We understand that 90% of startups fail, with failure most common in years two to five. Startups are inherently risky ventures, and we wanted to explore how startup founders perceive these risks.
In a recent poll, we asked business owners what keeps them awake at night and what they are doing to mitigate risks and stay on track with their plans for the year.
The results are in. Tied for first place are fundraising and execution risks, with talent risks coming in third. Let’s delve into what each of these risks entails and what founders need to be mindful of.
Not surprisingly, fundraising risks ranked high on the list. Fundraising is a significant part of a CEO or founder’s job, essential for keeping the business operational. Running out of funds can bring operations to a standstill, posing a massive risk to the company.
Successfully fundraising involves anticipating the time it takes to secure funding and mastering the art of pitching to investors. It’s a time-consuming and mentally draining process that requires resilience and adaptability.
As startups progress through different stages, from pre-seed to series A and beyond, the types of investors change, each with different expectations and demands. Founders must demonstrate value and show potential investors that they are worth investing in. This ties directly into execution, which was voted alongside fundraising as a top risk.
Execution is crucial for a startup’s success, encompassing various strategies like product, people, fundraising, and customer service. External factors, like COVID-19, can disrupt execution, underscoring the need for agility and quick thinking.
Talent risks, ranked third, are closely tied to execution. Without the right talent, a startup cannot effectively execute its strategy. Attracting talent can be challenging, and poor recruitment decisions can have costly consequences.
While mental health risks were not explicitly addressed in the poll, it’s important for founders to prioritize their well-being and seek support when needed. Building a strong support network can help founders navigate the challenges of leading a startup.
At Anapi, we aim to help founders transfer some risks to insurers, allowing them to focus on building their businesses. We collaborate with insurers to offer innovative insurance products tailored for startups.
Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas to earn a byline by submitting a post. Join our e27 Telegram group, FB community, or like the e27 Facebook page. This article was originally published on February 17, 2021.
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