"StartUp Success to StartUp Failure": Why We Aren't Afraid of Our Past Mistakes
This day and age, one of the toughest things to do is to find enough funding for that grand idea that you may have.
Getting the idea is the easy part - notice, we didn't say having it be a good or profitable idea is easy; just getting the inspiration is easy. After that's complete, you have to conceptualize it, usually in the form of a business plan that gets tweaked, re-tweaked, scrapped, started over, and then pulled from the trash unfurled and given new life with one last re-re-tweak.
But then what's next?
Unless you have your own funding, or great uncle penny bags is willing to fund your venture, you are probably out with Nikes to the pavement searching for funders. Funding can come in the form of grants, angel investors, venture capital, or seed funding. Every next great tech start up is looking for that venture capitalist to come through on their white steed, proclaim them the next Google, Facebook or Twitter and cut a check with more zeros than the high school band.
But how often does that actually happen?
In very general terms, roughly 1,500 startups get funded by venture capitalists in the US, and 50,000 by angel investors. VCs look at around 400 companies for every one in which they invest; angels look at 40.
The basic math above tells us that not many, or not enough potentially great ideas get the funding they need, or desire. So what's the next best option?
At Carrington, we help you discover and explore all options available to your venture.
In 2011, we came across a client - we won't name names simply to protect the innocent - who had a great idea, to be the next Rent.com for the New York market; but then go one step further by processing the rental application, conducting the necessary background and rental history checks, and also being the source of online, on-time rent payments for landlords across the city. Then hopefully expanding to other major metropolitans with a can't lose formula.
Anyone who's lived in New York knows, finding an apartment is easy, but finding a great apartment is tough. Also, the best way most people go about finding apartments in New York now, other than word of mouth, is to take the Craigslist route; and anyone who's done this full well knows the potential dangers of Craigslist being the end-all be-all for anything, especially apartment hunting.
The idea was great, we were able to not only pitch the idea to a number of investors and secure funding greatly exceeding the target goal. As the web protocol didn't require much to launch, and real success would be found with the first landlord in the city who signed up for the service; the funding goal was set at a paltry $150,000. We were able to secure funding over $275,000.
So what happened?
Well, (i) a dispassionate founder, (ii) a continually delayed webmaster, and (iii) investors with patience much shorter than their pen stroke. This isn't to say the investors were at fault, not at all. When you make an investing commitment, you expect to see timely results. Once the first project deadline was delayed, the founder decided to re-tweak the part of the business plan regarding the web development, decided against best advice to do the project herself. Did we mention she had no prior development experience.
What resulted shortly thereafter was an even further delayed project and investors who grew increasingly weary of the outcome and the direction the project was going. What happened next, the founder decided again to outsource the development project, but did so with the cheapest available option, as at this point cash was being hemorrhaged on marketing, sales, and operational expenses grossly exceeding what was needed for the overall project timeline. Anyone who has used a developer, mechanic, barber, tailor, etc before knows the old adage, regarding services being (i) Good; (ii) Fast; or (iii) Cheap:
“If you choose GOOD and FAST, it will not be CHEAP. “If you want it GOOD and CHEAP, it will not be FAST, and, “If you want it FAST and CHEAP, it won’t be GOOD.”
Well the project ran into all of those issues. The result was fast and cheap, and therefore just wasn't good.
Carrington was brought on to handle the business operation portion of the project, specifically: (i) legal, (ii) investor relations, (iii) marketing, (iv) sales and (v) sustainable operations planning; with the founder focusing primarily on the web development, as the vision was hers and hers alone.
We found ourselves in a great position, able to not only establish necessary contracts, business entities, and employment documentation; but also, for best impact, to partner with a regional target marketing powerhouse to great success and even brought along partnerships with local real estate agents and brokers to strengthen the company profile and footprint. We found great success in pitching the forthcoming project to landlords and had a waiting list of potential clients, both landlords and market tenants. And as previously mentioned, funding, where most businesses fail, was no issue. However, when the web development didn't succeed, investors pulled out, the proverbial bag was left hanging in the balance.
So why are we not afraid to tell of our failure?
Well first, if our clients don't succeed, then we don't succeed. We expend not only resources and time to our clients but also the full faith and credit of our passion in developing small business and ideas to great sustainable businesses.
We aren't afraid to tell of our failure in this instance, because most importantly, we learned a valuable lesson in choosing the best and right clients to bring aboard.
Just as any business consultant has to listen to their client's needs and deliver on promises, clients must be just as open and willing to receive advice that is pertinent to push projects forward. Here at Carrington, we were proud to have been on the cusp of a great project, exceed our goals and have the chance to build the next great thing.
We hope to do the same for you, your idea and your passions, but this time to greater success.
Contact our dedicated team today and let's see how Carrington can help you achieve your strategic business aims.