Wednesday, March 26, 2014

Will New "Excubator" Model Increase Startup Success Rates?

Posted By: George Deeb - 3/26/2014


& Comment

Over the last five years, Red Rocket has consulted or mentored over 500 startups. But, unfortunately, most of these companies have had the same problem. They are typically so focused on building their product (e.g., website, mobile app), that they do not raise enough capital to afford the sales and marketing activities that will be required to help them achieve their proof-of-concept”, which will allow them to better attract additional venture capital down the road. This means many startups run out of money soon after launch, with no interested investors, because they did not properly plan far enough ahead, stalling out before they reasonably had a fighting chance.

The root of the problem really comes down to better education of entrepreneurs. An education that should emphasize: (i) not launching a startup unless you have raised enough capital for both your product development and the required proof of concept period; (ii) having a clear understanding that proof-of-concept typically includes demonstrating to investors: (a) rapid user growth to prove demand for the product, and (b) proven customer acquisition metrics from previously tested sales and marketing channels; and (iii) knowing the best, most cost-effective sales and marketing tactics with which to start with to stretch their limited budgets.

Read the rest of this post in Forbes, which I guest authored this week.

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