Mittwoch, 13. März 2013

The Dark Side of Crowdfunding, Part 1

Lessons from Failure: Renting Hig-end Juwelry

by Diana Kander

At age 25, Laura Sanko was a founding member of a startup that raised $3.5 Million from some world-famous investors and the Founder’s Fund.  The business model was simple: a website that rented high-end jewelry for special occasions for a fraction of the retail value of each piece.  Three years later, the investment money was all gone and while the site continued to operate, it had failed to meet the investors’ expectations.  I sat down with Laura to figure out what went wrong.

Laura’s experience is not uncommon.  Many startups raise money before they’ve had an opportunity to test their assumptions. As a result, they spend the money validating their ideas instead of using it to execute a sound business model.  Startups are all about runway.  Almost all startup failures are the result of founders running out of resources to keep pursuing their ideas. The more runway you can give your startup, the greater your chances of success. Laura’s experience could have been a lot different if she and her team just had an extra year of capital or – more specifically – if they had tested some of their assumptions before spending their investors’ money.

For the last two years, Laura has been training as a mixed martial artist full time.  Today, she has an amateur record of 4-1 and is three months away from her first professional fight.  She is also launching a new company, Grassy Pants, a locally raised, grass fed, ground steak company.

Copyright: 2013