Basics of the start-up business

Sixty per cent of start-ups fail within four years. David Feinleib, a partner at the venture capital firm Mohr Davidow Ventures, says most fail for one of four basic reasons.

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Unnecessary Spending A common mistake is to plough money into sales and marketing, selling the concept to a market that has yet to start paying for it. This can be an especially tempting mistake after an injection of venture capital or investment dollars, which can temporarily mask the lack of cash flow.

Slow execution In rapidly evolving industries such as technology and the internet, start-ups are vulnerable to suffer what Mr Feinleib calls "analysis paralysis", spending too much time thinking about how to deliver their idea. By the time they have figured it out, the moment has passed. Leadership Mr Feinleib believes plenty of start-ups lack a true Entrepreneur (with an emphasis on the capital "E"), meaning a visionary who can turn complex ideas into products and who can sell their ideas to new employees, investors and partners.

Ahead of its time Sometimes, a great idea can happen before a market exists that is willing to pay for it. Entrepreneurs can burn through cash and energy building a business and then waiting for the demand to materialise. The waiting game can be a deadly one.