Money Alone Doesn’t Guarantee Success: Why Most Venture-Backed Companies Fail
May 1, 2013 | by Faisal Hoque
In a recent Wall Street Journal article, Harvard Business School senior lecturer Shikhar Ghosh shared that the prevalence of failure in the world of venture capital is much higher than what’s reported.
Ghosh’s research indicates that as many as 75 percent of venture-backed companies never return cash to investors, with 30 to 40 percent of those liquidating assets where investors lose all of their money. His findings are based on research of more than 2,000 venture-backed companies that raised at least $1 million from 2004 to 2010.
Unfortunately, I’m no stranger to those statistics. In the late ’90s, I founded EC Cubed, a B2B e-commerce software platform company. Like many other founders, the proverbial door hit me on the you-know-what at the hands of the VCs who invested $50 million to rapidly grow the company. While that was extremely difficult, what was even more painful was watching the company collapse soon after my departure, despite the capital infusion. Read the full article @HuffPost.
