Risks Associated with Seed Funding
1. The Risk Of Not Getting Funded: This is the most common risk, and it’s one that every co-founder faces. There’s no guarantee that your startup will receive funding, even though the idea is good and viable.
2. The Risk Of Not Being Able To Raise More Money: Once a startup has received seed funding, the startup will need to continue to raise additional rounds of funding in order to grow the business. If the startup is unable to raise additional funding at an increased valuation, the business will fail to grow.
3. The Risk Of Giving Up Too Much Equity: In order for a startup to receive seed funding, the co-founders have to give up a significant amount of equity in your startup company in order to attract seed funding. This can be risky, as it means you’ll have less control over your business.
4. The Risk Of Not Having A Viable Product: Many startups receive seed funding based on the promise of a great product or service that doesn’t yet exist, they have yet to come up with the actual product or service offering. In case, they are not able to deliver on this promise, investors will lose confidence, and the business will fail.
5. The Risk Of Running Out Of Money: All businesses require capital to operate, and startups are no exceptions. If the startup runs out of money before the startup is able to achieve profitability, the business will likely fail.