Since 2012, all newly launched startups were ranked based on one ranking parameter, namely, the raised investment funding. That’s why all best startups were those that had raised hundreds, or possibly millions.
All these entrepreneurial ventures have been very different – from financing to software, from manufacturing to social media.
A New Ranking Trend
This year, though, Poets&Quants has noticed quite a new trend. The top place in their ranking (Deliveroo), as well as the third (DoorDash) and the fifth (Grofers), were occupied by new food delivery companies. These newly opened startups have made more than 800 million dollars. All of them were founded by MBA alumni from different business schools, and even on different continents.
There are also successful startup companies which did not enter the top 100 rating, but still are worth attention.
According to incubators, such ventures are in high demand currently, and investors never cease to pour money into them. For instance, the Wharton-graduate-founded Deliveroo managed to raise 275 million, while Doordash (Stanford) got 127 million. In August 2016, Deliveroo was given a 1-billion-dollar assessment and obtained a ‘unicorn’ status.
What Dangers Await Them
It may seem that all these newborn startups are doing just fine, right? Nevertheless, there are certain problems that may put obstacles to their proud stride. The main and the most obvious trouble comes from juggernaut competitors – Uber and Amazon, for one. Hence, all the huge investments the new startups managed to get may turn into equally huge losses. That’s not what investors were accounting for or anticipating when they gave their dollars to daring MBA graduates.
This problem can be explained on one example: the ranking favorite, Deliveroo, was very promising and ranked highly according to its angel investments. Still, in 2014-2015, its capital started drastically going down the drain. They lost as much as 25 million during these years. Considering that the company is rather small, such a loss weighs heavy on its development. Even with a new pricing structure, they continue losing money rapidly.
Meanwhile, the massive competitors – UberEATS, Amazon and GrubHub – have not been idle. They have started several changes in their companies, bringing about even larger profits than before. Also, they have started employing new technological solutions, such as delivery by drone. Their gains have been disturbingly consistent for the last five years.
With such corporate giants astride, it is only a matter of time that smaller companies, albeit new and creative ones, will bow down to their might and either close down or let themselves be merged.
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