Bankruptcy in Startups
Startups are known for their agility, innovation, and potential for high growth, making them prone to failure which can lead to bankruptcy. There have been a number of cases of startups filing for bankruptcy. Some notable examples include Theranos and Better Place, as well as the more recent one TaniHub in Indonesia.
One of the main reasons for bankruptcy in startups is poor governance, often shown by a lack of financial planning and contingencies. Many startups focus solely on product development and marketing, neglecting their financial health. This can lead to cash flow problems, which can quickly spiral out of control.
Despite the negative connotations associated with bankruptcy, it can also be an opportunity for startups to learn from their mistakes and to pivot their business models. These bankruptcy cases serve as a wake-up call for startups to reevaluate their financial strategies, management practices, and overall business models. Filing for bankruptcy/PKPU is not the end of the road.
OCBC NISP Ventura
April 2023 Newsletter