Experts Claim Venture Founders Often Ignore Market Validation Requirements and Fail to Use Seed Capital to Build Valuation
LOS ANGELES--(BUSINESS WIRE)--Beginning with the lack of pre-startup customer response research, and extending to a poor use of their seed capital, two Southern California entrepreneurs have pinpointed three key reasons many new business ventures fail. As reported in their new book, “Successful Startups” (VentureCritical.com), veteran venture founders Bill Benjamin and Jason McDowall point to their own experiences with nine different ventures in setting tighter priorities for new, and more successful startups.
Reviewer DuWayne Peterson, Chairman Emeritus, Pasadena Angels, termed the new guide a must read for both the entrepreneur and the early-stage investor. He commented: “Benjamin and McDowall have written the perfect book for the current investment climate for startups. It provides a straight forward set of steps to build a solid foundation of success for the entrepreneur and the startup venture.”
Benjamin, founder of Thomson’s FIRST CALL investment analysis service, reported: “We know from first-hand experience that entrepreneurs either postpone, or neglect entirely, in-depth primary research into customer opinion about the proposed new product or service. We also know that, without this quantitative evidence of an original, innovative solution to a recognized, large-scale problem, the venture cannot write a fundable business plan.” He explained their new guide prioritizes each required step in the development of a successful business model, and then provides detailed guidelines on how to manage these sequential steps.
Co-author Jason McDowall, an executive manager in the mobile phone industry and veteran entrepreneur, continued: “Two other persistent startup problems we encounter, and report on, are the parallel use of expensive equity capital to begin product development in advance of market validation, and the failure to generate positive customer response data (proof of demand) prior to early rounds of financing.” He added: “These timing missteps often lead to lower equity valuations, and founder frustration over the issue of creditability expressed by the early investors. We advise a slower start concentrated on primary research, and the building of venture value prior to external funding if at all possible.”
The collaboration between Benjamin and McDowall is also a success story as the two authors are at opposite ends of their respective careers with some 40 years of difference in their ages. Bill Benjamin’s first venture, W.A. Benjamin, Inc., was launched in 1960 and is now a Pearson subsidiary. Some of his other ventures include FIRST CALL and INVESTEXT (now part of Thomson Reuters), EDISCIENCE (McGraw-Hill), American Database Corporation, Online Interactive, Internet Learning Corporation and Benchmark Metrics. He is also the author and editor of “The Business Research Solutions Series” (Southwest Publishing), and “The European Directory of Business Information Sources” (Harper & Row).
Two generations younger, Jason McDowall began entrepreneuring while still an undergraduate at Carnegie Mellon University, and continued through his MBA at UCLA’s Anderson School. He is the founder of both Tomo Software and Adhoc Mobile, and is an expert on mobile phone content delivery and platform development. McDowall and Benjamin co-founded Benchmark Metrics and have continued their friendship and the writing collaboration that resulted in the production of “Successful Startups,” a publication of The Benjamin Group Publishing, LLC, an affiliate of The Benjamin Group (www.VentureCritical.com).
The Benjamin Group provides business venture analysis and development services to startup entrepreneurs and venture investors via their website, www.VentureCritical.com. They also produce and publish venture guides and startup management tutorials that are delivered online. For more information please call Bill Benjamin at 805 969 5775, or Jason McDowall at 323 639 3632, or send an e-mail to benjamin5775@gmail.com or to info@VentureCritical.com.
