Why New business startups fail?
For decades large companies have gone shopping in Silicon Valley for startups. Lately, the pressure of continuous disruption has forced them to step up the pace.
More often than not the results of these acquisitions are disappointing.
What can companies learn from others' failed efforts to integrate startups into large companies? There are two types of integration strategies, and they depend on where the startup is in its lifecycle.
The Innovation Portfolio
Most large companies manage three types of innovation: process innovation (making existing products incrementally better), continuous innovation (building on the strength of the company's current business model but creating new elements), and disruptive innovation (creating products or services that did not exist before.)
Companies manage these three types of innovation with an innovation portfoliothey build innovation internally, they buy it or they partner with resources outside their company.
Five types of innovation to buy
If they decide to buy, large companies can:
- License/acquire intellectual property
- Acquire startups for their teams (and discard the product)
- Buy out another company's product line for the product
- Acquire a company for the product and its installed base of users
- Buy out an entire company for its revenue and profits.
Silicon Valley: a corporate innovation candy store
Corporate business development and strategic partner executives are flocking to Silicon Valley to find these five types of innovation. In response, venture capital firms-like Sequoia and Andreessen/Horowitz-are hiring new partners just to work with their portfolio companies and match them to corporations. They are actively organizing annual and quarterly activities to bring their portfolio companies and Fortune 500 decision makers together-both large events and one-on-one visits. The goal is to get a corporate investment or an outright acquisition of their startups.
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Q&A
Why new business fail in the early stages?
4 out of 5 new businesses fail the first year for several reasons first they started to big and borrowed too much money on a hope it will succeed. Next they started a business that they did not have a passion for, just something they thought might be a good idea. I have owned and operated my own companies for 35 years, starting at the age of 17 and became a self made millionaire by the age of 25. Both companies I had a passion for, started small and did not let anything stop me from succeeding. I retired at the age of 50 due to a motor-cross accident one of my sons was in that left him…
