Perhaps the biggest challenge to startups today is securing funding. Funding for hiring, funding for office space, etc… Whatever it may be, new companies are always looking for cash to get the ball rolling. So if you score big in funding, you’re a guaranteed success, right?
Wrong. Hey all, it’s Adam Kidan again, and this time commenting on a really interesting article I just read on entrepreneur.com, about a company called Better Place. The mission of Better Place, the article tells us, was to make electric cars both more affordable and more accessible worldwide. How did they plan to do this? By creating a network of battery stations around the world, where cars could swap out their used up batteries for more power.
Sounds like a great idea, right? Investors thought so to0. VC firms pounced on the idea, including investors like Morgan Stanley and General Electric. In total, Better Place raised $836 million in initial funds upon their founding in 2007.
Fast-forward six years to May of 2013. Better Place has now been forced to shut down its operations. That’s right; a firm with over $800 million in its pocket is no longer in operation, according to the article. Here’s a few reasons entrepreneur.com offers as to why, and some suggestions on how new entrepreneurs can learn from this mess.
First, make sure you’re immersed in your target market segment. Distance can be tough on any business relationship… Especially when that distance is halfway around the world, as was the case with Better Place. According to the article, Better Place was hoping to open these battery stations in Denmark, Australia, and Israel. But Better Place’s headquarters were in Palo Alto, California. Without an understanding of the area and culture of their target market, Better Place was unable to effectively implement their business plan.
Next, you want to make sure to build from the ground up, entrepreneur.com says. Start small, and prove yourself by climbing a ladder of minor successes. Better Place was of the mindset that their plan would attract millions of customers. Had they operated on a smaller scale, however, they perhaps could have identified flaws in their service at a much lower cost, made adjustments, and continued to grow.
Lastly, the article advises not to lean back on past accomplishments. Unlike Better Place, be sure to ground yourself in current data, current problems, and current solutions. Past strategies may have worked in the past, but it’s important to re-evaluate and take things one situation at a time.
Don’t be scared though, entrepreneurs. You can still have great success. Take the advice mentioned in the article, do your research, and make sure you learn from the mistakes of companies like Better Place.