Avoid Going From Riches To Rags: 6 Lessons For Startups With financial backing, entrepreneurs are equipped with the resources they need to innovate, scale, and disrupt industries. But despite these advantages, nearly 75 per cent of startups funded by VC end up failing
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In the high-stakes world of startups, Venture Capitalists (VC) is often seen as the golden ticket to success. With financial backing, entrepreneurs are equipped with the resources they need to innovate, scale, and disrupt industries. But despite these advantages, nearly 75 per cent of startups funded by VC end up failing. We present below the six mistakes that they did, which you must avoid in order to run your business sustainably.
DON'T SPREAD YOURSELF TOO THIN TOO FAST: A startup manages to attract investment due to the sharpness of their offering. They should concentrate on strengthening their internal infrastructure and enhancing their current products and services to establish a solid foundation that can support them when they decide to grow and take greater risks.
DON'T OVER-ESTIMATE PRODUCT-MARKET FIT: Before seeking funding, it is crucial for entrepreneurs to assess product-market fit, i.e., whether their product or service meets actual customer needs. If the market demand is not evident, they must consider whether they can create that demand effectively to ensure sustainable and profitable operations.
DON'T UNDER-ESTIMATE YOUR MOST VALUABLE STAKEHOLDERS: Employees and Customers are two most valuable stakeholders for any business—the people you pay and the people who pay you. However, startups glorifying exploitative work environment in the pretext of hustle does not sit well with customers. Customers today want to be associated with companies with ethical and fair practices.
DON'T CHASE THE MONEY: Investors come with expertise and can provide invaluable support apart from financial backing to the startup founders. They have a lot to offer, that startups can leverage and gain guidance from. However, this demands that founders not just seek money, but also guidance while partnering with an investor.
DON'T TAKE FUNDING FOR GRANTED: Startups with VC investment has the resources to expand rapidly and elevate their business. However, according to data, less than a quarter of unicorns are profitable. This is because most startups are mindlessly growing business in all directions without a strong financial foundation. Founders should realise that funding is limited and will not always be available.
DON'T BECOME THE "ENTREPRENEURIAL HERO": Startup founders often romanticize the entrepreneurial journey, which can lead to a false sense of invincibility. The idealized image of entrepreneurship clashes with the reality that on an average 90 percent of startups fail. The reasons may vary but by accepting this truth, founders can take a more practical approach to business.
