News stories are plentiful and the market is always reporting on start up organizations that receive plentiful funding from venture capital and or private equity investors. In the government sector, financing comes in the form of a new program, requiring a tax source, bond issuance,or tax for revenue regardless of the impact to the population or increased debt considerations. As for non profits, seed money and revenue come from philanthropic donor sources, individuals, businesses, and organizations that support favored causes.
Where does failure come into play? Think about it. If a venture capital or private equity firm invests in a new organization, risks are naturally high due to realities related to earlier statements. Organization A has a new bookkeeping application that they claim will be revolutionary. They claim they are using AI and other trendy or sophisticated words that most people do not understand but are intrigued by. Their target audience is usually limited by the specific nature of what their application is designed to achieve as well as the specific business use or use cases it is designed to serve.
An encyclopedia set can be written about these statements however, the result is organizational failure and capital flushed down the tubes all too frequently. Those funding these failed ventures calculate through financial analysis models that if one of a variety investments is successful, the profit from the successful organization will nullify the many failed ones. Failure results from multiple causations.
First, the organization does not have a complete, working application or system that they state will perform its stated task. Large amounts of capital are sought to realize the vision of what is being touted. Noble, innovative and long-term considerations, conceived and developed by the founders, are displaced with short-sighted considerations designed to achieve return strategies as quickly as possible. Inviting short cuts and narrow decision making activites. Desperation or the perceived need for capital is a causation for the founders. The genesis sources (founders) possessing vision and development of that vision push them through either need or belief that capital is required. They trade control and direction of their vision for capital. Think about it.
