Series on Entrepreneurship: Recovering from a Tech Startup

^{By Advisorsavvy Staff | 858 words | Reading Time: 4 minutes and 18 seconds | Date: 2023/01/31}

In this first story from the series on entrepreneurship, we’ll follow Cypress, a tech and finance guru. Cypress had a startup in the internet space that failed to become profitable, but was able to overcome financial hardship by pivoting within their career. Read on for the full story!

Cypress originally studied computer science. They decided to go into banking and finance due to work opportunity limitations in the IT industry. After an economic downturn, Cypress was laid off and witnessed the downsizing of a bank first hand – “it left a bad taste in my mouth.” Following their lay off, they started their own financial consulting company which had a tech focus.

Through their consulting firm, Cypress met an individual interested in starting up an internet business within the tourism and travel sector. Together they built the platform using their own time and financial resources. The internet company had humble beginnings, but the two co-founders were able to connect with advisors in Silicon Valley through their network. It took just under two years for the co-founders to build the website. But at this time, they didn’t have any money coming in. Eventually they were able to launch the platform and experienced some success. However, they were unable to recoup their initial investment from building the platform. They realized they would need external capital to scale the online company and achieve real financial profit.

The two co-founders decided to approach investors for seed capital to grow the business. They were able to get meetings with big players through referrals and networking. The feedback they received was they needed more traction from users on the platform before investors were willing to put money in. It was a tricky situation because in order to get more traction, they needed money, but in order to get more money, they needed traction. These are the challenges entrepreneurs regularly face!

Cypress was able to raise a small amount of funding, but struggled with product marketing. “We ran with this probably too long,” Cypress said. After three years, one of the co-founders dropped out, but the business continued on with the help of the initial advisors. Cypress admitted the internet company was ahead of its time which was part of why it struggled to become profitable.

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Eventually, Cypress and the team decided to cut their losses due to experiencing financial hardship, as well as some health problems. It’s always difficult to give up on something you dedicated so much time and resources to, but in the end, Cypress felt this was the best decision. It was time to deal with the monetary burden they had acquired from being unable to turn a profit in the business. Cypress was not at the point of needing to file for consumer proposals or bankruptcy, but had seriously depleted their own financial resources. In addition, they no longer had a job so it was imperative they figure out a way to make money sooner rather than later.

As a final hurrah, the founders tried to sell the business and the domain, but they were unsuccessful. They kept the site up and running for a while without any maintenance, but eventually it was taken offline completely.

Once the website was shut down, Cypress took a hard look at their monetary situation and came up with a financial plan to turn things around. Essentially, they were starting from ground zero – once again. They acknowledged their biggest skills were in computer science and finance, given they had been a CTO of a startup. Using their skills and network, Cypress decided to start another consulting firm. The beauty of consulting is you can start to earn money with little capital so long as you have skill sets, like Cypress.

They admitted it was difficult to stay positive while recovering from a failed startup, but Cypress pulled themselves up by the bootstraps and did their best to be positive in front of new connections and potential clients. It’s hard to get new business and consult when you’re “down in the dumps” so Cypress embraced a positive mindset to turn things around financially. They also reached out to friends and family for support. Cypress started another consulting company in the tech space and were able to rebuild financially. Reflecting back, Cypress acknowledged it would’ve been ideal to step back from the startup a year sooner to preserve some finances, but hindsight is always clearer.

As a final piece of advice to entrepreneurs or those struggling with financial hardship, Cypress said, “The most important part is understanding the financing process and having a realistic plan and capital in place to allow you to grow those revenues.” If you can do that, everything else falls into place easily. Even though Cypress’ startup didn’t take off, they successfully raised a round of seed capital and overcame financial hardship. At times we all struggle, but it doesn’t have to last forever, you can turn any situation around, just like Cypress!

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Are you struggling with financial hardship due to a struggling or failed business? Reach out to Bromwich + Smith for a consultation today!

If you enjoyed this story, stay tuned for the next story in the series on entrepreneurship!