Financial strategy in startup business plans and its impact on early-stage survival

The dynamic startup environment is well known for its high failure rate during the early stages of development. A critical milestone for a project's survival is overcoming a so-called death valley curve. The main objective of this bachelor's thesis is to identify mistakes in the financial strategies of startups and to propose an optimal financial strategy to eliminate them. The thesis is divided into a literature review and own research. The literature review summarizes current knowledge regarding the startup life cycle, capital structure theory, and the behavioral aspects of financial decision-making. The own research utilizes a qualitative methodology, specifically semi-structured interviews with founders of failed startups and a representative from the private equity sector. The collected data is triangulated with an analysis of specific market case studies. The research results show that the main reason for financial failure is not primarily an absolute lack of capital, but rather structural planning mistakes and the premature scaling of projects. An aggressive allocation of financial resources often occurs before a real market demand for the product or service is proven and before unit economic metrics are stabilized. Furthermore, the research empirically verified the assumptions of behavioral finance, particularly the fact that founders often do not base their choice of funding sources on rational calculation, but rather choose the path with the least resistance. In conclusion, the thesis proposes an optimal financial strategy and provides recommendations for founders on how to prevent these risks.