Reviving Zombie Startups: Acknowledgment and Guidance Key, Say Venture Capitalists at Web Summit 2024
Summary:
At Qatar's Web Summit 2024, a discussion was led by Cointelegraph's editor-at-large, Kristina Lucrezia Cornèr, discussing the problem of 'zombie startups'. Defined as those suffering continued stagnation, they put their investments at risk and need to recognize their position. The solution, according to venture capitalists Michael Lints and Zainab Al Sharif, involves acknowledging problems, tackling challenges, utilizing crises as opportunities, and standing out from the competition, with integral guidance from the investors.
Investment firms aren't only searching for profitable startups, but also for businesses and entrepreneurs with the resilience to navigate the obstacles of stagnation. Failing to do so, and experiencing halted growth, puts small to medium-sized businesses in danger of becoming "zombie startups". Recently, Kristina Lucrezia Cornèr, an editor-at-large at Cointelegraph, led a dialogue at Web Summit Qatar 2024 focusing on reviving these stagnant startups. Joining her were venture capitalists Michael Lints from Golden Gate Ventures and Zainab Al Sharif from Plus Venture Capital.
To understand a "zombie startup", Lints explained that they scrutinize the progress of their portfolio and the companies included in it, particularly their growth trajectory. He noted that some businesses, which initially held high potential for growth, showed a flat progress curve, persistently over numerous years. These companies, according to him, are labelled as "zombie companies".
Part of the issue, as pointed out by Lints, is when constant stagnation misleads entrepreneurs into believing their businesses are safe. Open communication with the founders at that juncture can help them realize that while their company is functioning, it's not exceeding expectations, causing investors to see a measly return on their investment.
The stiffening effect of startup stagnation can plague companies across all sectors, for countless reasons, yet the solution remains unchanged. Both Lints and Al Sharif suggest that reviving a zombie startup necessitates acknowledgment of the problem, dialogue about challenges, transforming crises into chances, and distinguishing yourself from marketplace competition. Al Sharif asserted that the teams or founders could be divided into two categories: those who refuse to believe they're in the zombie phase and those who understand their position but need guidance. Al Sharif emphasised the role of VCs in providing this guidance and stimulating proactive brainstorming to address the problem.
Published At
2/28/2024 11:08:18 PM
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