I was chatting with a friend yesterday who is a veteran of the tech sector, he is having a challenging time getting finance to support the early scaling of his business , his needs are primarily working capital as his product is designed, supply chain is in place, he has a pipeline of customers but he can’t seem to get financial support. This is an individual who has done it before creating a multinational that had a successful IPO.
I then looked at my own experience those of my contacts on both sides of the seed/angel funding table and I am coming to the conclusion that despite government trying to “grease the wheels” the channels to deliver seed funding to the entrepreneur are not working right.
Seed Funding by its nature is risk capital, however experience and Anecdotally suggest that the channels operate more like later stage funders and apply criteria for investment that many early stage ventures cannot meet realistically. I am not excusing the need for a solid evidence based venture proposition and business plan. But many if not most early stage ventures , when they have arrived at the point where they need seed funding just cannot meet the later stage criteria applied.
The usual message I hear is “Come back when you have some or more customers and revenues”
There is a double whammy for many entrepreneurs is that because the Professional seed channels are not working well, then the matching state supports get blocked.
I even think in Ireland we have a knock on impact or similar constraint down the venture development chain, this has been at least recognised in the most recent budget , that is SME available financial support to scale their business . These are organisations who have lower risk and can create wealth and jobs faster than the earlier stage companies, but I wonder will the ability to access finance now for these SME’s continue to be constrained by the ecosystem and channels.
Am I alone in having these concerns?