What to Make of Startup Shutdowns?  


In the startup game, failure is not questioned; it’s expected. In fact, according to The Wall Street Journal, less than 20 percent of startups succeed in giving substantial returns to investors (and industry insiders will tell you it usually takes at least three years before those profits start rolling in, and sometimes as many as seven).

Recently, two of Downtown’s notable startups joined the unlucky 80-plus percent: Ticket Cake, the online ticketing and marketing platform, closed its doors in July; and Factorli, a fledgling manufacturing company that planned to do small runs of products for hardware startups, announced this month it was ceasing operations.

Ticket Cake began in Utah in 2011, when founders Joe Henriod, Dylan Jorgensen and Jacqueline Jensen became the main ticket supplier of the Sundance Film Festival. In 2012, they moved the company to Las Vegas and were in the first group of startups to get seed money from the then-new Vegas Tech Fund, the Downtown Project’s investment arm. Despite having 320 event organizers who used the platform and processing more than $1.7 million in ticket sales, the founders closed up shop three years after launching. Jensen didn’t wish to elaborate on the closure, but she did tell Inc.com in a video profile earlier this year that they needed to focus on raising more capital and the cofounders were still having to justify small expenses.

Unlike Ticket Cake, Factorli was only a few months old when news came of its demise. After receiving $10 million in funding from Tony Hsieh in May, energetic CEO Jen McCabe unexpectedly departed with the startup and also left her position at the Vegas Tech Fund. (Downtown Project spokeswoman Kim Schaefer says the $10 million will be redistributed to Downtown, although she didn’t provide details as to where the money will go.)

While the Ticket Cake team is now resettling into different jobs Downtown, it’s unknown what McCabe’s next steps are. (Attempts to reach her for comment were unsuccessful). Meanwhile, this big question looms: What do the failings of two Downtown startups that seemed most likely to survive mean for the Vegas tech community? Before assuming the worst, consider the paper “Skill vs. Luck in Entrepreneurship and Venture Capital,” authored by Harvard students in 2006. It examined evidence gathered from serial entrepreneurs and found that first-timers only have an 18 percent chance of succeeding, but those who fail and try a new venture have a 20 percent success rate.

While 2 percent may not seem like much, it suggests failure actually increases the probability for future success.

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