Some wonder what causes the failure rate for startups to be so high. Is it because they are doing new, unproven things? Was it because the market changed or the customer preferences shift? Or was it because they didn’t have funding or access to key accounts.
The cause of startup failure comes back to one ultimate source: the team. Just about every failed startup comes down to the team not being able or motivated to execute.
It’s often the case, they underestimated the work and what must be done to succeed. The team you choose must be able to handle this.
Pivots, restarts, and unforeseen events are part of every startup’s journey. The team must be prepared to regroup for this.
As the company grows, the team must be able to cut costs, attack new markets, and turn on revenue streams.
The team must be able to work without funding for a period of time.
Failed startups point to a lack of funding, encroaching competition, regulations, and the list goes on. But the right team can take those in stride and continue to grow the company.
CEOs, ask yourself: Is my team able to adapt to the changing conditions?
Investors, ask yourself: Is the deal you’re considering to invest in have the skills to work through all the ups and downs? Look hard at their ability to do all of the above and not just what’s on the current plan.
Plans change, strategies shift, and markets move, but the team is the constant in which you invest.
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Copyright (c) 2020, Hall Martin and investorconnect.org. All rights reserved.
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.