2. The Challenge of New-
Venture Start-Ups
• Starting Phase – legal entity, team,
financial support, facilities and equipment
and need to devote full time
• Survival Phase – managerial factors, risk of
new products or services, narrow markets
and scarce resources
• Growth Phase – cash management, personnel
etc.
3. Pitfalls in Selecting New
Ventures
• Lack of objective evaluation
• No real insight into the
market
• Inadequate understanding
of technical requirements
• Poor financial
understanding
• Lack of venture uniqueness
• Ignorance of legal issues
4. Critical Factors for New-
Venture Development
• Uniqueness
• Investment
• Growth of sales
• Product / Service
availability E.g. Tata Trucks
migration to Euro II
• Customer availability E.g. HD
tele/channels
5. Why New Ventures
Fail
Product / Market Problems
1.Poor timing
2.Product design problems
3.Inappropriate distribution
strategy
4.Unclear business definition
(what is the exact business)
5.Over reliance on one
customer
6. Why New Ventures
Fail
Financial Problems
1.Initial undercapitalization
2.Assuming debt too early
3.Venture capital
relationship problems
7. Why New Ventures
Fail
Management Problems
1.Nepotism in hiring
2.Focusing on promoters
weakness than strength
3.Incompetent support
professionals
4.Inflated owner ego
5.Deception
6.Verbal agreements
