts and founders of Backer Venture, providing startups with an extensive background in technology law.

Curator's mentors provide a dual perspective concerning technology and law and believe the interception of these two facets allows startups to further their business model and future phases

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Gap (4) : Lack of mentorship from either VCs or Investors 

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Gap (4) : Lack of mentorship from either VCs or Investors 

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Guidance and Insight: Often, Venture Capitals or Investors leave startups with funding but fail to provide vital guidance to navigate the ecosystem, thereby risking a startup's chances at success.

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Challenge (4) : Lack of valuable intel/guidance 

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Challenge (4) : Lack of valuable intel/guidance 

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Self-reliance

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Curator's community-building initiatives are unique opportunities for startups to build bedrock networks, especially since the pandemic has purged startups of this necessity.

The access to Curator's events ranging from conferences to seminars, will allow founders to collaborate and discuss the industry and ways to break into it with expert individuals.

This program of Curator can allow startups to accelerate their chances of receiving insights, new fundraising rounds, or even exit opportunities

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Stunted network: With the COVID-19 pandemic, usual business practices of physical networking events have ceased to occur—the halting of such a powerful tool for startups curbs their chance for success.

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Creating your Community

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Curator provides its portfolio companies with detailed and tailored Market Reports which incorporate Quarterly regulatory and policy reports.

The Report provides startups with a competitive edge where founders can scope out rivals/peers and pinpoint target audiences according to Curator's comprehensive industry and region insights.

The Market Report would indicate to startups about current or potential trends allowing founders to build technology or solutions to stay at par or ahead of the trends.

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Inaccessible Information: A big issue is that data exists, but it cannot be retrieved effectively or through practical means to become helpful information.

Incurs Expense: Manually pulling data from systems in itself is expensive, but apart from this, the information produced is often incomplete, thereby costing the integrity of decisions made.

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Technological uncertainty

Market unawareness and competitive uncertainty

User acceptance

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Solution (1) : Curator's Legal Workshop 

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Solution (1) : Curator's Legal Workshop 

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Curator's legal workshop caters to provide startups with the lay of the land but simultaneously provides invaluable legal insight and support.

Apart from educating founders on legal challenges and providing due diligence courses, the legal workshop extends its expertise to provide legal understandings on various startups challenges.

For instance, it provides an understanding of SAFE agreements, founders' agreements, the legality of setting up businesses, and regulatory interpretation to solve the aforementioned legal challenges startups face.

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Gap (1) : Law firms/ Internet Legal Service Providers 

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Gap (1) : Law firms/ Internet Legal Service Providers 

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Expensive Service: Law firms are typically expensive, especially at the partner/counsel level.

Limited Time Committed: For the time commitment required for startups from inception to exit, founders may only see their legal counsel only in critical situations, not consistently.

Untailored insights: For Non-Firm Internet Legal Service Providers, the counsel accessible may not provide tailored market-specific insights.

Inaccuracy of documents: These Paid Service Providers also disclaim all liability stemming from their documents that are usually not updated or accurate.

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When and How to seek funding

Disputes between Founders/Management

Founders are often beginners in the business

Scaling up the business

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MICRO CHALLENGES FACED BY EARLY-STAGE STARTUPS

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MICRO CHALLENGES FACED BY EARLY-STAGE STARTUPS

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Acquiring Funding: Founders are often unaware of the overall fundraising process. Knowing how much to ask for, at what price, and with what partners, is critical to further a startup.

Technological Uncertainty: Startups are required to develop products that are on par or even ahead of current tech trends in the market. This uncertainty leaves startups without clarity on infrastructure and further adaptations to meet the current or future technologies.

Market Unawareness: This unawareness includes the inability to identify the competitors, their product and service offerings, and the strategies they use to compete. New firms must understand the competitive market to react to the actions of the competitors in a timely way with improved products and services.

User Acceptance: To exploit an opportunity, an entrepreneur should understand the specific aspects of user needs. Failure to evaluate the potential market size is also one of the top reasons for the failure of startups.

Legal Challenges: Every aspect of running a business is governed by one or the other law, and entrepreneurs must know about all the regulations which affect their organization.

Below is an article that encompasses other common challenges faced by early-stage startups.

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Starting your own company is exciting and challenging, no matter the industry in which you wish to focus. Looking at the tech industry, startups face their own unique hurdles and opportunities, and the road to innovation is guided by goals that some businesses in their early stages struggle to meet.

Still, we believe that--with the right ideas and the right guidance--tech innovators can certainly find success. As such, we've put together our take on the 12 Most Common Challenges Faced by Tech Startups, with insights into how they affect the businesses they impact and why overcoming them is vital.

Let's dive in!

1) When and How to seek Funding

This is perhaps one of the most common and most challenging of the issues that tech startups face. Knowing when and how to acquire the correct depends on many factors. It certainly impacts a start-up's ability to fully develop its vision and technology. When it's time to launch operations, additional resources are needed, and how and what type of investors to seek is a complexity often not understood by founding technologists. Certainly, a critical element, if not mindfully assessed, will impact the other challenges we are about to discuss below.

Overcoming this can seem daunting, and at times impossible, but companies that are shrewd and strategic in getting their message out, are more likely to attract the attention of angel investors and venture capitalists who would be willing to bankroll their innovation.

2) Creating your Network

The discussion of funding ties neatly into the second challenge. While it's not always about who you know, it's still crucial that tech startups know how to reach out and build network relationships that will either boost their brand awareness or help them better navigate within their sector.

Building relationships with experienced members of the tech community provides startups with valuable voices who can let them know where they're struggling and offer advice and support as the business strives to grow. A network provides a myriad of different resources from the concrete to the intellectual. They're foundational in helping you build your customer base, and magnifying your message.

3) Confidence

The process of crafting your startup requires confidence, and a willingness to step outside of your comfort zone. As you work to innovate, you need to be willing to challenge yourself and to grow your vision, to acknowledge when you've become complacent, and tweak to make things better. It's rare that the first version of your idea is going to be the best version, and it takes guts to admit to that.

Too many startups are trapped in the comfort zones of their founders, unwilling to attempt anything new. As such, their voices get drowned out by those who are more established, and are doing something similar. Innovation requires bravery, and in a crowded field of dynamic businesses, timidity is a property you can't afford.

4) Identifying and Onboarding the Right People

It's nice to imagine a world in which, should you have good ideas, others will flock to you. While there are scenarios where this happens, it's usually on a small scale. Truth is, many startups struggle when it comes to finding a team that they can rely on, execute and develop its vision.

Without the right team, it's more and more difficult to spread your brand, to craft your content, and to operate in a way that supports your solutions. Building a committed and creative community within your business is essential, but many startups haven't quite figured out how to find these individuals. In crafting that perfect team, all of these elements are essential.

5) Creating Publishable Content

Content creation is crucial to spreading the message of your brand and helping potential clients understand exactly what it is you're doing. But crafting content is time consuming, and for smaller startups it can be hard to create the volume of content needed to get the word out and attract attention.

You want your voice heard, but you also want to put careful thought into how that voice sounds, and what you intend to say. Startups that can't achieve this are likely to go unheard, and suffer lack of presence as a result.

6) Time/Project Management: Focus, Focus, Focus!

Carefully planning as to how you spend your time, and where that time is spent is essential to success; however, many tech startups still struggle with time management. In some cases, this is because their team focuses too much on one element and neglects others until it is too late. In other situations, it's simply that those who have founded the company are less experienced at managing teams or multiple departments, and--as such--they underestimate how much time a given task will take.

The dangers of poor time management are evident to anyone who waited until the night before to study for an exam, but the frequency with which this problem arises is shocking. It's important that startups put careful thought into managing projects and administrative tasks, lest essential work fall by the wayside and derail the organization.

7) Finding your First Customers!

When you're the new kid on the block it can be difficult to win the trust of the businesses or individuals that your product serves. With little brand recognition, potential clients might simply ignore you, opting to work with the firm whose name they're more familiar with.

The key to combating this is putting ample energy into marketing and sales, and working hard to shape a brand identity and proliferate it. You're doing something innovative: something new and different. It's essential you aptly convey that to the folks who could very well go from complete stranger to brand evangelist.

8) Wild Expectations!

When you have an idea you truly believe in, it's easy to get carried away. Ambition and innovation go hand in hand, and both are powerful forces for the betterment of your startup. If misapplied though, they can also be damaging.

It's important that startups work to square their hypothetical ideas with concrete reality, and not lose their priority focus. If they do, it's all the more likely that issues like time management or project oversight will fly out the window. Chasing the stars is a wonderful dream, but it's important to get your feet off the ground before you plan where in the galaxy you'll travel.

9) There's Always Competition!

While this might seem obvious, it can be shocking to some startups just how fierce and intimidating competition can be when they first start out. In the infancy of your company, the competition can be incredibly frustrating, when you feel like you're a toddler playing football against NFL all-stars.

It's essential that startups treat competition as a learning opportunity: seeing where they've lost out, and examining how their rivals are winning. It's these lessons that help startups stand up to their competition, and to ultimately succeed. Letting the competition drive you crazy will only make it harder to learn these lessons.

10) What Makes You So Different?

Another challenge that seems to tie in with others on this list is lack of differentiation. If customers don't understand what makes your solution unique or special, then they're less likely to find reasons to go with you than with a competitor who has managed to get their message across.

In a packed field of tech solutions, having an identity that allows you to connect with potential customers is essential. If you allow your innovations to simply blend in, it's far less likely they'll be noticed, and ultimately enjoyed by clients.

11) Building and Nurturing Your Team!

Much like time management, being able to keep your team under control is essential. As your business begins to grow, you'll be faced with more and more projects, more and more people, more and more complexity. From the get-go, it's crucial that startup founders know how to work with their people and keep an eye on everything that's going on.

In many ways, the early life of a startup always feels like chaos, but one of the best ways to mitigate that is to bring order wherever you can. Ensuring that everyone know what they need to be doing, how they're connected to their coworkers, and when certain goals need to be met goes a long way towards bringing that stability.

Another potentially arguable factor, is the concept of stakeholders. Your starting team are as key to you as your investors. They are all stakeholders. You need these people to stick with you through thick and thin. Don't be afraid to reward them with heavy stock options/shares, these people will make it happen to the same extent if not more than your financial investors. Your initial team, if built correctly is the core of your company, and has contributed more than those people arriving later, reward them in such a manner! You need them to stick with you!

12) Don't be Afraid to Seek Help!

It might sound like a grade school cliché, but if you refuse to seek help or advice when you need--simply opting to fight through the problem alone--you're far less likely to achieve what you set out to do. Startups are inherently about tackling new challenges and new experiences, and being able to work with others to navigate these challenges when you feel overwhelmed is vital.

Asking for help doesn't make your business weak or stupid. It's the very thing that makes you stronger and smarter, and better poised to thrive.

This is Where ForesightOne Steps In.

We work with MarTech innovators to help get their voices heard, and their solutions evaluated and acquired. With years of marketing, sales, and technology experience on our team, we strive to identify and remedy the challenges businesses face, be it content creation, the search for funding, or the development of a brand.

Building a MarTech or AdTech company from the ground up is difficult, and allowing ForesightOne to step in and launch your products and services, provides you with more time to continue to launch your innovative vision without taking on further operational challenges.

Give us 12 challenges and we'll give you 12 solutions.

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Top 12 Challenges Faced By Tech Startups

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Starting your own company is exciting and challenging, no matter the industry in which you wish to focus. Looking at the tech industry, startups face their own unique hurdles and opportunities, and the road to innovation is guided by goals that some businesses in their early stages struggle to meet.

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LEGAL MACRO CHALLENGES FACED BY EARLY-STAGE STARTUPS IN THE MENA REGION 

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LEGAL MACRO CHALLENGES FACED BY EARLY-STAGE STARTUPS IN THE MENA REGION 

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Fragmentation of the regulatory framework: The regulatory system of the MENA region lacks uniformity. This fragmentation of the regulatory framework of the MENA region makes scaling and growth difficult because it would be like founding new companies in each jurisdiction for startups.

Foreign competition disrupting economies: Since the MENA region's startup ecosystem is finding its footing globally, exposure to highly skilled and developed foreign competition stunts the growth of the MENA region. This hurdle would require governments to regulate to bridge the gaps in the ecosystem via tariffs.

The rigidity of government legislation: The government legislates slower than the disruptions that arise within the startup ecosystem. Also, MENA regions lack common law jurisdictions; this backtracks a startup's efforts to scale up their business.

Red tape: The enormous paperwork about setting up and scaling the business coupled with legal jargon tends to consume and clouds a founder's aim to build their startup.

Below is an article that explores a few of the major macro challenges faced by the startups in the MENA Region.

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Philip Bahoshy is a numbers man. His brainchild, Magnitt, has swiftly raised to notoriety since its launch in 2014, with most of his investment reports and regional insights going viral across the region, crystallising the growth of a startup ecosystem that is witnessing an all-time high, with $290 million in funding only in the first six months of this year.

As the founder of a startup for startups, he's something of an entrepreneur's entrepreneur. "It's really fulfilling trying to understand the ecosystem. Being a data startup in the region, I have all the same pains everybody else faces: it's expensive, it's bureaucratic, it's difficult to raise funds or find the right talent or mentors. Whenever I'm speaking to entrepreneurs, I'm facing the exact same challenges as them and I have to find more ways for Magnitt to support not only myself specifically but them as well," he says.

The Dubai-based, British-educated young ingenue has long been an overachiever, from his education at London School of Economics and Political Science to his prior work as Chief of Staff at Barclay's Wealth MENA. True to form, when he founded Magnitt in November 2014, Bahoshy went above and beyond in the scope and quality of his research: the site not only offers a database that includes over 3,000 startups in the region, but also regularly features data-heavy reports and analysis of the regional startup ecosystem and a forum called #askmagnitt, where entrepreneurs and investors exchange tips and experience.

He wasn't always a startup scholar, though. Inspired by his courses at INSEAD, Bahoshy became intrigued by entrepreneurship after a particularly strenuous startup bootcamp simulator. Thrown into a pitching competition but lacking specialized business, legal, and management training, Bahoshy realized that the experience was educational but incomplete. "You were beholden to the investors that were in the room, and I saw that people had the mentality of criticizing and not being constructive. But we didn't know how to get the help for the all of the pieces that were required of an entrepreneur," he details. Ever the problem-solver, he began asking how the solutions to this problem could be outsourced, and his answer became the birth of Magnitt 1.0, which was originally directed at MBAs. Later, as he moved to Dubai, he realized he needed to tighten his focus, and thus the MENA-targeted resource was born.

So, what's in a number? Here's five things data can tell us about the Middle East's regional challenges, explained by the Magnitt magnate.

1. It's expensive and bureaucratic
The path from ideation to actualization of a viable business is lined with miles of red tape. Aspirational young entrepreneurs frequently find themselves leashed by stifling licensing fees and requirements. For example, business registration fees in the GCC can cost thousands of dollars, which is a stiff order for nascent businesses. Government entities can also be slow and complicated. According to World Bank data from 2016, it takes an average of 20.2 days to open a business in MENA countries, versus a mere 5.6 in the United States.

The path from ideation to actualization of a viable business is lined with miles of red tape. Aspirational young entrepreneurs frequently find themselves leashed by stifling licensing fees and requirements.

Bahoshy stresses the need for improvement of business legislature. "It's expensive, it's costly, and it's bureaucratic. When it comes to addressing these issues, the first things we need to ask are how we can get over the cost of incorporation, the legislation, and the bureaucracy. Government entities should foster an environment to make it easier not only to set up startups, but to fail and try again. That could be bankruptcy law, regulation, incorporation, or visas, for example. I think many governments are aware of this and aiming to change this, but that's the first issue."
2. There is a definite need for capital
Recent years have seen growth in investment activity from international organizations and corporations. One such example is Saudi Arabia's recently-established Vision Fund, which at a staggering $100 billion is now the world's largest private equity fund, backed by multinationals such as SoftBank, Apple, Qualcomm and Sharp. The US-based 500 Startups announced the first closing of its new MENA fund in May. While the increase in international interest is promising, gaps in different stages of funding remain a critical issue.

The data cruncher stresses one particular area of dire concern. "There's a definite need for capital," he says. "Depending on which startups you speak to or which conferences you go to, different people will say that a different level of funding is needed. My firm belief is that while it's important to have Series A or Series B funding - and there is a lack of funding in that space - fundamentally, there is a whole lack of angel funding to kick-start startups, to get them to the stage where they should be pitching to VCs. 49 percent of the startups that are looking for funding on Magnitt are looking for less than $250,000 in funding. That is angel funding by international benchmarks, yet many of those guys are pitching to VCs. It's not the fault of the VCs that they aren't investing in the startups, it's just that these companies are not VC-ready and they usually need angel funding to get to that stage. One of the things that needs to be addressed is how angels in this region can be incentivised and educated."

3. Where is the data?
The lack of a cohesive data aggregate can make researching the industry - and preparing for success - difficult. When it comes to business, knowing the numbers is essential. Being a data hoarder, Bahoshy would know. "There's no independent reporting of data in the region. And for me that's extremely important and the core of the Magnitt proposition.

Effectively, Magnitt came about trying to connect stakeholders one or two steps before they get to funding," he details. "How do you create bite-sized and understandable information pieces that can empower decision makers and stakeholders, whether they're government, investors, or corporates, to be able to make informed decisions? Everyone is talking about startups, everyone is talking about innovation, but a lot of the talk has been theoretical -'I think there's been this much money, I think there's been this many exits, I think this is what it takes to be a good founder in the region.' And every time I bring out these reports, which are substantiated by the data on Magnitt, I look to try to address those questions with data points."
4. MENA entrepreneurs and "Tunnel Vision"
Is the prolific press surrounding MENA startups narrowing the entrepreneurial outlook? "I think one of the challenges that we face is that we get so tunneled in this region that we sometimes don't look outside to see what's going on," explains Bahoshy. "Many of the challenges that we face are faced by other regions as well. They have many of the same success stories we do, it's just that we do a very good job of publicising it all the time, whereas other ecosystems are a little more under the radar, he says, reiterating the need for bureaucratic overhaul over endless press. "Publicity is key, I think awareness is important and we're beginning to see that drive activity here in the region, but fundamentally some of the bureaucratic and infrastructural challenges here need to be addressed if we are to take the ecosystem to the next level."

I think one of the challenges that we face is that we get so tunneled in this region that we sometimes don't look outside to see what's going on

It doesn't stop with just press, though. The issue also pertains to the business strategy of founders in the region. "Additionally - and this is most important - for startups to be successful in this region, they need to have a minimum of a regional outlook, if not a global outlook. It's okay to start in a city. It's okay to start in Cairo. But your business cannot be focused purely on one city. And you need to have a road map for regional or global aspirations if you look to achieve VC-end growth in your company."
5. Regional fragmentation leaves "room for consolidation"
Despite the scope of size and diversity across the region, many MENA countries still share similar issues tackled by multiple startups with convergent goals. Bahoshy gives an example as to how consolidation could expand reach and reduce numbers of "duplicate" startups: "say there are five different startups that are addressing the same issue in Kuwait, Saudi Arabia, Emirates, Lebanon, and Jordan - perhaps none of them is yet getting the funding they need because they're being told the market isn't big enough," he outlines. "I think corporations could have a big role to play in this situation. There's a lot of room for M&A [mergers and acquisitions] activity with startups. If a company chooses to merge two or three of these startups, they can create a super-startup with the proper team, funding, and foundation to fuel a successful business. There's room for consolidation."

In general, communication is an issue for entrepreneurs across the Middle East. Bahoshy finishes with emphasis on the need for more conversation between innovators in the region. "Not enough work is being done to embrace and bring the community together as a voice to challenge the norms. Entrepreneurs don't spend enough time speaking to other entrepreneurs to empower one another. When founders speak, we realize we all have similar challenges."

Photo by @MO4Network's #MO4Productions.
Photographer: Mo Ezaby.
*This article was originally published on our sister site Startupsceneme.com

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The 5 Biggest Challenges for MENA Startups, Explained by the Man behind Data Pioneer Magnitt

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Originally Iraqi but Dubai-bound, Philip Bahoshy has been silently working to crystallise the Middle East's startup ecosystem through his big data platform, Magnitt. In a talk with Charlotte Swan, the man behind the math unveils 5 reasons the region lags.