By Scott Meacham
Copyright © 2015, The Oklahoma Publishing Company
“Startup death is surprisingly hard to identify.”
When I read this statement in a recent analysis by CB Insights, a National Science Foundation-backed company that supplies data-driven intelligence on emerging companies and disruptive technology trends, I thought, wait a minute. How does this square up with the often-quoted industry statistic that 50 to 70 percent of startups fail in the first three to five years?
The explanation is that failures among startups are hard to count because “many startups are essentially dead but limp along for years in zombie-like fashion,” CB Insights asserts.
I understand this phenomenon. At i2E, we see plenty of entrepreneurs with seemingly good ideas launch startups that never quite take off. We also see those entrepreneurs, typically individuals full of tenacity, drive, and hope, often having a hard time declaring that sunk is sunk and letting their fledgling startup go.
Some startups die from lack of capital. Some but not all. Often the primary cause of a startup’s demise isn’t from a shortage of funding; it’s from lack of customers and uncertainty about whether customers want or will pay for the company’s product or service.
i2E is tackling this challenge head-on with our new Immersion Venture Assessment Program for high growth ideas.
I use the word “ideas” intentionally. Entrepreneurs who sign up for this assessment typically won’t have a business plan, likely aren’t yet incorporated, and hopefully haven’t built a prototype product.
The strategy is to figure out if there’s a product-market fit before the entrepreneur spends a lot of time and money creating a solution that no one wants to buy.
Immersion Venture Assessment is a bi-monthly tough-love boot camp (delivered in both Tulsa and Oklahoma City) where i2E venture advisers work directly with entrepreneurs to help them make a go/no go decision in three weeks.
Entrepreneurs attend weekly sessions held in the early evening. They have weekly one-on-one engagements with i2E advisers, as well as assignments to identify and quantify potential markets and customers.
“Immersion Venture Assessment is a pragmatic step for a would-be entrepreneur. He or she will exit with a to-do list or a ‘to-don’t’ list,” said Elaine Hamm, venture adviser and program director.
If there’s a market for the idea with enough of a value proposition to pursue an additional investment of time and money, great.
If not, i2E can help the entrepreneur pivot to a different market or customer set or go to work on another idea, instead of spending months and money trying to create a company that risks becoming one of the zombies that CB Insights talks about.
We are accepting online applications for the next Immersion Venture Assessment scheduledThursday: http://www.i2e.org/immersion-venture-assessment-program-application.
Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Contact Meacham at i2E_Comments@i2E.org.
Did You Know? 2014 technology exit activity was more than 58 percent over 2013, driven by strength throughout the year with every quarter of 2014 exceeding 2013. Source: CB Insights