25 Primary Reasons Why Startups Fail

25 Primary Reasons Why Startups Fail



Most startups never get past the first year of operation. Founders blame investors; investors blame CEOs, CEOs blaming the R&D people; R&D people say the product is fine, the market just doesn’t get it, and marketing people blaming it all on the recession. These mistakes have proven to be the reasons for most startup failures.

  1. Inability or failure to obtain and/or maintain sufficient capital (for a variety of reasons), whether or not managed poorly.
  2. Not learning fast enough
  3. Management teams lack flexibility to change direction when needed.
  4. Focusing on technical development rather than on the customer. (4 Steps to the Epiphany)
  5. Founders make something not many people want
  6. Building products that cannot scale
  7. A lot of potentially good ideas/projects die because the founders quit
  8. Sometimes the market simply isn’t there, founders conduct little or no research
  9. Poor allocation of company resources and funds
  10. Inability to change your business model where necessary and especially when there is the need to do so
  11. Too much money can also creates undisciplined management decisions hence the failure. You risk spending your money too freely, shortening your runway
  12. Lack of trust and commitment   in the founding team
  13. When you  build something far more complex than it needs to be.
  14. Wrong timing
  15. Lack of long-term vision and plan, passion
  16. Raising money can sometimes be a HUGE distraction
  17. Incompatible team
  18. Bad hiring. Overly aggressive team expansion, and a high burn rate but no execution in product and marketing
  19. Not solving customer problems
  20. Co-founder/CEO who proves himself or herself  overbearing, not valuing his partners
  21. Inability to market/sell, manage, iterate, adapt, scale, listen to users/team, handle mistakes and change
  22. Poor understanding of how to motivate people and create a happy workforce
  23. Sometimes startups fail because of unexpected external factors like economic downturn
  24. Trying to grow too quickly,  scaling up too fast and without  realizing that there are significant costs to scaling
  25. “All companies that go out of business do so for the same reason — they run out of money.” Don Valentine