His startup failed.  But this founder would do it all over again.

His startup failed. But this founder would do it all over again.

When is a failure not a failure at all?

For Nikki McLay, seeing a startup she had spent years putting her sweat into retire and go out of business has not been a lesson in failure.

It has been a lesson in learning what works and what doesn’t.

A graphic designer by day, McLay became a co-founder of a startup called IVOW AI in 2018, which wanted to use artificial intelligence to generate culturally aware content.

For a loose hypothetical example, let’s say you have a company with a chatbot.

That company could have eventually worked with IVOW to make sure he had something to say, that was accurate, about the women in history, if he had been asked.

We know that data is being absorbed and collected to help power AI tools and systems. IVOW AI’s mission was to ensure that cultural histories and history were not forgotten in the rush of this digital transformation.

Despite having a “really strong 2019,” when the IVOW team was able to travel, give talks about the startup’s research and broader goals, and despite launch after launch after launch, earlier this year the founder with US-based Davar Ardalan decided it was time to wind IVOW up.

McLay says that Covid-19 was difficult for the old company. The team could no longer present at conferences, could no longer get in front of decision makers, and when they could get in front of the right people, they would turn them down, sometimes with cutting comments of rejection.

McLay says that at the end of one particular launch, a potential investor told them that they loved what they were doing, but that the quota of women-founded companies was already full for the year.

The firm wasn’t looking for a lot of cash, says McLay. At first they had a one-page plot and were looking for $50,000.

The team self-financed their work. They all had day jobs, says McLay.

IVOW piqued the interest of the business community and certainly aroused enthusiasm; his research reports investigating bias in artificial intelligence have been covered in the news, on podcasts, and on blogs.

But he couldn’t get over that first big hurdle; get investors, get money, get over the hurdle and go to the next stage.

It was emotional and full of ups and downs, says McLay.

She says she would have to get stronger for every spin on the purses. And then each rejection would be a blow back to earth.

“I definitely learned how to manage stress, that’s for sure.”

starting up, shutting down

There’s kind of an accepted statistic about startups in the US, that most of them fail. And many baby businesses in New Zealand don’t make it.

Data from Statistics NZ shows that in 2020 (based on the most recent and rigorous data set available) of over 60,000 new businesses started, 9,780 of them disappeared within a year.

Other data from Stats NZ shows that of businesses started in 2015, 67% survived to 2017, while 39% made it to 2021.

Many businesses fail early.

But there is a lot of optimism about New Zealand startups.

A report by consultancy PwC and Angel Association New Zealand found record growth in the number of deals and the amount of capital invested in startups in the first half of 2021.

The report, published in October 2021, found that early-stage investors invested $60 million, which represented a 60% increase in transaction volume and an 80% increase in dollars invested over the same period in 2020.

New Zealand-based venture capitalists also put $200 million into those deals, bringing the total invested to just under $260 million.

“These record levels of activity mirror what is being seen in other venture investing markets around the world,” the report said.

Jack McQuire, a partner at early-stage investment firm Icehouse Ventures, says that a successful startup is the culmination of a million individual decisions and actions, and luck.

“That’s the thing. Not only do you have to work incredibly hard, you also have to be lucky… Even if it doesn’t work out and you’ve done everything right, you can still be unlucky. People can punish themselves or feel like they’ve failed.” But that’s a startup thing, it’s out of your control.

McQuire, who works with and invests in startups, says he likes the advice offered by US startup coach Justin Milano, who says ‘you are not your startup’.

“Just because your startup failed doesn’t mean you failed. People blur identities, startup becomes founder and vice versa. It is very healthy to remember that. They are separate things.”

And will the failure of a startup mean that investors will look at the next launch with critical eyes? McQuire says that Icehouse will invest in founders who have experience with a failed startup. But only if they have acted with transparency and honesty “in everything”.

“I would never hesitate to endorse someone, again, simply because they failed. In any case, [failure] it’s more effective, because they’ve learned all these lessons and grown from the experience.”

He says the New Zealand emerging economy is getting compounding returns from founders, or early-stage employees, who then try again.

Marian Johnson, CEO of Christchurch-based startup advisory Ministry of Awesome, says there’s another often-cited stat about startups, but this one is about success. She says it’s rare for a founder to get a win, let alone a big win, at his first chance. The “whiz kid” is often one of a kind.

Instead, Johnson says, it’s the third or fourth startup that is most likely to be successful, and the average age of a successful founder is 45, not 20-something.

So you want to be a founder

McQuire says he has two pieces of advice for aspiring startup founders.

Don’t do it because you think it’s glamorous. It’s not. He says entrepreneurship is considered glamorous, but the reality is that all founders go through tough times.

He says, for example, that people often just look at where Rocket Lab founder Peter Beck is now, but he got to where he is today thanks to decades of hard work and dark days.

“It’s really challenging work. And that’s what makes founders so amazing. They do it anyway.”

His second piece of advice, McQuire says, might “seem counterintuitive.” It’s putting his team first, then his clients, then his investors.

“First of all, you have to have an exceptional team. And then to be sustainable and successful, you have to have great customers. And if you do those two things, well, everything else will take care of itself.”

Johnson says founders have to be brave, but also have compassion for themselves as people and be able to keep startup clear about how they feel about themselves.

“If you’re going to do something that’s never been done before, then obviously your chance of failure is pretty high. And so you really have to have a commitment to your vision and a lot of confidence and a lot of commitment.” of ambition, which to a certain extent, against everything that puts it to the test every day, every obstacle, cannot be championed”.

Johnson says founders need to approach it with their eyes open.

“If you want an easy life, this is not for you.”

For McLay, his first foray into a startup isn’t a personal lesson in failure.

McLay says she’d be “100%” involved with another startup, she just needs to think about what’s next, and was recently looking for startup inspiration at the Blackbird Ventures Sunrise startup conference.

“If I don’t get a million dollars, it’s not a failure. You just didn’t get the funds,” she says. “It’s like anything, if it doesn’t work, it just didn’t work. It’s not that it failed. You didn’t see it to the extent that you expected, and that image in your head didn’t work.”

Instead of anything going wrong, McLay calls the startup process “incredible.”

“I think it’s equivalent to doing a couple of [university] degrees Personal development, understanding business, learning about machine learning. I wouldn’t have known about this.”

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