- Business, Leadership
Upporting new businesses:
Ninety percent of all new businesses do not succeed, according to Small Biz; indeed, research conducted by Harvard Business School shows that three-quarters of new companies financed by venture capital flounder. In light of such research, it is clear that new businesses have little chance of success; that said, year on year ever growing numbers of people are willing to support such enterprises all over the world. This move is considerable and not merely transient; the net amount of venture capital finance for investment peaked in 2017 at almost £3 million, breaking the record of the preceding year by twofold. As a result of such data, one must seek to shed light on the situation and pose the question as to whether new businesses are, in fact, a safe bet to invest in?
Why you should put money into a new business:
As the previous section demonstrates, people have been putting money into new businesses for many years now. There are many reasons for this, which help to shed light on the attraction of financing new commercial ventures. For example, people will always be enticed by the idea of making a fortune overnight and being able to say they were involved in the next global enterprise when it was just getting off the ground. Indeed, successful wealthy people also enjoy the chance of adding to their current investment portfolios and potentially being in the vanguard of commercial advancement and modernisation. In reality, putting money into a new business is akin to playing the lottery – people do it because there is an outside chance of hitting the big time.
History has shown that this can indeed sometimes work, one prime example being Zuckerberg’s Facebook, which was founded in 2004. In a relatively short space of time the company was reputedly worth more than $500 billion, having started from naught. This success story means that investors will always be attracted to the so-called ‘tech industry’.
Weighing up the pros and cons of putting money into a new business:
As with any commercial venture, there are potential hazards when contemplating investing in a new business, yet these can be offset by the tantalising thought of financial renumeration and general success. This goes some way to explaining the fact that some people sometimes are more than willing to invest at their own peril. As we have already seen, most do in fact fail; there are significant reasons for this backed up by research and analysis.
For example, Fortune found out that 23% of new ventures fail to succeed due to not having suitable team members, whilst 42% fall short due to ineffectual market research, and 29% of unsuccessful businesses simply stall due to not having enough financial backing in the first instance. Such statistics show that one must be insane to consider such an investment, yet there remain few better ways of gaining a huge monetary reward and being involved in something truly innovative.