Most start-ups fail, even those carefully selected and backed with cash and mentors to have the best shot at success.
With more than half of the Startmate accelerator program start-ups failing, StartupSmart spoke to the program co-founder and serial entrepreneur Niki Scevak about why it’s rarely the idea that’s the make-or-break factor.
“Investors always say they invest in team, team, team, and that’s why it fails too,” Scevak says. “It’s never because of the idea. It’s always about the connection between the team members, and their connection to the idea and the market.”
Scevak says whether a start-up is in an accelerator program or not, it’s the refusal to give up and the ability to respond to information and rework the idea that matters.
“Successful start-ups come from those special kinds of people who just say there is no way I’m going to fail, who keep going and figure it out. Founders realise they need to change the idea, or change which customers they’re targeting with the same idea,” Scevak says.
Startmate focuses on Australian start-ups seeking to be global companies. As both the stakes and chances of failure are higher when founders chase big goals, managing the fear of failure is key to success.
“The reaction to failure, that fork in the road of ‘give up’ or ‘keep going’ is what matters most. Things will go badly before they go well, so what really matters is how well someone reacts to a bad situation. And there is just no way to test that until it happens,” Scevak says.
Scevak says teams that have genuine connections to each other are more likely to succeed. People who’ve worked together before are good, in a start-up or agency are better, and childhood friends are the best.
“People who know if they don’t make it happen, it’ll fail, are the best bets because they’ll stick together and make it work. The best ones are childhood friends. If you’ve argued your whole way through life together, you’re a pretty good bet to make a start-up last,” Scevak says.
He adds companies shouldn’t be afraid of failing.
“Failure should be put into context of what actually happens. Failure is a team giving up, some rich people losing $50,000 each, and an idea being dropped,” Scevak says. “So it’s not really a risk for you. The only risk is you spent six months of your life doing something that didn’t really work out and that’s not a big deal.”
Adding it’s likely you’ll go on to join another start-up or have access to a better job now you’ve got real proof of initiative on your resume, Scevak says aspiring start-up CEOs need to make sure they’re doing this for the right reasons.
“The most important thing to decide as a founder, because launching a start-up is brutal, is do you actually care about the problem you’re trying to solve and will you still care about your customers in five years? Are you across the small incidental details in the problem? Because if it works, it’ll be all you do,” Scevak says.