In this article, Mr. Gao Xiang analyzes several major reasons for entrepreneurial failure，Based on the situation of the invested companies，In the team、Valuation、Business Plan、A lot of sincere suggestions were given in the four aspects of the roadshow。This article comes from Mr. Gao Xiang’s speech at the Chaos Entrepreneurship Camp’s “Innovation Leveraging Capital” forum。

Mr. Gao Xiang is the founding partner of Gaorong Capital，Focus on investment in TMT field。Before this，He works for IDG Capital，Serves as a partner and member of the investment decision-making committee。Projects invested and managed include potatoes、91 Assistant、3G Portal、Dota Legend、爱屋吉屋, etc.。

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Every time people mention the cold winter, they have very negative emotions，I think everyone doesn’t need to look at it this way。Because the entrepreneurial winter usually occurs every 3 to 5 years，It emerged with the subsidence of the capital boom。

For many startups，Economic winter is often also a source of future opportunities。The capital winter is never the reason for entrepreneurial failure。So what is the root cause of entrepreneurial failure？The team’s own flaws are the root cause of entrepreneurial failure。

Five reasons why startups get into trouble：

The first reason: giving up what you are best at，Move to something bigger or more right。

I am also surprised by this，But in the companies I invested in that were in trouble，More than half of companies make this mistake。

In 2007, I invested in a social networking site similar to Facebook，This company is very good at social games，The Southern School was basically occupied in less than half a year。About three or four months later，They come to me，Tell me the development process of Facebook in detail，Look，After Facebook experienced rapid growth，Entered a growth bottleneck for about half a year，When will the growth begin again？When they launched the Facebook open platform。So we want to become a website like Facebook，Must also build an open platform。That’s right 188bet app when I think about it，Just do it。

So the company’s main focus was on the open platform development project team。But the fact is half a year later，The open platform has not been developed yet。Opening a platform is a very difficult thing to do，Far beyond the capabilities of this team at the time，Although they want to be an open platform，Made a lot of efforts，But it is a small company after all，There are very few resources available。And at the same time，Renren uses a very simple method，Basically occupied all channels。

The case above，To put it simply, it means "beyond our capabilities"。Entrepreneurs must always ask themselves this question，What is our strongest ability？Have we made it the strongest in the industry。

When your strongest ability can still make the company develop rapidly，Never change your rhythm and strategy casually。

Only when your abilities have been maximized，When you find it difficult to grow，You should look for a new direction，Or exercise your new abilities。

The second reason: only big goals，No specific breakdown，And most of the time, this big goal cannot be achieved。

I have invested in a company before。This company sent me a 10-page annual plan one year to launch an important new product next year，It’s full of teams、Product、Market、General description related to promotion，Only the last page has numbers，It is said that the new product is planned to be launched in the second quarter，Plan to reach 5 million users throughout the year，500,000 daily users，Become China’s biggest something。

Obviously not done in the second year，But I summarized the reasons in very simple language，Due to market、Team、Funding and other reasons，As a result, this annual plan was not completed。Then we will make such improvements this year，Preparing to reach 10 million users by the end of the year，Still only one big goal，No decomposition。Third year，They no longer need to make annual plans。

This case is a very extreme case，Because this situation actually occurs in many entrepreneurial teams，It’s just different degrees。

Why should we break down a big goal?

1） 、The process of rethinking，Go through the process yourself，It is possible to find many problems。

2）、Do a good job in division of labor，Let everyone know what they have to do。Team execution with goal decomposition and team execution without goal decomposition，It’s very different。

3） 、Basis for post-event summary，Only decomposed goals have the value of summary。

The third reason: only focusing on users and not on finances.

Every entrepreneur can think about it，What is your company’s cash balance，How much do you spend every month，What is the relationship between your user growth and costs。

Every entrepreneur I see will ask him this question，188bet app From my actual results，More than 60% of entrepreneurs cannot answer this question，Of course there are only a few people who don’t know the answer at all。Most of the time I say，Wait a moment，Let me ask about my finances。In other words，You may not have taken it to heart when Finance told you，Only a rough impression，And this impression is probably delayed。

Startups should have at least 9 months of cash reserves at all times，And you are at this point in time，You must think about it，If six months are deducted，What should I do when I only have three months of money。

The fourth reason: the speed is too slow.

There are many reasons why the speed is too slow，For example, insufficient execution。There are two situations that I think can be relatively avoided in a too slow environment。A kind of perfectionism，Always in beta。The second type is called excessive dependence on external resources，Time is uncontrollable。

There is a small way to help you test: find a friend who is an investor，Send him a message every month to tell you about your latest progress，Let’s see how he reacts。If he doesn’t answer，Or reply with two smiley faces，Basically it means your progress is a bit slow。If he interacts with you a lot，It means your progress is good。

The fifth reason: working behind closed doors and refusing to communicate.

Time for company strategic transformation，High-quality communication is very necessary。A company I met before that is facing transformation，We spent about a month or two discussing what should be done，But there is no conclusion yet，At that time, the company only had three or four months of money left in its account，So we faced a big difficulty at that time。

Finally we did one thing，Gather together the CEOs of other companies that we had invested in at that time，Have a brainstorming session with him，That exchange was indeed very effective，I have figured out many of the problems that we were struggling with before，So their transformation was very successful，From a loss-making company to 30 million in the second year。

And today’s entrepreneurship is increasingly difficult to do alone，Ten years ago, if you started a business alone, it was OK，Because in that era，Winning or losing is entirely determined by the quality of the product。

2. Common sense errors regarding valuation

The most frequently asked question in financing is valuation。In the past, I have seen many entrepreneurs make common sense mistakes in valuation，I will summarize three points here:

The first point: write sky-high prices in the business plan.

The business plan is a material that makes investors willing to meet with you。Many times we may feel interested and want to talk about it after reading it，At this time, you are asking for sky-high prices，Too far from my psychological expectations，I might not 188bet Online Sports Betting and Casino even give you a chance to meet。Everyone always thinks to offer a high price first，Let investors pay back slowly。

But the actual situation may be，There were originally 5 investors interested in you，But because of your high price，Maybe 3 fewer people，There are only 2 people left。5 people are interested in you and 2 people are interested in you，The final investment completion rate is completely different，The more people who are interested in you, the easier it will be for you to complete financing。

Second point: It is better to go high first and then go low than to go low first and then go high.

There is another situation，You opened 100 million US dollars when you came up，Meeted 10 investors，No deal was reached with 10 people。At this time, you tell me to tone it down，Adjust to 70 million US dollars and go meet 10 people。But the investment circle is actually very small，Everyone will know that you once raised a financing with a valuation of US$100 million，Not included，Now it’s time to melt again。

Everyone will have various guesses，Why didn’t those people vote for you？So when your valuation keeps falling，Fewer and fewer investors will be interested in you，In the end, you won’t be able to raise money。

So it’s better to say，After initially determining a valuation range，Choose a lower price to finance，Get the maximum number of interests，If everyone is really interested in you during the communication，Your valuation will naturally go up。

The third point: Playing games is a dangerous approach。

Many entrepreneurs will use the relationship between investors to create Game Play，Want to get a better price。Sometimes we go to some entrepreneurial companies，The blackboard was not wiped clean，The name of a certain fund is also written on it，Or when doing a PPT presentation，Inadvertently showing you other VC’s folders。

Because everyone invested in a project，Everyone will make money if this project is successful。If what you say is not very true，I asked on the following WeChat account，If the feedback given by the other party is different from what you said，Then you will face a very embarrassing situation。

3. Related business plans

How to write a business plan? I would like to share three of my views:

First point: It is best to write the business plan yourself.

Let’s talk about the preparation of business plan from three aspects。A business plan is actually the thing that most truly reflects an entrepreneur’s ideas，So my suggestion is that it is best to write it yourself。

The process of writing a business plan，Actually, it’s the same as what I just said about decomposing goals，In fact, it is your own process of rethinking。And your personal characteristics will be clearly reflected in the business plan。

If you are from a technical background，In your business 188bet app plan，There may be more descriptions of the technical part，If you are a person with strong market ability，There will be many opinions about the market。

Second point: A good business plan is actually a story.

Give an example，Two years ago, I accidentally heard an entrepreneur chatting with a friend of mine about starting his own business in a coffee shop in Guangzhou。Because they are friends，So it was very exciting，Why start a business，Then I discovered an opportunity，I was impressed，Later I contacted this person，Said I want to vote for you。But when it comes to the A round，He told me the business plan three or four times，I don’t feel anything at all，I’ll tell you where your original feeling went？After changing it three or four times, I slowly found the feeling，Finally got the investment。

This story actually reflects the，A good business plan is a story told by an entrepreneur。Instead of writing according to the standard template，Follow the investor’s pace，Why don’t you tell your own story，Use your own rhythm to impress others。

The third point: Just explain six simple questions clearly.

Who am I，What do I want to do，Why do you do this，Why am I doing this，How to do it，What kind of company will I be after doing this。Just state these things clearly in your business plan。

4. Related road shows

When entrepreneurs are on the road show，What should we pay attention to？I share five suggestions:

The first piece of advice: Don’t be stubborn when doing road shows.

The road show is actually a relatively important moment，Because investors basically spend the first hour meeting with entrepreneurs，People will decide if they invest，Should I vote for you or not。

Here are some small mistakes that we think we often encounter。Start memorizing materials after arriving，No matter what question you ask，He always replies，I have the answer to this question later，Don’t panic。

Roadshows like this usually fail，Because the time has come，The questions investors want to know have not been answered。

So everyone should adapt to changes during the road show，Present yourself according to the status of investors。

Second suggestion: Pay attention to investors’ questions，Don’t be defensive。

I often feel that entrepreneurs are very angry，Ask a few more questions and he gets angry。For example, there is a joke，You investors always ask questions，What would you do if BAT started this business？What about investing in BAT，What do you think？Actually，We don’t ask this question to get a definite answer。We ask this question just to know if you have considered this matter，Are you thoughtful about what you do。

We use these questions to judge your ability，Because investing means investing in people。All our problems depend largely on people’s reactions，188bet Online Sports Betting and Casino Your reaction determines my opinion of you。So everyone must pay attention to investors’ questions，Don’t be defensive。

The third suggestion: don’t use too many techniques，Simplicity and effectiveness are the most important。

Sometimes we ask how much money you want to raise，This question should be simple enough，80% of entrepreneurs will not answer directly，Some even give you ten minutes of lectures，You didn’t hear the final answer either，Actually, I really just want to know how much money you want to raise。

So don’t use any negotiation skills，Communicate with investors，Simple, direct and effective is the best

Fourth suggestion: Lies and lies must always be paid back.

Sometimes，The entrepreneur does not mean to tell lies，But as you say it, it becomes a lie。So in the process of communicating with investors，Always stay true to yourself and your investors。

Fifth tip: Read investor feedback.

Many times，Let’s meet ten or eight investors，Everyone said it was good after coming back，There may only be two left who really see each other again。Everyone must read investor feedback。

The first one is called keep in touch。You are pretty good，Very good，Let’s keep in touch。This is basically equivalent to rejection。

The second option is to keep in touch，But subsequent investors will take the initiative to ask you about your progress，For example, after a month he will send a WeChat message to say how things are going。

The third type，We will start arranging various meetings immediately。You can see that there are basically three kinds of replies，The fourth possibility is to reject you directly on the spot。

After understanding the feedback from investors，Only you know how to formulate the next strategy。If many people are interested in you，You may want to be more aggressive，If not many people are interested，You have to be more conservative。

final，Actually speaking simply，The best way to communicate，Just treat investors as good friends，Communicate sincerely and emotionally。Just like the example I mentioned above of meeting good entrepreneurs in a coffee shop，In fact, that is the most efficient way。

*This article is reproduced from Chaos Research Society (WeChat official account: dfscx2014)。