To begin with this topic has been discussed several times before but is just a different view which may resonate with some of you. And also I am not an expert on this subject but an entrepreneur witnessing entrepreneurship closely to its skeletal being.
All entrepreneurs have some common trait of getting bitten (smitten) by this ‘keeda’ (bug) earlier in their life. Some are aware of it and some unaware but eventually fall into this trap. Yes you read it right, ‘trap’ as it always leads to failure more than success with all its baggage like failed person, degrading social image to parasite living on parents/spouse at their productive age and many more.
Why do most of the entrepreneurs fail so miserably and why only few or 1 out of 10 become a unicorn?
Some serious answers, right?
Actually ‘YES’ and in a way ‘NO’ too.
‘YES’ because if doesn’t work as revenue model then their ideas are not going to be implemented in the market resolving the societal issues.
And ‘NO’ because entrepreneurs are people essentially with ideas, novelties and different (read ‘out of box’) approach to problem solving and not making the biz model work. That is not their concern. They play and brood on their ideas and solutions to add value in society.
The bigger issue would be “is the idea scalable?”; meaning in simple terms a start-up is an organization searching for a repeatable and scalable business model.
Ultimately the bottom pitch is the bottom line of the business model evolved over the unique idea. So why do investors invest in these ventures knowing too well the risk associated with it? I think nobody has the right answer or formula for this kind of investing but it’s more to do with hope of disrupting the market and greed of the returns.
Here I would like to mention different types of investors, largely three types; one is the ‘out of the box’ type, second the ‘hard facts’ type and third the ‘neutral’ type.
The ‘out of box’ type thinks this is the unique product/service which would disrupt the market. They usually have entrepreneurial background in some form or the other.
The ‘hard facts’ types are brutal in their approach with solid business model. These are normally inculcated later in the life cycle of start-ups when the ‘out of box’ type are exiting. They would be hell bent to get the bottom line out of red with whatever methods possible to the extent of changing the product / services. They are hard core business guys and interpret the business model and people in profit/loss figures.
The third type namely ‘neutral’ types who are the balanced guys with right dose of entrepreneurial and business approach. But as they have very highly evolved mentality they are seen investing in high stake businesses and rarely in start-ups. But once in a while you may see them investing in start-ups. These breed have history of doing business for long enough time (now retired) with steering their empires or businesses out of hardship not once but several times. They have a very evolved and balanced approach unlike the other types mentioned. They have simple common sense questions to entrepreneurs and always guide entrepreneurs to ask oneself the tough and brutal questions with simplified answers. Examples may be a) Are there enough customers for your product / services?; b) Will your product / service itself be marketing tool for your business? and many more.
Reasons & success
So the reason of the failures may be lack of right investors struggling with the start-ups to their deserved end game, lack of right start-up with wrong investors OR many other reasons. You may add your experience and give a reason as every start-up is different with its personal point of view and circumstances.
The point is how are you overcoming these obstacles into advantage and leveraging to its implementation, managing the start-up to value addition & profitability.
Your comments & opinions are welcome.