With the first round of funding, there should be agreed-upon milestones to be achieved.\u00a0 If ![\"\"](\"https:\/\/berkonomics.com\/wp-content\/uploads\/2019\/01\/Lessons-learned-300x180.jpg\")
they are not achieved within the expected time, the reasons must be analyzed by you and by your board and acted upon to avoid loss of capital beyond plan or expectation.<\/p>\n
If you discover and become convinced that your vision is flawed, or the product impossible to create within cost and time expectations, or the demand impossible to quantify, or revenues never close to plan, then it would certainly be time to rethink the plan and product.<\/p>\n
Could you pivot to save the company?<\/strong><\/p>\n Could you and your team pivot if given the time and runway to do that? \u00a0Would that restart the clock, putting even more pressure upon you to perform? \u00a0Your investors know that an excellent management team is perhaps the greatest asset for any company – because it is just this team that has historically been able to make a drastic alteration of the plan, ultimately making a failing vision into a wildly successful one.<\/p>\n [Email readers, continue here…]\u00a0<\/em><\/span> But if neither great management nor your vision for the product shows real signs of success in the market, then it may surely be time to listen to the investors and perhaps the board. Fail fast! Reduce further expenditures of remaining capital and protect the assets purchased with the original investment.<\/p>\n A personal story of failing fast<\/strong><\/p>\n Is it the end of your entrepreneurial world to fail quickly?<\/strong><\/p>\n Half of all professionally managed venture capital or angel investments fail.\u00a0 There should be no shame to the entrepreneur in admitting such a failure.\u00a0 Some angel and VC investors will give special credit to those entrepreneurs who have experienced failures when investing in their next effort.\u00a0 The lessons learned are difficult to teach and are great assets in the next effort.<\/p>\n There is little shame and quite a reputation boost in acknowledging a failing plan and \u201cfailing fast.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" Here\u2019s a question that should strike close to home. Professional investors like to quote this mantra to anyone who will listen. \u00a0\u201cFail fast,\u201d they say. But what if you believe so strongly in your budding enterprise that this seems to … Continue reading ![\"\"](\"https:\/\/berkonomics.com\/wp-content\/uploads\/2015\/09\/success-failure.png\")
My favorite story of a fast failure was of a technology incubator started in the year 2000 with optimistic money from several angel investors, including me.\u00a0 Within a month after the tech crash, the founder of the incubator decided that it made no sense to incubate companies that were not likely to receive new investments soon following incubation in the winter-of-cash that followed the tech crash.\u00a0 He volunteered to close the incubator and he returned 96% of our investments to all of us angel investors.\u00a0 (That return proved to be the best investment return any of us saw in the several years that followed.)<\/p>\n