Day 2: Why Do Startups Fail & What is Money’s Role?

Marija Butkovic | @MarijaButkovic

As a startup founder myself, I arrived at the Day 2 of FashTech London Summit fully prepared with a set of questions for some of the panelists and the panel discussion on Investments and Funding was a great place to start.

On the panel was Ifty Nasir, CEO at VESTD and Gregg Stewart, co-founder of Fashion Fund who discussed why do startups fail and what’s the money role in it? On this Nasir mentioned how every year we see more and more startups, emerging, but almost the same amount fails due to lack of money and skills. Sharing his experiences on equity crowdfunding, Gregg Stewart shared that they have a very US centric perspective when investing in startups. Meaning they look for not so early stage startups that already generated at least $1 million. Startups should ultimately have a decent amount of traction when they start their campaigns. And although equity crowdfunding has become very popular over the last couple of years, we are still witnessing a lack of trust from startups to this type of fundraising and also a problem with the proper creation of companies from platforms and investors themselves.

Gregg Stewart co-founder of Fashion Fund
Gregg Stewart co-founder of Fashion Fund

Personally, I’m not a big fan of crowdfunding, except maybe in the very early stages when a company still needs to validate their product. The thing is, if you already have a product market fit and you have figured out the most important stuff of how and whom to sell your product too, then why would you spend a couple of months preparing a campaign, engaging with customers and investors to potentially end up not raising enough money? Don’t get me wrong, crowdfunding campaigns (if done properly) have the power to bring you a decent amount of PR, new customers all the while raising brand awareness for your product, but do you really need dozens, or even hundreds of investors as part of your company? How much value can these investors actually bring you? Not to mention that it is a pure nightmare to exit a company with that many of the investors (first hand information).

ALSO READ: Fashion Tech Crowdfunding That Should Have Suceeded

On the other hand, I quite like the US centric perspective of investing that was mentioned by Gregg Stewart. I think US investors have got that right because I heard this from many startups that raised money both in the US and Europe, that US investors always try to see the bigger picture by imagining how your company might look in ten years. While European investors only see the here and now and they can be very cautious when it comes to investing at the early stage of startup companies, not to mention hardware and it owns. I have personally been there, done that, and I think this should be food for thought, particularly for UK investors.

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As I listened to the two-man panel, I did feel that it was quite a shame that the discussion did not include anyone who has first hand experience. A startup founder added to the mix would have been a good idea, because fundraising is hard and finding the right investors for your startup is even harder. It is a process that sometimes takes up to one year, yes you heard me correctly one year many sleepless nights. So on that note, maybe this is something that #FashTech London will consider for their next summit, because it is always necessary to also take a look at this topic from the angle of a startup founder, because they are as equally important in this equation as the investors themselves.

Missed Day 1 of FashTech London Summit? Catch up HERE.

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