Doughbies: Why some Startups are not meant for Venture Capital

Doughbies was a venture capital-backed cookie delivery startup in San Fransisco. They closed their doors in 2018 because they simply could not keep up with the rapid pace of growth expected of them by the industry.

Up until the day they closed their doors, they were a profitable business and had a pretty solid financial situation. Their problem? Their business simply did not fit the high growth requirements that must be met to succeed as a venture-capital-backed startup.

Doughbies was founded in 2013 by USC alumni Daniel Conway, who had experience working in venture capital and left his job in order to try starting a cookie delivery company in the bay area.

 Originally, he created a website that intended to act as a marketplace for freshly baked goods where home bakers could post and sell their creations online to those in need of pastries or cakes for a party. 

Conway soon realized that this marketplace was not efficient because people wanted baked goods quickly, but bakers could not full the short-term demand. He noticed that most people wanted cookies right away, so he decided he could start a company to capitalize on this.

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Doughbies only operated in two small areas of San Francisco and delivered within 20 minutes in order to give the customer the real “fresh out of the oven” experience. Their delivery window was from 12 pm to 4 pm every weekday. They were not scaling out of these neighborhoods rapidly due to the fact that they needed a bakery in close proximity to the areas they needed to deliver to, which requires a lot of capital and time.

In the end, because of the restrictions on rapid growth inherent in the business model, they had to close their doors. It is helpful to learn about not just the successes that come out of the venture capital system, but the failures as well.

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