The Startup Velocity Question: Market Shifts Derail Companies

Let’s take a most obvious example: BPO companies offering large numbers of customer support agents to other businesses.

Enter AI.

At least 70% of the agents can be replaced by technologies like Aisera. (You may have read my Aisera case study …)

A $50M ARR company can swerve dramatically down.

This example assumes humans are being replaced by AI.

We’ve also had major market shifts like the Internet, Cloud Computing, Mobile Dominance, etc. that have derailed venture-funded companies that were doing great for many years. 

There is also technology disrupting technology.

Product teams have to stay ahead of emerging trends to not get blindsided.

In truth, however, most venture-funded companies do one product reasonably well.

If that product gets disrupted by a major market shift, the company starts to falter severely.

Currently, AI is the hot new game in town.

And there are new opportunities for technology to disrupt technology.

To reinvent a declining venture-funded startup requires rapid positioning change and sales-oriented validation ASAP.

The obvious issue is that of the runway.

Runway is running out.

To gain additional runway, a validated investment thesis is necessary.

Such situations inevitably result in massive dilution of existing investors to raise further funding if at all. Insider rounds may be a possibility.

Exit is not necessarily viable under such circumstances without showing that a repositioned strategy is viable.

No one acquires a dud except in a firesale mode.

Key Takeaways:

• Technological advancements can dramatically disrupt existing products.
• Major market shifts like Cloud Computing, and Mobile Dominance have historically derailed many venture-funded companies.
• Now it’s AI’s turn to disrupt.
• Most venture-funded companies excel in one product, making them vulnerable to disruption.
• Reinventing a declining startup requires rapid positioning change and sales-oriented validation.
• Limited runway is a critical issue when pivoting or repositioning.
• Gaining additional funding requires a validated investment thesis.
• Exits may not be viable without demonstrating the viability of a repositioned strategy.
• This scenario is extremely complex and challenging for startups to navigate.

My Question to You:

Are you facing disruption due to shifting market forces?If you think you need help, consider 1-on-1 Private Consulting with me. I will diagnose and create a path forward in an hour.

Photo Credit: allenrobert from Pixabay

This segment is a part in the series : The Startup Velocity Question