Why do Startups fail? – Brief No.01
Founders, what is your greatest weakness? After spending the last 20 plus years watching over 2,000 pitches from around the globe, I can tell you the following, with a high degree of certainty; most often you have a wonderful technology solution, you address very well a real need in the market, you have identified a sizable market that can be adapting your technology, etc. Then you arrive at the go-to-market strategy and all the investors realize that you have no clue (to say the least) how you will accomplish your big dream and turn it into a profitable and scalable business.
“We are going to sell nationwide” or “many potential customers show interest” or “we have a letter of intent from..” or “We have few customers in the hopper” or “we are the only ones..” (which is unlikely), is not a strategy. The addressable market your company targeted is a red ocean full of competitors or at least other hungry and driven founders with alternative solutions, like you, that are looking to solve the problem and fill the need, some of which are not bad at all, and your solution does not necessarily offer a better and more stable alternative with very distinct differentiation factors.
Without a solid, detailed Go-To-Market Strategy, your innovation does not have any real value if it can’t be commercialized for the economy of scale. Have you identified the sales channel and costs, the sales cycle, the user versus the person that controls the funds (decision maker), does the person overseeing the sales and marketing activities have a successful background in this market, etc.? The investor is less interested in the in’s and out’s of the technology, the only thing they are interested in is how will you get it to market as fast as you can and make as much money as you can, as long as you can. Many companies with great opportunities and technology solutions fail to understand the market, plan for it, and to execute and end up disappearing.
The technology “Graveyard” full of promising companies, some with the best technology that we have ever seen, that can really change the world, they died, due to lack of the ability to market it and sell it. It is just as simple as that.