By : Abigail Calcott

A groundbreaking survey among 2000 investment companies and business owners sheds light on it.

The term unicorn (finance) was coined by Aileen Lee in 2013 and means a privately held startup company valued at over $1 billion. In 2013 only 39 companies fell into this category, however, by the beginning of 2019 the Unicorn Leaderboard listed 452 companies. The bright examples of these successful startup companies are Airbnb, Ant Financial, Uber, Zoom, Epic Games, Robinhood, Farfetch, Meizu, WeWork and many other companies. The unicorn leaders countries are the USA with 196 companies and China with 165 unicorn startups.

According to data compiled by Fundable only 0.91 percent of investment projects are funded by angel investors, while an insignificant 0.05 percent are funded by VCs. In contrast, 57 percent of startup companies are funded by personal loans and credit, while 38 percent receive funding from family and friends. Based on the analysis of 1,100 tech companies in the USA carried out by CB Insights it is seen that 70% of companies end up either dead or become self-sustaining (which is not positive for investors). And only 1% of investment project that raised seed rounds, reached unicorn status of $1B+ valuation.

Despite the lower number of successful companies that continue to develop with financial injection from investment companies, it is absolutely possible to attract needed investments to a reliable investment project whether it is at the seed stage of seeking funding or has already made it through to the C funding round. Nevertheless, there are some obstacles that might get in the way and interfere with your success. According to the survey conducted among 1000 project owners and 1000 investors from the USA and Europe who have been engaged in the process of seeking or providing financial resources the fundamental reason that leads even credible companies to failure, is the lack of personal connections between project owners and investment decision makers. Middle level executives do not have substance to back up investment projects and if relying on them, the most likely scenario is it will just be a waste of a project owner’s time and money, with zero results, and the project will unfortunately be consigned to the history books.

Claudio Cancio, the owner of an Italian hospitality business says: “When I was seeking funding, I decided to take part in two funding events. At the first one I presented my project onstage and a few representatives of investment companies got interested, they approached me after my presentation and we exchanged contacts, I send sent them all the information about my project and even had a meeting with them one more time, but it did not lead to anything, despite their initial interest and eagerness. The second event I visited was an investment conference and a family office advisor took my project to pitch it further to investors. I’ve been waiting for a few months now but sadly there is no deal in sight.”

Business owners agree on the opinion that if a project owner pitches an idea to investment decision makers directly and investors endorse it, it opens the way to obtain funding and increases the chance of attracting investments by almost 100%. But if a project is presented to lots of middle level executives (such as portfolio managers, asset managers, analytics from investment companies funds, VC or family offices) and they like the project, it only means that the rigmarole of financing this project has just begun.

Angelina DiLarosa from Switzerland shares her experience: “My project was presented to an investment company by their employee, and of course it was pitched in a completely different way from how I would have done it, but unfortunately I cannot reach investors directly…”

Why do these situations keep occurring? Why despite going to funding shows and investment conferences do people not find the needed investments?

Andrew Crawley the head of an investment company from the UK says: “Usually people who we send on behalf of our company are in charge of relationship matters, however they are not responsible for making decisions regarding analysing and funding projects. I usually attend investment or business events either as a speaker or as a participant, choosing events that only consist of decision makers such as The World Economic Forum and Private Investment Forum Worldwide.”

The feasibility of taking a part in The World Economic Forum has been questioned by many businessmen in connection with the high price which is $72,000 for the an ordinary package and $358,000 for the a premium participation package.

Consequently, the best way to plough money into a project is to establish personal connections with investors, present your project and negotiate with investors by yourself. How to do so can be read here How to get investors in a Rockefeller way.