Why Some Startups Fly And Others Fail

February 8, 2018
Photo: Leap (Flickr/CC)(Via Sabrina's Stash/CC/Flickr)

David Cohen has invested in more than a thousand companies that have generated billions of dollars in profits. He’s waded through heaps of pitches to find the rare few ones that'll actually make it, like Uber. Cohen, who lives in Boulder, is also known for founding the startup accelerator Techstars. As part of our coverage of entrepreneurship in the state, he talks with Colorado Matters about how to pick a winner, and why some startups fail, even when they seem to have everything going for them.

There are 35 investors on Cohen’s team, working regionally out of New York, London and other cities. They look for six criteria, and the first three are “team, team, team.” Do they have an insight no one else has? Do they have an advantage no one else has? What’s their motivation? After that, there’s market -- is it big, small, changing, dying? Progress is next -- is there any? Ideas have to be acted on. Finally, there’s the idea -- is it truly creative?

Cohen says that if a startup fails, maybe it’s because it had toxic people on the team, or the leader didn’t hire the right person into a critical, big position, or they’re a control freak, or there’s fighting among co-founders. Another possible reason for failure: teams and leaders that are too focused on what they believe, and not what the market wants.