Greg Smith, Chief Investment Officer, TIMIA Capital
In my industry, I am fortunate enough to meet inspiring entrepreneurs every day. I always admire their willingness to shoulder the risks involved with leading a fledgling company. Their belief in their vision somehow outweighs their fear of losing all that they’ve put on the line. They never waver — despite the sobering fact that half of all startups fail within five years and 20 percent don’t even survive one year.
During the recent SaaS North event, I met with many startup CEOs who bucked this trend and I asked them all the same question — “What do you wish you could tell your past self about your early startup strategy?” …
Greg Smith, Chief Investment Officer, TIMIA Capital
The question on everyone’s mind these days is, “How close is the tech bubble to bursting?” To put it more succinctly, “Who among us is the greater fool?” From the outside, the industry looks stable. Under the covers, most investors follow the same playbook: provide funding to start-ups to drive growth; demonstrate growth to secure more funding; rinse and repeat until the company goes public or bust. Unfortunately, for most start-ups, the latter is more often the case.
According to research by Harvard Business School, at least 75 percent of U.S. venture-backed start-ups fail. To be clear, it’s not the venture capital funding that’s the problem. It’s the expectations that come with it. It can encourage a swing-for-the-fences mentality that causes some companies to take their eye off their raison d’être — value creation — to focus on a level of growth that they are not yet built to sustain. This has the paradoxical effect of driving growth that ultimately results in the demise of the company. …
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