Challenges to Funding a Start-Up in the COVID Age

The ongoing coronavirus pandemic has shuttered hundreds of thousands of small businesses across the country and has dramatically affected large businesses and corporations. Despite these staggering realities, applications for new businesses are surging. While this may seem like a risky time to start a business, there are a few upsides. First, business closures mean there is less competition in certain markets. Second, as many businesses turn remote, you may be able to land a bargain on office space. This opens the door for new business opportunities and you could end up dominating the marketplace when things begin returning to normal. Nevertheless, the pandemic still comes with its fair share of risks and challenges. Entrepreneurs may find it difficult to get the funding they need to support their start-ups. Given that funding is a cornerstone of starting a business, this is a very important piece of the puzzle. For this reason, it is important that entrepreneurs understand the challenges they face when looking to fund a start-up amid this pandemic. 


Risk of Personal Financial Loss

Funding may be hard to come by in a time when so many businesses are facing financial losses. Investors might be leery of lending money, which could result in entrepreneurs having to use their own personal savings to fund their business. Start-ups require a great deal of money on the front end in order to get the business up and running. It could take several months or even longer before your business becomes profitable so you have to be able to support yourself during this time. On the other hand, if your business does not succeed, you risk significant financial losses which could be devastating if you do not have a safety net.


Uncertainty with the Economy

Although more and more people are getting vaccinated every day, there is no clear way to predict when this crisis will end and when the economy will recover. It is even possible that the economy will continue to get much worse before it begins to recover. Investors are very cautious about funding during a time of such uncertainty. 


Revenues are Impacted by Containment Measures

Just about every business is facing unique challenges relating to restrictions and containment measures. Mask mandates, social distancing, capacity restrictions, and other containment measures are making it difficult for businesses to run as usual which in turn, directly affects revenues. Furthermore, many people are still skeptical about going out in public, being in crowds, and participating in activities that they participated in before. Investors are well aware of these challenges and they realize it might be a significant amount of time if and when they ever recoup their investments. This makes it even more difficult to find an investor who might be willing to fund your business. 


Constantly Changing Legislation

The business landscape is constantly changing and it seems as if every day the government is releasing new laws, policies, and regulations that affect business owners. Again, investors are cautious to proceed with new business ventures until they can get a better understanding of what regulations they will be faced with.