TOP 20 REASONS FOR STARTUP FAILURE

Written by: Simon Skowronski, LPVC, Venture Capital Partner

 

It is an interesting graph as it was made after dissecting over 100 top startup failures.

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1. No market need – If there is no demand or do you not know how to create demand, than no amount engineering talent will solve this. Selling demand to something that does not exist yet is a skill in itself (selling faith while knowing you can deliver).

2. Run out of cash – this can happen in three ways. You didn’t raise enough cash to begin with, the results didn’t happen before you ran out of cash or you scaled prematurely. The whole point of the bootstrapping phase is to test and gain clarity in a new unknown area, while keeping expenses as low as possible so you can still be in the game when you can execute the clarity. You don’t want to run out of cash before you can fully execute what you have learned in the startup phase.

3. Not the right team – there is nothing worse than working with the wrong people. It is a horrible way to spend your time. Note that you CAN’T change people. You may be able to train them +/- 5 to 10% in either direction but you can’t fundamentally change a person. Getting the people that naturally exhibit the personality traits for the success in the role is the only way to create a great team. These sort of teams create 1000% returns with a lot less effort. In these sort of teams, people want to work together and enjoy each other’s company.

There are a myriad of ways for a startup to fail and there are also a number of ways for a startup to succeed. For success, a large part is up to the founders simply continuing and not getting too caught up in the emotional drama while adapting to whatever new information/situation presents itself. Than once a solid business model is built, execute without holding back:).

 

The article was originally posted on LinkedIn.

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