STARTUPS – WHY NOT, EVERYONE ELSE IS
Startups – We hear a lot about them these days, particularly if you live in the land of vineyards, silicon and venture capital otherwise known as ‘The Bay Area’. As a serial entrepreneur, it’s enticing. Hell, it’s more than enticing, it’s intoxicating ! But for every startup that tries to sprout it’s seed ( seed $$ that is ), hundreds of thousands fail. In 2012, 514,000 new businesses were started according to a recent Mashable article. So where is this all happening. Well, as suggested, a large percentage is occurring in silicon valley and the bay area but increasingly, the independent spirit that ignites the fire and stokes the coals of an entrepreneurs heart is spreading to cities like Boulder, Co., Austin, Tx, Ft. Collins, Co., Seattle, Wa and Cambridge, Ma. Cities like Nashville, TN and Charlotte NC are also seeing a rising boom in startup technology companies and incubators as the land is cheap and opportunities are ripe without competition.
SUCCESS OR FAILURE – IT’S NOT THAT EASY
So let’s talk about what makes one succeed or fail for a moment. I recently listened to a rather interesting TedTalk on this precise topic by Bill Gross, a serial entrepreneur. Here are the top five areas from this talk that were evaluated from the standpoint of success or failure :
Interestingly enough, of these top five elements, I would have guessed that funding would have been the number one reason why most Startups fail, at least that’s what I’de always been told. I’ve also personally found this to be true. That said, as it turns out, after having looked at over 100 of both his own and 100 external companies, it turns out the statistics paint a different story as shown below ( excerpt from his talk ):
I would have never guessed timing was the most critical element but, in combination with impeccable execution, timing was crucial.
Let’s chat briefly about funding options as it seems I see or hear about a new source of crowdfunding just about every day. There are many ways to gain seed funding, round A funding, or VC funding – short of going on SharkTank. This is often accomplished in a step wise fashion as the company gains ground and begins to demonstrate adequate revenue based on market traction. I’ve listed several companies that provide avenues through which one can solicit for funds. Bear in mind that if funding is provided from and external source, crowdsourced or otherwise, equity and shares rapidly dilute and your profit margin will be affected accordingly.
Here are a few of the most popular :