Long Term Startup Capital

Startups are being created at a hectic pace. Things are easier if they get bought out quickly. Otherwise there will be the risk of money running out. To prevent such a scenario, they must be backed by venture capitalists with a lot of money. Another technique is to quickly turn a profit to sustain operations.

Some liken this to the boom and bust of the dot coms years ago. A smart founder must consider funding for the whole lifecyle of the startup. Perhaps this is causing a need for a different type of venture capitalist that funds a company after it becomes less risky, but needs funds to continue.

One good factor is that the cost of startups seems to be on the decline. Lean and mean boostrapped startups are best to run longer. There is something that probably does not change over time. Startups fail at a certain clip. Something that accelerates the failing is the shrinking nature of the VC market.

How can you prevent your startup from failing due to cash problems? Launch fast, iterate fast, and spend very little money. It is funny. Some people say the formula for the new startup seems simple enough. Get a catchy tech name. Create a fancy logo. Put up a Web 2.0 site. Then release a mobile application. Got it?

Don't Do Free

Early on I had a plan that I would developer applications and give them out for free. The idea was to get people to my web site that had ads. That model did not seem to pan out.

Now I read that the free model is a bad one. People don't want to pay once they get a chance to sample your goods for free. Great.

So perhaps it is time to switch up the business model. End the free apps. Charge a minimal amount for them. I will need to step up my game. The app has to be awesome to convince somebody to shell out real cash for it. Reset.

Success Rates

I read a 2008 paper that researched startup success rates. There is an 18% chance for success on your first venture. If that first one is a success, you have a 30% chance of success in your second venture. Otherwise you only have a 20% chance on your second venture.

The source of the success/failure statistics was Venture Source from 1975 to 2003. The findings show that success affects future results. They also found that you were more likely to success if you were backed by top venture capitalists.

Skills do influence your success rate. Management skills are important. Skills to decide time to market are also key. However past success, or the perception of such success can also propel you to a win.