Steve Rowles has been serving the San Diego startup ecosystem for over 20 years. Beginning in 1987, he worked in the garages of the first companies to come out of UC San Diego. Steve strives to provide a higher value to the local startup community and serves on the Board of Directors of CommNexus, a non-profit technology industry association that works to accelerate the formation, growth, and success of the industry in the San Diego region. Steve recently spoke to a group of entrepreneurs about the top 10 reasons why startups fail. Performance milestones and a strong business plan are two key components to successfully raising capital from investors, according to Steve.
The top 10 reasons why startups fail:
1. Taking Money From The Wrong Investors
Look for local investors with strong character and domain experience.
2. Fear of Dilution
Understand the difference between dilution and economic dilution, which occurs when the value of the business doesn’t change but the number of shares increases.
3. Neglecting The Legal Foundation
During company formation, the management team needs a solid legal strategy and must be compliance.
4. Half Baked Business Plans
Avoid chart junk, wild forecasts and top-down sales forecasting.
5. Allocate Enough Time for Fundraising
It takes nine months, not nine weeks. Be prepared for a long diligence process.
To hear the reaming 5 reasons why startups fail, watch this video excerpt from Steve’s talk.