Reasons to Start or Not to Start a Venture
“I´m convinced that about half of what separates successful entrepreneurs from the non-successful ones is pure perseverance” — Steve Jobs
Undoubtedly there are extremely successful entrepreneurs who appear to have a natural gift for building companies, usually these entrepreneurs become serial entrepreneurs with a long track record of successful companies and failures. Such is the case of Sir Richard Branson who began his entrepreneurial career at age 16 when he started his first business. He is currently the founder of the Virgin Group which controls more than 400 companies in different industries.
However, not everything is is shiny, successful serial entrepreneurs often fail. In 1994 Richard Branson launched Virgin Cola, competing directly with the two major beverage brands, Coca-Cola and Pepsi. In fact, these companies used defensive strategies by forcing certain businesses not to sell Virgin Cola. Distribution problems coupled with brand positioning led to the failure of this venture. Nonetheless, Richard Branson’s tenacity and entrepreneurial nature has led him to continue his entrepreneurial path and learn from his failures.
Having a successful high-impact venture is extremely complicated. It requires a solid, experienced team with business networks; to explore an opportunity in a new or neglected market but potentially fast-growing; and to be surrounded by a positive context that helps the development of the startup. The most important thing is to have an entrepreneurial attitude ready to face challenges and adversities, know how to learn and rise from failures and have a disciplined and tenacious character.
Therefore, entrepreneurship is not for everyone.
There are several reasons why entrepreneurs find it attractive to start a new business. Usually facing new challenges is one of the main motivators for entrepreneurs to carry out a project. This challenge begins with the identification of a problem and the construction of a solution. Also, the challenge involves getting out of a comfort zone and not having a parachute in case of failure. Similarly, building something yourself can be more satisfying and self-fulfilling than most jobs can give you.
To the extent that the startup has traction and is successful, the entrepreneur is not only solving a problem, but she is also building a legacy that generates value and will impact future generations. Imagine what today’s world would be like without the existence of Apple, Microsoft and Google. On the other hand, the economic motivator can also be an important reason to start a business. It must be understood that it is not necessary to build a unicorn to benefit financially from starting a business, if an entrepreneur builds a company that reaches a valuation of USD$100mm and has 10% ownership in the company at the time of exit, she will probably have a greater wealth than what anyone could generate in a traditional job. Take as an example, Mark Zuckerberg, he came from a well established family, but today is one of the richiest men in the world.
However, there are also reasons why not to undertake the challenge to build a startup. Perhaps the main reason is the risk involved in running a startup. It is living under uncertainty without having any idea about the result of the project. The emotional load is usually not manageable by everyone since entrepreneurship is a rise and fall of emotions, successes, and failures. Likewise, due to how demanding the task is, not all people bear the stress of this activity.
Building and developing a startup involves forming a team, developing the product, marketing and customer acquisition, operating and raising capital, among other activities. The entrepreneur works much more than he would work in a corporate company, especially in the initial stages of the startup. For this reason, many first-time entrepreneurs fail, as they are unwilling to sacrifice weekends, days off, and time with family and friends for the sake of their startup. Sometimes people have already established family, or financial and professional commitments, which is why they cannot carry out a new venture.
By developing an enterprise, you can invest 1, 2 or more years of your life and you will probably fail. This entails an opportunity cost. Instead of starting a startup you could continue your professional development in a company climbing the hierarchy, receiving a competitive salary and bonus and with having a greater certainty about the future.
The cultural factor is another element to consider when launching an startup. For example, the Israeli culture has an entrepreneurial attitude in its genes, taking risks and developing technologies to solve global problems. The culture is very different in other geographies such as Europe where people can have a very comfortable life without having to do much or taking many risks, or in emerging countries where the need for survival is more important than any undertaking.
Entrepreneurship is not a decision to be taken lightly. It is important to remember that 95% of startups fail and that only entrepreneurs with the greatest commitment and character in the face of adversity are those who manage to take home the prize. Also, a little luck never hurt anyone.
“I suppose the secret to bouncing back is not only to be unafraid of failures but to use them as motivational and learning tools. … There’s nothing wrong with making mistakes as long as you don’t make the same ones over and over again. “ - Richard Branson
Hector Shibata. Director of Investments & Portfolio at ACV a global Corporate Venture Capital (CVC) fund and Adjunct Professor for Entrepreneurial Finance.
Ricardo Latournerie. VC Investor at ACV.
ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.
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