Definition of customer capital

Scale and Fail: 5 Reasons Companies Nosedive After Raising Venture Capital  April 27, 2016 – 11:01 am

For quickly growing startup or expansion-stage software companies, raising venture capital should be cause for celebration. Champagne bottles should pop, high fives should ensue, and every stakeholder should salivate over the ways in which the business can leverage its cash infusion to scale and drive future growth.

And while most investments start that way, it isn’t long before some companies’ euphoria gives way to disaster.

Unfortunately, starting from the notorious “Webvan” of the dotcom bubble, the high tech “deadpool” is infamously littered with many examples of ventures that either had no business accepting outside capital, or had issues that couldn’t simply be solved by more money. That many startups fail is not ground breaking news, of course, because venture-backed startups are risky investments and have a very high rate of failure, by definition.

The more relevant issue is why they fail. In my experience, it happens for five simple reasons:

1. The product isn’t a must-have in the long run

A lot of nifty, trendy software startups produce nice products that appeal to early adopters. They’re good enough in the first few years, but they might not translate into mainstream appeal as the business begins to scale. And if you haven’t cornered your market or your customers can’t live without your product, then what’s the point of trying to grow bigger with outside capital?

Source: OpenView Blog

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  3. Evaluation of customer capital
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  5. Acquisition of customer capital