> The basic take-away I gathered was they relied too heavily on donations, grants and sponsorships instead of revenue-generating endeavors, and once the "free money" dried up, they were left with few-to-no options.
Not sure if that take-away is true or not, but it's almost always a bad idea to run a business that relies on charity[1] to stay afloat.
There's some outliers, sure, but if you are planning a business, make sure the plan includes getting people to give you money in exchange for something they value more than that money[2].
[1] That includes investment for current operational expenses.
[2] I was, in 2009, on a panel once, distributing seed money to startups. I remember the one pitch we had from a pair of founders. They brought charts, graphs, all their numbers, current and projected. They had launched with a single investor and a runway of maybe 6 months. They were in month 3, IIRC. It was a labour intensive business (Tourism, so each customer just bought their ticket once, and may never want to go on that tour again.)
They needed more money to keep their operation going (mostly just paying themselves and a few staff members).
I asked about what happens after month 6. They replied that they were actively pursuing investment to make sure that they had another 6 month runway.
I looked at their income and mentally divided it by the number of customers. I asked about how they were planning to get to profitability after 12 months (after all, the purse holders wanted some possibility of return). They replied that at the 9 month mark they would pursue further investment.
I double-checked my figures; each customer was costing more to service than the customer was paying.
Okay, so at the 12 month mark? "We'll actively pursue further investment".
After 5 years? "We assure you, we'll be continuously getting new investment".
At which point do you raise your prices? "We can't do that, we're already so high that there aren't enough tourists willing to pay anything more".
How do we get a return on this? "It's an investment, you don't get it back. It's in everyone's interests to have more tourism. We will all benefit eventually".
The most surprising part of all of this is that both were extremely recent university graduates. I know this, because they proudly presented their humanities credentials at the start of the pitch.