Success is stumbling from failure to failure with no loss of enthusiasm (Churchill). Here are the top 20 reasons why startups fail, with stats:
1. No market need (42%)
2. Ran out of cash (29%)
3. Not the right team (23%)
4. Get outcompeted (19%)
5. Pricing/cost issues (18%)
6. User un-friendly product (17%)
7. Product without a business model (17%)
8. Poor marketing (14%)
9. Ignore customers (14%)
10. Product mistimed (13%)
11. Lose focus (13%)
12. Disharmony among team/investors (13%)
13. Pivot gone bad (10%)
14. Lack passion (9%)
15. Failed geographical expansion (9%)
16. No financing/investor interest (8%)
17. Legal challenges (8%)
18. Didn’t use network (8%)
19. Burn out (8%)
20. Failure to pivot (7%)
Data collected by CB Insights after analyzing 101 startup failure post-mortems.
I want to add another three to the list – lack of mentorship, prematurely scaling, and overfunding.
Stats:
70% of tech startups fail.
97% of consumer hardware startups fail.
170+ US companies classified as unicorns.
~6.7 years on average to reach unicorn status.
0.2% of firms receive VC funding.
~50% of entrepreneurial IPOs are venture backed.
Top 2% of VC firms generate 98% of the returns.
CA, MA, NY account for 84% of total AUM.
970 venture firms, 1722 funds in the US.
