Vektrust CEO David Munoz Unpacks the High Failure Rate in VC Investing: The Problem Is Poor Execution

Vektrust CEO David Munoz Unpacks the High Failure Rate in VC Investing: The Problem Is Poor Execution

Daniel Hall 22/03/2023
Vektrust CEO David Munoz Unpacks the High Failure Rate in VC Investing: The Problem Is Poor Execution

Investment experts know that every new business must complete all stages of the kickoff process to have a chance at success.

Entrepreneurs should logically define challenges, ask critical questions, examine related factors, and act to prevail. In layman’s terms, this practice is called “putting one foot in front of the other.” 

Investor David Munoz has seen many companies come and go as he established an early, successful career as an investment banker and hedge fund founder. He now acts as chief executive officer at Vektrust, a merchant capital business where professionals advise companies, take stakes with them, and play an active role in developing them. As CEO of Vektrust, Munoz works with early- and mid-stage businesses.


Munoz has assessed multiple pain points for burgeoning companies throughout his career. He points to a need for more execution that foils many entrepreneurial dreams. 

“There are endless opportunities out there,” Munoz states. “But if you read statistics on startups or venture capital investing, there’s such a high failure rate. In my experience, the high failure rate is largely due to poor execution.”

An entrepreneur must go through critical steps to propel a business idea into reality. Performing analysis without execution means going extinct. 

“You must have a team thinking about breaking down those steps incrementally,” Munoz says. 

Someone can have a great idea. But taking it from conception to the tactical steps that move it forward is a different situation, cautions Munoz. 

“Typically management teams — ones that are not very mature or don’t have lots of experience in building and growing a business — have a business vision for where they want to go,” Munoz explains. “They're super excited about that vision when you talk with them. They talk to you and explain it. Then it just ends.” 

The Data Reveals the Grim Statistics About Small Business Survival in America

As any investor knows, most early-stage businesses fail. The reason could be out of one’s control — bad luck or timing — or the company concocted an ill-conceived business model.

According to U.S. Bureau of Labor Statistics data, approximately 20% of small businesses fizzle within one year. By the second year’s conclusion, 30% of companies will be defeated. By the end of the decade, 70% will fail. 

Data from CB Insights examined the reasons behind startup failures in 2022. Lack of financing or investors was the top reason; 47% of startup failures in 2022 claimed it. Running out of cash was the second reason. And 33% of startup failures attributed their demise to pandemic effects on business and the broader economy. 

Vektrust CEO David Munoz Learned the Critical Skill of Managing Risk Early in His Career

David Munoz graduated from Princeton University with a Bachelor of Arts in economics, then occupied C-suite roles at several prestigious financial firms. He was a vice president at Credit Suisse for the global mergers and acquisitions group. He was also a senior investment expert for the global principal strategies division at Lehman Brothers, and CEO of Deltec.

Then, at BlackRock, Munoz acted as the global head of credit strategy and global co-head of macroeconomic strategy in the fundamental fixed-income division. With a team, he co-founded R3 Capital Management, a multi-strategy credit hedge fund.

“Launching the hedge fund helped me to be more attuned to risk management,” he says. “It has helped me tremendously and continues to do so.”

He says entrepreneurs must be mindful of risks related to competition, human resources, regulatory, and funding risks. The right attitude to assume, Munoz states, is: “In every action that we take, how do we reduce the risk of failure?”

Company leaders who prioritize and rank their steps to reduce risk will prevail. If not, significant obstacles will befall their businesses. Munoz says these companies won’t get funded, receive a higher valuation, and attract employees and customers unless they modulate actions to simultaneously get closer to goals and mitigate risk.

“If you tend to favor one over the other, each one of those leads to a dead end,” Munoz says. 

To be successful, a company’s managers must think critically about their option universe. Munoz believes new businesses must be innovative about moving forward. They must discern how to take baby steps, incrementally assume risk, and avoid jumping in feet first. 

By Monitoring Interest Rates, Investment Experts Like Vektrust’s CEO David Munoz Recommend Businesses Use Caution

Like all savvy investors monitoring interest rates, David Munoz is concerned they may rise more than markets anticipate in 2023 and beyond. He credits these concerns to several determinants. Core factors supporting a higher-price environment include efficiency gains in payments and financial markets, a decline in cheap labor, deglobalization, and energy security and sustainability.

If the economy ushers in a higher-price environment, the overly optimistic mantra in startups will quieten. Munoz says the landscape will no longer be filled with voices saying, “Just go. Just start it because somebody else is going to do it.”

Munoz stresses that companies should gather diverse opinions before undertaking a business or business strategy. Otherwise, they won’t attract funding. He says entrepreneurs should ask questions and listen to different voices to prepare. 

“You’ll need many different opinions to distill your options to the best decisions.”

For years, investors have given cheap capital to mediocre companies. Munoz attributes the crescendo of venture capital funding to a fear of missing out. Proper diligence and investment decisions have supplanted this fear. Businesses with lousy business models will begin at the funding stage rather than the product stage.

“The era of ‘I’m going to put $30 million into a business that’s been up and running for six months’ is gone,” Munoz states. “Investors are hyper-focused on businesses with a path to profitability and sustainable growth.”

While the phrase “move fast and break things” defined the past decade, that’s no longer a consideration. Instead, companies must be more conservative and thoughtful. 

“They’ll have to measure twice, cut once,” Munoz advises.

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Daniel Hall

Business Expert

Daniel Hall is an experienced digital marketer, author and world traveller. He spends a lot of his free time flipping through books and learning about a plethora of topics.

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