Investment Red Flag Alert – Failure to Launch

Dara

by Dara Albright, CrowdFunding Beat Guest Editor, Co-founder of the FinFair Conference,Recognized speaker, writer & influencer on topics relating to market structure, New Issues, FinTech, P2P & crowdfinance

You see it all of the time. A starry-eyed CEO is out on the capital raising trail luring investors with hopeful promises. Prospective investors are assured that their money will fund the next world changing innovation. They receive well thought out financial forecasts and pitch decks dressed up with hockey stick charts. Of course, every assertion, every number and every eye candy chart hinges on one key element – the product launch.

Anyone who has ever brought a new product to market knows that there are many obstacles to overcome. This is why a great deal of products are delivered late and over-budget. And those are the lucky ones. Some products never get released at all. There are technology glitches. There are sick days. There are staff changes. There are weather interruptions. There are empty promises received from manufacturers. Sometimes there are just too many cooks in the kitchen overseeing or contributing to the product. Occasionally, it comes down to unsuitable contractors awarded the jobs for all of the wrong reasons. At other times, it is simply that the company just cannot get its product to function.

Because veteran CEOs anticipate many of these barriers, they are much more proficient at launching on time and within budget.  By contrast the novice CEO is less prepared to handle unforeseen complications. As a result, his projections are much more “pie in the sky”.

The Obamacare website is a shining example of how inexperience, bureaucracy and cronyism mutilated a product launch and needlessly cost taxpayers hundreds of millions of dollars. By serving as a prototype of missteps, Obamacare can be invaluable in helping investors identify red flags.

Keep in mind that government bureaucracy and cronyism almost always ensures that products will be delivered late and over-budget. But because startup CEOs typically micromanage project development, they really can’t hide behind the “bureaucracy excuse”. Nor are they in a position to compromise their products by hiring unqualified personnel. If a startup’s product launch is overdue, it is usually because of a miscalculation due to management naïveté or an inherent product defect.

As an investor, you are entitled to know about the development status of a product that is being financed with YOUR money. Ask questions. Find out if there have been any staff changes that may have caused production delays. Inquire about technology glitches during beta. Volunteer to test market the product. Perhaps you can provide the expertise, additional capital or relationships necessary to perfect the product and expedite its launch. In some instances it could be worthwhile to allocate more resources towards improving a product that you already have a vested interest in. At other times your best bet is to simply cut your losses and move on. The earlier you know whether or not an investment is worth salvaging, the better.

Click here to view more investment red flags!

Source:

https://daraalbright.com/investmentredflags/

Tags: , , , , , , , , , , ,

HEADLINE NEWS

Types of Crowdfunding for your Small Business  Small Business TrendsFor small businesses looking to bypass traditional sources of financing, crowdfunding is a great choice. Here's a quick primer on the types of crowdfunding. [...]

Northern Monk completes rebrand after £1.5m crowdfunding campaign  The Drinks BusinessLeeds-based brewery Northern Monk has completed a rebrand of its range and released new gluten-free and low-alcohol beers after raising £1.5 million in 13 ... [...]

Crowdfunding offers promise for women and junior academics  Times Higher Education (THE)Study's authors suggest women are better able to communicate the value of science to score public donations. [...]

Unpaid Fyre Festival Cook Wins Back Life Savings From Crowdfunding Campaign  TheWrapMaryann Rolle, who appeared in Netflix documentary "Fyre," earned over $139000, surpassing her $123000 fundraising goal. [...]

How To Set Yourself Up For Crowdfunding Success  ForbesIf you want your crowdfunding venture to become a wild success, it's important to prepare to give yourself the best shot. [...]

How Crowdfunding Works For Entrepreneurs  ForbesHow does crowdfunding work for startup entrepreneurs? Crowdfunding exploded onto the internet a few years ago. Since then early platforms like Kickstarter ... [...]

Woman crowdfunding to have vaginal mesh removed  BBC NewsVictoria Adams is crowdfunding to have it removed after the NHS refused to do so. [...]

Syrian refugee attack: Boy's family crowdfunding to sue Tommy Robinson and Facebook over 'defamation'  The IndependentLawyers representing a Syrian boy who was attacked at school are crowdfunding to sue Tommy Robinson and Facebook. Footage of the 15-year-old victim ... [...]

How Crowdfunding Is Helping Homeless People Turn Their Lives Around  ForbesUK-based tech startup Beam has developed a crowdfunding platform that's helping homelessness people upskill and pursue successful careers. [...]

CRE Crowdfunding Platforms Must Focus on Realistic Returns  National Real Estate InvestorCRE crowdfunding platforms need to focus on stringent underwriting and transparency to avoid misleading investors about potential returns. [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Fintech World Beat

2020fintech.com' title='https://2020fintech.com/' target="_blank" class='rtw_url_link'>2020fintech.com 2019 Blockchain Mastermind Series 2020fintech.com' title='https://2020fintech.com/' target="_blank" class='rtw_url_link'>2020fintech.com #blockchain #digital #realestate #fintech ulation pic.twitter.com/wJC04nwJyl

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |