The many mistakes startup companies make

Implications: As this article accurately portrays the life of a small startup, many missteps are pointed out in the text as classic mistakes most companies make during their lifetime.  The problem is that startup companies have little room for error.

Analysis: Compared to the high-flying days before the dot-com collapse, venture capitalists these days are keenly looking for a less risky investment.  Companies with a history of revenue stream, positive cash flow, solid senior management, a track record of hiring talent, a strong balance sheet, and tight reigns on spending to name a few characteristics funding firms are attracted to.  Some pitfalls young companies could fall into include hiring high priced senior management, not having a willingness to sell a solid equity stake in the company, a reluctance by the founder to step aside to a lesser role, and of course, timing of the market.

Over the past several weeks, I've spoken to several VC firms that have approached companies about possible investments, only to find a lack of solid performance or one of the former characteristics listed above.  Company owners looking for B or C round funding need to realize potential investors' appetites have become more refined in the past decade.  These firms are well versed in growing companies and know the actions that need to be taken before a successful exit strategy can be carried out.  And hopefully the investment firms are not willing to compromise on this criteria.