Why Too Many Startups Run Out of Money Too Fast
November 19, 2013
Over the last five years, my firm Red Rocket Ventures has consulted or mentored more than 500 startups — nearly all of them suffering from the same problem. They are typically so focused on building their product, they don’t raise enough capital to cover essential sales and marketing activities that will allow them to better attract additional venture capital down the road. As a result, many startups run out of money soon after launch, stalling out before they reasonably had a fighting chance.
The root of the problem really comes down to better education. Entrepreneurs need to learn early on that you can’t launch a startup unless you have raised enough capital for both your product development and your initial sales and marketing activities. They must learn the essentials that all investors look for: rapid user growth, proven customer acquisition metrics from previously tested sales and marketing channels and knowing the best, most cost-effective sales and marketing tactics to stretch their limited budgets.
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