The Price of Success and Failure

Every entrepreneur should know that the vast majority of startup companies fail. In most cases, the bulk of the returns on the venture capital investment portfolio is yielded by very few investments, whereas most of the portfolio is expunged. There is a high probability that the entrepreneur's company will comprise part of that component of the investment portfolio.

In addition, as an entrepreneur, one should be prepared for the fact that the financing of any particular stage of an investment does not guarantee an investment in future stages. The road to success is paved with obstacles, and the foundation of a new company often implies the dedication of nights and days, long periods of uncertainty, and severe fluctuation between moments of stress and joy. The price of failure may be relatively small (loss of time and some funds), but may also entail the loss of savings, of alternative promising employment, etc., as well as tension within the family. However, despite the possible high cost, many find that no career satisfaction is greater than establishing and developing a company.

With the increasing recognition that startup failures result from a variety of reasons, many of which are independent of the entrepreneurs, the latter are decreasingly deterred from re-embarking on new ventures, after the failure of ventures in which they took part. Furthermore, society no longer labels entrepreneurs whose ventures failed as "failures."

It is always important to keep in mind that many entrepreneurs who have failed once are later successful. In many cases, entrepreneurs choose to reinvest their human capital, while assuming that the probabilities of success and failure may work in their favor on one of such attempts, especially since prior experience is greatly helpful in improving the success-failure ratio.