How can startups fail?
How many ways can a startup idea fail? or how a startup launch fail?
Fundamentally, a failure is defined by two facts:
1. The company runs out of funds and can not pull in new funds;
2. The founder or board decide to shut it down for whatever reason.
How can a company run out of funds then?
1. No income
2. There is sales, but not profitable, and there is no further investment (such as IPO or PE investment);
3. There is sales, but the sales were removed by competitors
How can a company have no income? when the value proposition hypothesis was not accepted.
How can a company have sale but not profitable?
1. when the price space is controlled by competitors including dirty tactic competitors.
2. when the product fails to have quality control.
How can a product not have quality? when there is no good great talent working on the project.
How can a company not have talents? talents don't want to join for salary considerations, or the company's mission is not exciting
What are the top reasons the team will shut down?
1. Founders dispute, human error from day one.
2. The successful establishment or running of the company is no longer interesting.
How can a startup have no sale? how can a wonderful product not accepted?
1. There are interesting features, but the channel rejected your product because the channel will have to be destroyed to take you. Basically, because no one can make a living off you.
2. The product is worth the price, but not worth the value. Say something costs 100 to make and you sell at 101. But in reality you should sell at 10 and sell 1000 units.
Why VCs don't fund you? there is no reason, there is no guarantee they will take their money back in multiples in 2 years. (Say 3 times return in 1.5 years).
Why they don't see the promise?
1. There is no sales validation yet
2. There is no story to tell other investors. The product is exciting but the story is not exciting.
3. You and your team are not high quality. You can not second time entrepreneurs. You are just technical talents, not startup veterans.
Question asked by
May 24, 2020 at 12:01:38 PM