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Serial Failure Doesn’t Kill VC Funding Ability- or Does it?

If there is any one industry where people are rewarded with second, third or even fourth chances, it would have to be the tech startup industry. This is one vast industry with all sorts of companies and different stages of development involving a large army of people. Many are dreamers, many would be better off as poets, others are hard workers and others are just in it for the money. Be that as it may, the startup space is very forgiving when it comes to serial failure.

How would you react when somebody would come up to you and tell you that “My past five companies have all failed but I think my sixth company is going to be the one, I need ten million dollars.” If you are in that vast area we call the “real world”, you’d laugh at the guy because the name of the game is track record. Do you have a track record of success? Are these companies always failing? Does it have something to do with the business model or does it have something to do with you? Even if it does have something to do with the business model, does it still reflect badly on you because you chose the bad business model? This would be the line of thinking in the real world but this is the adventure capital startup market we’re talking about and it is not uncommon to see people raising tons of money even though their past five, six or seven companies have all gone belly up.

What gives? Well, the VC industry and funding ability base on different rules. It’s more about how hot the idea is and whether the founders have the means and the vision as well as the experience to pull something together. It is not a question of whether you run a successful business in the past but whether your idea has legs. This is the saving grace of the startup industry. You would have many companies and many of them are just business plans that are trying to get funding and this is precisely why the VC industry is so exciting. It’s all about ideas, momentum and a lot of it is also marketed. Does the serial failure kill VC funding ability? Not necessarily. It all depends on other factors and a lot of those factors depend on the idea that the founders bring to the table.