Why do you think startups fail?

Question

There are several reasons I noticed when analyzing early-stage startups:
— Moving to product development before checking the idea with the target audience; 
— Focusing on making perfect MVP and spending too much time on it;
— Making decisions based on your intuition, not your project's data;
— Working with a wrong (not motivated, not bonded) team; 
— Not doing research & not analyzing your competitors and their strategies; 
— Not calculating unit economics; 
— Not investing your time/resources in marketing;

What do you think about these reasons? Do you have more based on your experience?

Roberto Pérez · Accepted Answer

All great points there Darya. 
Number one, according to most experts, is the startup runs out of money (whether that be founder capital if bootstrapped or investment funds).

Largely due to a combination of the points you already gave.
Also if a startup is overly focused on fundraising instead of actually being a self-sustaining business, it usually won't make it in the long run.

Elena Tsemirava · Answer

According to statistics, the most common reason is poor marketing. But your list is also valid.

Eliza Crescini · Answer

I absolutely agree! But let me add some things to the list:

1. Lack of product-market fit. 
2. Insufficient funding. 
3. Poor execution.

Answer

Insufficient funding. Startups need money to grow and develop their products or services. If they don't raise enough money, they may have to shut down.
Poor management. Startups need experienced and capable managers to lead them to success. If they don't have the right people in place, they are more likely to fail.
Inability to pivot. Startups need to be able to adapt to changing market conditions and customer needs. If they are unable to pivot, they may become obsolete and fail.

Darya Skorokhod · Answer

@romiojoseph thank you for sharing your opinion! What do you think about 6: not calculating unit economics?

Darya Skorokhod · Answer

@elenat pretty much agree with you!

As a marketer, I've also seen situations where product & marketing departments work apart, leading in unsuccessful campaigns/irrelevant audience attraction/ too much marketing hype for an undeveloped product even when the team had good marketing resource base for the start

Darya Skorokhod · Answer

@rockyperezz definitely agree! The point about overly focusing on fundraising is quite valid, especially nowadays

André J · Answer

most startups fail because they run out of cash I think its 60%

Imran Razak · Answer

I think lots of people don’t first spend time exploring and crafting what they’re making. Especially if they want it to be the next billion dollar idea take a couple weeks or months to just craft and explore what you’re making. Look at the problem in a deeper lenses and from different angles. Maybe the problem is worth solving maybe it isn’t, maybe you discover something else. Just do that. Then the next stage is build a minimum viable experience (something that is akin to a good experience but isn’t the full version) and launch. 🚀 speak to customers. As much as possible, get close to them. Refine your product to what they need. Build a roadmap out of it. And keep going from there. Never loose that

Even big companies like Apple do that. When they release a new iPad Pro for example or Mac recently they highlighted companies that use their products and how they use it. This is all done behind closed doors to help them make the best experience XYZ users.

Keep your pool small because that will allow you to grow once you find PMF. Initially you just want to get to a stage where your customers love your product and use it more than another tool.

Erick Philbert · Answer

Man that 1st one heats me well... 🤔🤔

Rohit Joshi · Answer

Yes, you are right Darya, I would like to add few more words which are responsible for the startups fail:

-Poor Execution.
-High Competition
-Failure to Innovate
-Insufficient Funding

Roberto Pérez · Answer

@darya_skd Indeed. Playing a totally different ballgame. Heard a lot of startups in 2023 shutdown exactly because they had the fundraising mentality.

Darya Skorokhod · Answer

@erick_philbert It's surprising how the excitement of a concept can sometimes lead us into the development phase before confirming it's what the audience truly needs..

Romio · Answer

@darya_skd Yes, that and 5 too. I was highlighting 1,2.... from the stories I read. And these two I haven't seen much, but they play a role I think.

Romio · Answer

I completely and strongly agree with 1,2,3,4 and 7.

Why do you think startups fail?

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