In the United States, 25 percent of startups fail in the first year, and 75 percent of venture-backed start-ups fail at some point. Those are startling percentages, and ones that can be alarming and disheartening for both aspiring entrepreneurs and those who invest in startups. However, there is an opportunity to lower that statistic while simultaneously fostering an environment that ensures entrepreneurs are prepared to succeed from day one – regardless of where they are located: in the plains of the heartland or in Silicon Valley.
As a co-founder of an early-stage venture capital firm, Unshackled Ventures, I see pitches daily from bright minds wishing to change the world. While it is inspiring to know there are people trying to solve real-world problems with innovative technology, that does not always correlate to a successful business venture, particularly in the high-stakes venture capital and startup world. We see founders who have the appropriate academic or trade backgrounds to solve the problem which inspires the startup. However, they do not necessarily have the right business experience, networks or access, which increases the likelihood that the startup will be one of the 25 percent that fails in its first year.
Right now, successful first-time entrepreneurs are hard to find. Most often, someone may have a good idea and energy to execute, but that person may not be ready immediately for the startup world. If we look at the world of sports and professional athletes, the greats, from Steph Curry to Venus Williams to Tom Brady, are naturally gifted. But these athletes have been trained and coached to develop their potential from an early age. Entrepreneurs, on the other hand, are usually given no developmental help or coaching during critical times. We would never put a JV football player into the Super Bowl and expect a winning touchdown. We should not expect the same of our entrepreneurs.
This lack of developmental support for entrepreneurs rings even truer for those in areas of the country more disconnected from the VC and startup world. Aspiring entrepreneurs who are not in Silicon Valley or do not have access to the resources of big cities like New York City or Chicago are at an instant disadvantage. Without the right resources, mentorship and education, investors cannot expect these aspiring founders to be prepared to propel their businesses to success from the beginning. However, more times than not, that is the expectation — and a primary reason why so many startups fail and so little capital flows to all types of business. That failure cannot rest solely on the individual entrepreneur.
Fortunately, organizations are beginning to recognize the importance of connecting the disconnected, and arming entrepreneurs across the country with the tools to succeed. For example, the Kauffman Foundation, based out of Kansas City, Missouri works with entrepreneurs across the country to help empower them and break down the barriers to starting a successful business. The Foundation awards grants to help level the playing field for entrepreneurs who are disconnected from the startup world, whether it’s due to demographics, geography or socioeconomic factors.
After attending Kauffman Foundation’s first ever ESHIP Summit with 400+ business leaders, I left feeling hopeful that more organizations, schools and universities across the U.S. will replicate the Foundation’s program. Building a developmental system for young entrepreneurs will have a significant effect in the long-term, but a shift of this magnitude will take time, and those of us who live in the startup world cannot sit back and wait.
The Kauffman Foundation’s “zero barriers” idea is one that everyone involved in startups should heed — from investors to successful founders in small, medium and large businesses. It is important that we provide a support system to prepare entrepreneurs with an idea and the courage to jump into the startup world. We must bridge the gap through mentoring and talent coaching. Imagine, if we all offered up just one day a month to share experience and knowledge with young innovators, think of how much more prepared our next wave of entrepreneurs could be resulting in more capital supporting all types of businesses. It is incumbent upon all of us in this industry to make a change.
As we pursue change, Unshackled Ventures will continue to focus on building our development league for immigrant entrepreneurs, who like many American dreamers are long on ambition and short on things to lose. A product that meets an entrepreneur’s aspiration with the inspiration of a strong ecosystem has the potential for big upside. Perhaps through this, we will create more entrepreneurs who can become all-stars. This is how we will connect the disconnected. By fostering a successful entrepreneurial environment for future generations who hope to change the world with their innovative ideas capital will continue to flow and reach across our nation.
Manan Mehta is the founder of Unshackled Ventures, a VC firm that aims to help immigrant-founded startups succeed faster.