eFiles: October 29, 2001

By eweek  |  Posted 2001-10-29

Why Startups Fail: Bad Chemistry?

If, like many IT professionals, you decided over the last year to jump to an Internet startup only to see it falter or fail, youre probably wondering what the heck went wrong. A Collegeville, Pa., management consulting company, T. Williams Consulting, said it has the answer: Maybe the management team at your startup didnt have the right personalities. The company, in cooperation with the University of Pennsylvanias Behavioral Health department, has launched a service to assess and analyze the personality traits of startup team members as well as team interaction patterns.

The service helps determine if the startup team will be able to work together under constant stress and adapt quickly to changes.

Venture Capitalists Feeling the Strain

Investors in venture capital funds may want to consider having their heads examined for putting their money into IT startups in the first place. Over the last year, ending in the second quarter, the average of all venture investments declined 18.2 percent, according to a report from the National Venture Capital Association, in Arlington, Va., and Venture Economics, in New York, a unit of Thomson Corp., of Toronto. Communications and Internet-specific startup investments were the biggest losers, according to the report.

Big factors in the VC losses, according to the report, were overinvestment in parts of the market and the drying up of the initial public stock offerings that reduced VC investment liquidity.

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