Why most start-ups will fail in the future

Posted on 30th June, 2015 | | 5151 Views | Business

I recently met a 25 something, nice young fellow in a social gathering and we got into a conversation. When I asked what he does, he enthusiastically said ‘Well, I am working on a start-up.’ Excited, I probed further; ‘what is that you are working on?’ He answered ‘I haven’t figured that out yet but I am looking for an idea which can value my company in millions of dollars.’

Whoa!! Money, not passion to build something great, is driving this new breed. Welcome to the new age of entrepreneurship and start-ups.

Today, most start-ups are initiated with the underlying expectation of making big money by getting a venture capital, PE fund and taking the company public. For this, rather than a passion behind, they look for a framed idea that will excite investors.

Rather than the product or service, a lot of energy these days is being spent on excel sheets to make the proposition look attractive to prospective investors. If a particular number is not yielding great returns on investment, simply change it to so that the synopsis looks great. Are prospective investors fool? Some are not but many do get trapped in this as they have no idea about the future of the said idea.

There is one more reason for this propelling growth in the number of new start-ups we are seeing. A lot of rich and the famous now have a dedicated pool of money to fund start-ups. Their mantra, as told to me by a big investor was, ‘It’s a game of probability. If I invest in 10 start-ups, one will be successful and I will recover all my investments with huge profits in the one which become successful.’ Their hope is given fire by smartly dressed so called expert advisors who make a killing by closing such deals. Having a kitty for funding start-ups now a day is considered even more glamorous and a style statement than owing a charter plane or an expensive yacht.

Also, these days being associated with a start-up gives a lot of kick. It makes the person the talk of the town. The want of ‘success and money’ has taken over ‘the urge and passion’ to build something meaningful and this is the precise reason why most start-ups will fail.

It’s not that I am bearish on all start-ups. Without a doubt, many new start-ups will make history in the days to come. These will be those who will water their ideas with blood and sweat for unthinkable number of hours and days and years. These will be those who will start with the premise of making this world a better place. Such start-ups will get their life by feeding on passion and commitment of the person and team behind. However, I do feel most start-ups will not be able to make the cut simply because they will lack the depth and dedication and are started with the objective of making money and earning recognition.

It has become a fashion statement that ‘I am working on a start-up’. And if one was not enough… one guy I recently met told me that he is working on four start-ups simultaneously. When I asked the rational, he simply said even if he succeeds in one, there will be a lot of money in it.
Hearing him, for once, even I thought to jump in the bandwagon of start-ups. But my better sense prevailed and I thought let the idea come first and let the conviction come that I can spend my lifetime in making that idea work. I am waiting. Who knows…one day!!

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One Response to Why most start-ups will fail in the future

  1. Ketan Nanivadekar says:
    October 8, 2015 at 3:53 am

    Found the article v nice.. Agree passion is what drives and makes a person / biz successful.Money is incidental

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