It is estimated that the “global startup economy” created an economic value of nearly $3 trillion during the period from 2016 to 2018. But since the COVID-19 pandemic broke out, it is estimated that about “$28 billion in startup investment will go missing” this year alone. In another instance, Dealroom reported that since the end of January, tech and internet companies in Europe have lost almost €400 billion in total. Across the globe, investors now appear to be selling their startup stakes at discounts. In every region, corporate venture investors are pulling back their investments more sharply than ever. These staggering numbers represent the critical need for evolution in fundraising ecosystems to support potential high-growth companies who don’t attract venture capital but are important job creators.
What are the Holes in the Fundraising Economy?
The factors that make fundraising an enormous challenge for young startups around the world can be derived from three particular pain points: access, credibility, and efficiency. Often new founders do not necessarily have an extensive track record to convince potential funders that their startup idea is worth investing in, thus they are compelled to accept the limited funding opportunities available to them. This problem arises with the lack of access to active and relevant investors that are tailor-fit for their startup needs.
The difficulty of establishing credibility when trying to raise funds can prolong the whole fundraising process. Also delay in outreach, courtship, and due diligence from both ends cause inefficiencies as fundraising is necessary ammunition for startups to launch their ideas into fruition. All these are hurdles that ultimately hurt the startup.
Unfortunately, 99.5% of MSMEs continue to remain as Microenterprises and have always found it difficult to grow because of these challenges. The founders of these MSMEs and startups also deal with efficiency problems due to the use of multiple service providers with fragmented processes, with each one trying to get a share of the fees. These inefficiencies add to the lack of visibility over investor activity and the entire fundraising process.
The lack of transparency poses challenges for startups to get the funding they need as they have extreme difficulties in getting their message and plan out to the world. They are typically limited to their local markets and traditional financial institutions that basically want them to borrow the money and to put up their own personal guarantees or assets to back any funding. The lack of desire to do this or of substantial collateral to support their loan applications forces entrepreneurs and startups to secure loans from informal channels where interest rates are at least twice as high when compared to the formal market.
How AladiEx is Set to Improve the Fundraising Ecosystem
Today the startup economy needs a platform that can make external fundraising a lower-cost and less time-consuming affair. The fundraising economy needs a trustless and transparent system with no barriers for startups with the potential to excel. AladiEx is one such platform that harvests the power of blockchain to enable micro, small and medium enterprises, and startups to raise the funds they need by pitching to seasoned experts available to them from around the world.
The AladiEx ecosystem eliminates the middleman from the fundraising economy and connects new founders and MSME owners directly with potential investors worldwide. This platform has a bi-directional approach to revolutionize fundraising. It not only enables businesses across any sector to raise capital for their projects globally in a low cost and hassle-less manner but also supports investors worldwide to invest in projects easily with great potential. AladiEx also enables investors to manage their assets on the platform using advanced trading tools.
AladiEx provides a bridge between investors and businesses by enabling MSMEs and startups to tokenize their assets and gain access to innovative sources of capital. Once these businesses tokenize their securities and assets, it provides a way for smooth trading of global alternative assets and opens the door for more investors to invest in all kinds of businesses. So go ahead and enjoy the futuristic fundraising ecosystem with the borderless, secure, and highly rewarding AladiEx ecosystem. For more information visit our website at https://aladiex.io/.