Raising money and finding people to pay for their product are among the chief challenges founders are facing, according to new data from tech event Slush published today.
In its Startup Struggle survey of more than 1,000 founders (alongside more than 250 investors), 63% of startups said fundraising was among their top three challenges; 49.6% said customer acquisition was up there; 38.1% mentioned scaling and growth; and 36.8% pointed to revenue growth.
Startups in different sectors have varying concerns. Customer acquisition, for example, took priority over fundraising for startups in cybersecurity, education, enterprise software as well as travel and leisure. Scaling and growth was the most frequent concern for marketing tech startups, and revenue growth was the most common challenge for proptechs.
Here’s what else was in the data.
Do founders and investors agree?
Founders ranked growing the team, compliance and keeping users happy lower down their list of concerns; only 12.2% highlighted hiring as a top three challenge, with regulation (8.6%) and customer retention (6.9%) also receiving relatively little emphasis. Similarly, just 3% cited talent retention as a top three challenge, suggesting founders seem to be confident in their ability to keep staff engaged.
Investors, however, are more concerned about regulation, particularly financial regulation and intellectual property protection. They’re also wary of compliance risks — such as data protection – that can dent a startup’s bottom line if they’re not followed properly, and rising compliance costs.
Investors gave more weight to making money as a challenge than founders did, ranking it on par with raising capital. While 23.6% of investors said revenue growth was the biggest current challenge for their portfolio companies, only 13.6% of founders felt the same.
Where’s your head(count) at?
What counts as a main challenge differs depending on how many employees a startup has. Fundraising was the chief concern for companies with up to 20 employees; for those with more than 20, the focus shifted to revenue generation.
Startups with 10 or fewer employees were most worried about customer acquisition. That changed for companies with 11 or more staff when the main concern became scaling and growth. Balancing growth and profitability was the main issue for companies with between 20 and 100 employees.
Once startups reach more than 100 employees fundraising becomes a core challenge again, along with competition, according to the data.
What puts investors off?
More than 40% of investors said that challenges around revenue growth (46.5%) as well as scaling and growth (40.8%) were key issues that discouraged them from investing in a company. Other notable concerns include struggles finding customers (33.7%) and raising money (25.1%).
Finding it hard to hire and keep talent ranked low among factors that put investors off. No investors cited regulatory challenges as a deterrent to investing.
Investors have AI (and not much else) on their minds
Among the investors surveyed, 63.6% identified AI and machine learning as the biggest future trend in the ecosystem, compared to 10.7% who pointed to climate change and 6.25% who highlighted geopolitical dynamics. Just 5.2% cited regulatory changes as the industry’s key trend.
