Reasons Why Some Companies Fail After Getting Venture Capital Funding

For expansion-stage or growing start-up companies, getting venture capital funding should be cause for celebration. High five should ensue, and every stakeholder should be happy because of venture capital scale and drive future growth. Unfortunately, many start-ups fail after raising venture capital. Today we will look at three reasons why such start-ups fail.
Company product only appeal to early adopters
Many company products aren’t a must-have in the long-run. A lot of trendy software start-ups make good products appeal to early adopters. They are only good enough in the first few days. If customers can live without your product, there is no point of trying to grow bigger using outside capital.
Unsustainable business model
It is not unusual for unprofitable businesses to get significant capital funding that allows them to run unprofitably for a long period. Although unprofitability may not be necessarily an issue in the early growth or start-up companies, lacking profitable economic model is a big problem. If you sell more of unprofitable products, you’ll be more unprofitable.
Management team is inept
Bad management can cause a business to fail. If you have not assembled a competent senior management team for your company, then the business is doomed. No amount of capital venture funding can rectify the failings of a senior management team.
References
https://scalefinance.com/scale-fail-5-reasons-companies-fail-after-raising-venture-capital/
https://s3-us-west-2.amazonaws.com/cbi-content/research-reports/The-20-Reasons-Startups-Fail.pdf

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