Many startups will “go to the wall” says unicorn founder

The co-founder of one of Portugal’s successful unicorns has admitted that many startups will never get off the ground, let alone have the chance to go bust.

Talkdesk founder, Cristina Fonseca and investor in the Portuguese venture capital company Indico Capital Partners says that the problem today is that all startup founders think that their company is “worth investing in”.
However, the reality, she says, is that startups should think twice before expecting finance from venture capital investors.
In an interview with Dinheiro Vivo, she said that her belief that her know-how would be able to make an impact in the entrepreneurial world had led her to help set up one of the first independent funds in Portugal, Indico Capital Partners.
This fund was distinguished in 2016 in the Forbes ranking 30 under 30 which represented a before and after millstone in the ecosystem.
“When I founded Talkdesk there wasn’t a single professional investor in the country. There were some funds, the majority linked to companies whose manner of investing was different. The arrival of professional investors in the sector was a watershed, not just because they invested, but because they had serious up-front capital for the market and with the mindset that the success of these companies meant the success of Indico Capital Partners as well.
“We invested from €10,000 to €100,000 in startups and our aim was to support projects throughout their lives. We really are partners,” she said.
“We wouldn’t be here if we had invested badly”, she added.
Cristina Fonseca says that the problem is that today, particularly against the backdrop of Web Summit and the development of the Portuguese ecosystem “everyone thinks that they have a startup worth investing in, but it doesn’t quite work like that”.
“VCs get lots of applications for investment and in many cases they really aren’t suitable for venture capital”.
“You have to be really careful about which startups to choose because many startups that get investment don’t take off, or fall sort of expectations”, she said.
According to the blog ‘Exploding Topics’ some 10% of startups fail within the first year. Across all industries, startup failure rates seem to be close to the same. Failure is most common for startups during years two through five, with 70% falling into this category. In other words only one out of three startups survive five years.