The most common and interesting question for entrepreneurs today (after ‘how to get an investment’) is ‘why Startups fail’ and how do they avoid falling to the painful and cruel statistics of startups graveyard. In 2014, a fascinating analysis was conducted at CBinsights, tech market intelligence platform that analyzes data for venture capital usage, during which 204 former startups founders were asked to describe the reasons for their failure. The participants attributed an average of 45% of the reasons for their startup failure to the team element (“Not the right team”, “disharmony in the team”, “lack of passion”). The statistics is indeed surprising, but this is not a mistake; The common reason for any startup failure is not necessarily lack of validation or being ahead of the market, as we like to call it, but proper neglection of the human capital – The feverish minds with whom we work every day, for long hours and with great intensity to make our dream possible. As part of the bloody pursuit towards product development, marketing, capital funding, dealing with bureaucracies and competitors – most venture teams simply forget about their most important asset.
It is pretty ironic that if you ask the most influential investors in Israel how they choose their investments, they will claim religiously that the team element is the most important factor and has a dominant element in the decision making process. Gigi Levy-Weiss, the most active and connected Israeli angel, admitted in his lecture a few years ago that a good idea is not hardly enough to make him open his pocket and invest in a venture. According to him, 70% of his decision whether to invest in a team is influenced by the team’s identity: “An excellent idea with a mediocre team would interest me far less than a good team with a mediocre idea”. READ MORE