Most startups fail in the first couple of years. Many reasons contribute to the failure. One reason for this is being too optimistic. Angel investors do not invest lots of money in startups but may guide the founders how to refine their business plans and set realistic targets. Once the startups grow to be ready for pre-series A or series A fundraising, many founders become confident of success. At this juncture, they may:
- move office to a much larger size with recreational facilities such as gym room, billiard / tennis tables etc.
- scale up to different locations / jurisdictions
- build up a bigger workforce without building up the team which usually results in wrong persons being recruited who won’t work together; OR, too many people doing the same work
- employees can work flexi-hours or from home without proper internal control and surveillance
- the founders are not capable of managing the larger workforce and offices
- the financial figures i.e. revenue do not match up to the expenses which will create a cash-flow problem further down the line.
Therefore, take a small step each time and make sure that everything is under control.