Why Companies Fail

One of the things we consider in reviewing every opportunity is: will this company fail? No offense, but the odd company doesn’t make it, and while VCs bank on it, venture debt players need to do their best to avoid the obvious very high risk situations.

A blog by a Hummer Winblad Venture Partners fellow caught my eye. Lots of truth to his perspective about why companies fail, and what to look for if you fancy yourself as a VC or Angel investor:

1. VP Sales Turnover
2. No Competitors
3. No RFPs
4. No Repeatability
5. No Partners
6. No Energy
7. No One Knows What The Company Does
8. Constant Thrashing

These points are as relevant to an individual considering joining an early stage company as they are to a prospective investor. Something we don’t talk about enough, but folks joining a newer firm need to have many of the same investment disciplines as a capital provider.

MRM