[Editorial Notes : At a recently organized NextBigWhat meetup with Scott Cook (Intuit founder), Scott talked about one important aspect that most startup founders ignore – i.e. of finding a right coach. Read on this great piece by Vasudevan T, founder and CEO at Coatom]
Among the 560,000+ startups listed on CrunchBase by Q2, 2014, only 58,000+ have received at least a seed / angel investment. This means merely 12% of startups are at least making a headway towards it’s vision. Among this, 32% are seed funded with an average investment of $300,000 – $350,000. Let’s leave these budding stars aside, I would like to talk about the 48% of the venture / PE funded startups today.
How many of them are going to get an exit for their investors? Experts say, 1-2% is the typical exit % from startup investments, but that itself will cover the overall investment made across all stages of investments. Hence we see startups are still getting funded.
How about a scenario where investors are able to improve this 1-2% success rate to a better one, say 3-4%? We are suddenly talking about an return of over 200% more from what’s expected today. Easier said than done, but I guess no harm in attempting it, right? Investment is already made and hence we are not talking about a higher risk. What probably need is a bit more care on their investee companies’ leadership team.
The funded companies who fail can’t be because of not finding a product-market fit. They raised capital after proving that. Mostly it’s because of two reasons:
- Could not scale up business to find an exit route
- Did not innovate to stay ahead of competition and also retain customers
Both look as different challenges, but in my opinion, the root cause is the same. Lack of proper leadership. The failure should be attributed to the inability of the leadership team in all these startups. But that looks slightly contradictory as most of these startup teams were able to raise multiple rounds of investments, so they must be good leaders. I would say yes, but every leader reaches a stage where his/her charge gets drained out completely and did not find a way to recharge. They perform a valiant fight in the end, but eventually die down in the drain.
Now this story has reached a stage where I now need to suggest a way out. Honestly, if I propose, you think I’m making this up. But if few among those who read this so far who would like to listen, the rest of the article is for them. So quit reading if you think I’m biased or going to get biased.
I have a proposal.
No guarantee that this will work for all of them. But we have evidence that the solution that I amm proposing has shown wonders to many successful, once startup, founders like Larry Page, Marc Zuckerberg, Jack Dorsey – even Jeff Bezos. What’s common among them is that they all had a coach. World champions from various spheres around the world use a coach, somebody who can give them perspective, challenge and motivate them and help them unleash untapped potential in a creative and thought provoking manner. Undoubtedly, coaching has worked well for these world leaders.
A coach can be the one who recharges a startup founder by making him/her to ask the right questions at the right time – now what, why, and how?
Just think. Why did these most celebrated & successful founding CEOs hire a coach?
[About the author: In his 15 years of professional career, Vasudevan spent last 2 years in a leadership role driving product & marketing strategy for a fastest growing online education startup based in Bangalore. Prior to that, he was leading digital marketing for Myntra – India’s largest online fashion portal.]