I have been following lots of startups and angel investment news these days and I never understand why so many e-commerce sites get funded … and with millions of dollars. If e-commerce sites are backed by big investment companies, they seem to get traction. But, what about other small size investment companies which are investing in e-commerce, especially in clothing?
I have asked a few friends lately who frequently shop online about some of the sites which got a few hundred thousand dollars. When I ask about those sites, they say they’ve never heard of them. I ask them to look them over and if they would ever use them. Their answer is almost always a “No.” A typical response is, “Why should I change when current popular sites are offering wide variety of products?” In fact, they are not finding anything new, but still these companies seem to easily receive investment compared to a lot of other companies with great products which are struggling a lot. I don’t know what exactly these investors are seeing in the companies they are choosing, but I can’t imagine what they are thinking starting these companies. I sense that entrepreneurs are losing honesty. Their only intention is to start something, press their luck with investors, try to move forward, and ultimately sell their company.
Are you offering anything new? Where is your strength of conviction?
I have a service-based company and we’ve worked on at least five e-commerce startups related to clothing. I still get a lot of emails asking to build more, but I stopped taking on new ones if they don’t offer anything new. I even give them links and ask them if they offer anything new and none of them seem to come up with a valid reason.
I am not trying to speak down on anyone, but how some of the early investors are funding such startups when there are so many amazing products out there looking for funding is unfathomable. I have been working on a great product for quite some time and the company has been working on getting funding. In the meantime, I’ve seen many worthless companies receive funding. It is disheartening to see funding for this great company continue to be delayed.
I feel sometimes people with money are trying to invest simply by following big investment companies, who continue to invest in e-commerce. These days, I feel a lot of people are starting companies just for the name, the fame, and just to try their luck. In this essence of business, the startups are losing.
There seems to be a very small set of companies that are getting started for a cause or to make the world a better place. A lot of people are just trying to start companies without passion or conviction. This is why many, many well-funded companies are shutting down and will continue to fail.
Take a pledge
How often do you see this kind of pledge from a younger generation of entrepreneurs? https://posthaven.com
I am talking mostly about early investors and please look for change. There is lot more out there than e-commerce and photos. Don’t follow others. Don’t invest just because others are investing in similar startups.
Also, entrepreneurs, don’t begin a startup just to sell. Keep longer, more meaningful goals. If selling is the only thing it can do after some particular point in time, then do it. Take a pledge and then begin your journey.
Bhanu is CEO at Ruby on Rails Software Kitchen. He resides in Hyderabad Area, India. Connect with him on LinkedIn.