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Mathew Moog is the chief executive of PowerReviews, a leading provider of customer review technology to more than 1,000 brands and retailers in the United States of America.
An active angel investor, Moog is a co-founder of FireStarter Fund, an early stage investment fund focused on helping technology companies grow. Since 2012 when this firm came on board, it has invested in 12 firms. He is also the founder of Built In Chicago, a network of online communities for tech companies and start-ups in the Midwestern United States’ city. Moog is aware that start-up failure rate is on the rise across the world.
A recent study by Statistic Brain showed that the failure rate of all U.S. companies after five years was over 50 percent, and over 70 percent after 10 years. In Nigeria and many African countries, two out of three start-ups die within the first three years of starting.
In the light of such high failure rate, Moog suggested a model that would work for entrepreneurs across board.
For him, entrepreneurs must not be afraid of being small until they were confident they could be big.
He said start-ups often made the mistake of concentrating on raising money and spending it, rather than getting customers and retaining them.
“Businesses just start before raising money,” he said, during the Foreign Press Centers Global Reporting Tour in the U.S. on Thursday.
He said entrepreneurs must master their revenue and cost structures
He frowned at entrepreneurs that set up companies with the intention of selling them after few years, stressing that it was a bad business model.
“Build a business to make money, not to sell it,” he said.
“I have seen where people spent five years building businesses and sold them without making a dime,” he added.
He explained that entrepreneurs needed not scale when they had no product that would provide solutions.
“The very first step that we try to tell start-ups is that they should not scale until they have the product the market wants,” he said.
“Develop the most basic product first. This is what is called ‘minimum viable product’. Develop such products and see if you are solving a problem,” he suggested.
He said every industry needed technology to succeed in the 21st century.
He, however, cautioned that most celebrated businesses across the world had been in existence for about 10 years before being in the public eye.
For him, investors all over the world were looking for start-ups with integrity and strong ethics, including those with good, marketable ideas.
“I want to see someone who is passionate and has done their homework,” he said.
ODINAKA ANUDU, Chicago