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The Global Challenge of Fundraising Inequality

I. Introduction:

Fundraising has become a real challenge for entrepreneurs nowadays. It has never been easier administratively to launch a startup; nevertheless, financial barriers remain significant.

Many entrepreneurs worldwide fail to raise funds because their pitches are not convincing, they lack networks, access to incubators and VCs, or they simply lack initial funds to invest.

However, it is evident that the development of startups is not halted. For instance, a country like France has reached the milestone of a million startups, according to INSEE. Although their role is undoubtedly significant, their failure rate remains very high. While this is not solely due to access to financing, it constitutes a significant part of the problem. Therefore, we will detail the obstacles to fundraising and then provide a concrete solution to this issue.

II. In Wealthy Countries:

The obstacles and challenges to fundraising are not of the same magnitude and do not stem from the same causes across geographical regions. In wealthy and developed countries, the primary challenge remains the ability to secure initial funds, to have a network among investors, and to convince them. However, these are rare characteristics among most entrepreneurs given the openness of this profession to all.

Often, excellent ideas that could make our world better are rejected by VCs because the individuals proposing them are not trained in pitching. Similarly, some fundraising campaigns through crowdfunding platforms fail to meet their goals due to the absence of a network and initial donations for the project.

This sad reality leaves a void in the world of fundraising and, more importantly, excludes talented individuals from this practice in favor of established and experienced individuals. It’s a modern-day injustice.

III. In Developing Countries:

In addition to the previous challenges, developing countries face other issues in the field of fundraising. Initial access to VCs and private investors is much more complex than elsewhere. They are scarcer and have fewer funds. Moreover, it is very difficult for residents of these countries to propose projects on platforms given the amplification, for them, of the aforementioned points.

Africa, for example, is a continent rich in talent and ideas, and although recent developments in startup financing push for some positivity, entry barriers remain very heavy. Furthermore, only certain African countries like Senegal or Nigeria are implementing real financing means for startups.

IV. Future Innovations:

With the problems defined, the solution is simple: democratize fundraising for everyone, regardless of social or geographical origins. The development of CNNs and RNNs algorithms within social networks, allowing anyone to become a star by simply posting content, suggests that the fundraising universe should adapt to this practice.

An intelligent algorithm based on AI could highlight entrepreneurs’ content simply based on the interactions generated. In the era of AI and advanced algorithm development on social networks and elsewhere, it is crucial to innovate in crowdfunding.

V. Conclusion:

In conclusion, in a world where the development of startups is exponential, the predominant challenge is no longer administrative but participatory simplification. Stakeholders are beginning to realize this, and it would be innovative to see real “social networks for fundraising” emerge.

This article was written by Remi Zeitoun.

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