If only you had known these before investing in a tech venture (or any private company)
Some well-known secrets 😉
#2
It is hard to assess how long a company will live.
Of course, any founder will want his/her company to live as long as possible but as is the case with people, companies cease to exist, too.
Sometimes, they evolve, holding a little longer and defying their fate.
However, for many tech ventures, the lifespan is short although they live by dog years.
How long was the average lifespan of a tech venture born in the original dot-com era after the venture had gone public?
It was 3 years.
In this article, I’ve focused on some of the factors affecting the longevity of companies, providing some real-world examples of successful and unsuccessful ones.
Category Archives: Entrepreneurship
What to (and not to) make of Startups: Introducing additional well-known secrets of venture capital and start-ups
On the 9th of March, 2022 I shared a post on some well-known secrets within the venture capital:
https://bit.ly/3wEc80F
On the 15th of March, 2022, Bloomberg LP published the following:
Homebuying Startup Knock Scraps Plans to Go Public, Lays Off Half Its Staff
· Housing-tech firm instead raises $70 million in private round
· CEO says collapse of Zillow iBuying business spooked investors
“The business is doing great, but we built to be a public company, and there’s no IPO market right now,” Black said. “It does feel like money has gotten very scarce and very expensive.”
Link to the article: https://bloom.bg/3qG0D4O
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Is your start-up ready for the many challenges ahead?
How can you make your start-up more resilient against unexpected circumstances?
Analysts, VCs, underwriters, or even your finance department, may assess a value for your company. Is it reliable?
I will try to answer these questions in this article. Also, we will take a quick look at what happened to Knock.
If only you had known these before investing in a tech venture (or any private company): Some well-known secrets ;) Part 1 of many
If only you had known these before investing in a tech venture (or any private company)
Some well-known secrets 😉
#1
Tendency to stay private as long as possible not necessarily results from the motivation of glossing over “subpar execution” and “problems concerning financial viability of founders’ business model” although there are many cases in which these have been the real motivations of staying private. It has been driven mainly by excessive private capital, albeit currently drying up, incentivized by supplying easy, i.e. not smart, liquidity so that valuations shoot up before IPOs, which have become just down rounds recently.
So, now you know why many ventures are waiting for a decade or more on average before going public.
Free tip for all prospective entrepreneurs 🈺
Entrepreneurs who are copying business models from an original country and trying to implement those models verbatim in their own countries generally are not able to calculate the risks properly, actually that is why they are copying in the first place.
Obviously, different markets will have different market dynamics: purchasing power, demographics, openness to innovation, state-level regulations, capital accumulated, and the backing of a sound financial infrastructure. All will affect your copy differently.
However, there is one more important aspect.
Checking whether the business was financially viable in the original country!
In many examples these founders are just copying models that are not even proven to be financially viable in the original country, i.e. no prospect of positive earnings and cash flows despite the growth.
⚠️
A money losing venture growing more may eventually become a worse money losing venture.
Have the ability to check this first.
Only a handful of perennial money losers evolved and beat the odds.