Professor Raiton’s Inside Perspectives: Entrepreneurship, Creativity, Innovation

Sick of picking on the little guys, VC blogger Fred Wilson took it upon himself today to explain “why early stage venture investments fail.”  Here are his two primary reasons:

Venture investments fail for two primary reasons.

• It was a dumb idea and we realized it early on and killed the investment.
• It was a decent idea but directionally incorrect, it was hugely overfunded, the burn rate was taken to levels way beyond reason, and it became impossible to adapt the business in a financially viable manner.

Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered.