I've read several materials on startup failures including posts by Paul Graham and Steve Blank on the topic. I'm curious what other reasons aside from lack of customer development, product market fit and co-founder problems. Anything to add? Thanks!
Biggest is probably the product-market fit. Is your product or service helping (enough) people solve a problem or fulfill a need?
This is the biggest question a startup is trying to answer. You have to answer this question within a "finite time" and with "limited resources".
So it really comes down to how focused a startup is in answering this question. If you lose focus with other stuff (co-founder issues, business cards, spending too much time making the product beautiful or whatever else) you are going to run out of time and resources and you have lost the game.
I interview some of the very successful digital entrepreneurs on the web that respond to questions like this. Check out the interviews here: http://treptalks.com
Poor hiring. I cannot stress enough that the people you hire represent your company and putting the wrong people in key roles will cause the business to collapse.
Many of the answers already provided are valid. Many startups fail because not enough people want, or will pay for, the product. Others fail because they are unable to generate enough revenue to sustain before they run out of money. In my experience I've also seen startups with great ideas and some traction (evidence of a product-market-message-fit) fail because the entrepreneur couldn't get out of his or her own way. Mindset is key. A willingness to iterate and pivot where necessary is key. A realization that you don't know what you don't know that you don't know as an entrepreneur - and the commitment to fill in the missing bits and pieces is essential.
Good question (because if you know why startups fail, you could minimize - not prevent - the risks of failing for the same reasons).
The best answer (to most questions) is the one based on data (not opinions) as the famous/funny quote goes: "I believe in GOD, all others must bring data". Therefore 'My' answer is based on research done by CBInsights in which they reviewed 101 postmortems of startups that failed and then deduced the top 20 reasons. Here's the link:
Here's the top 10 reasons:
1. No market need.
2. Ran out of cash.
3. Not the right team (I would put this as #2 - opinion based on working with over 100 startups).
4. Get outcompeted.
5. Pricing / cost issues.
6. User unfriendly product (I would move more down the list)
7. Product without a business model (I would move this to #3)
8. Poor Marketing.
9. Ignore Customers (I think this is very similar to #1)
10. Product Mistimed.
Happy to help on any other issue you might have
Best of luck
There several reasons but more often it's because you built a solution for a problem that didn't existed. You should focus on building something quick and dirty and get feedback from your real users. Try to have them pay for it. Here's a detailed article I recently published. https://listingprowp.com/tips/why-99-percent-of-startup-ideas-fail/
A Startup may fail because of multiple reasons, however, for me the main reason is Founder(s). In case the founders don't want to startup to fail, then it will never fail.
No Business Model
No market need.
Ran out of cash.
Product without a business model
No money no trust
if founders don't understand market always fail
No entrepreneur wants to hear this, but one of the biggest reasons companies fail is because of the entrepreneur. There is a term, "founder's disease" that investors like to use, and it refers to an entrepreneur who already knows everything, thinks he's got it all figured out, and has a business plan that he thinks will work. However, there are real problems -- and he won't listen to anyone because he already knows everything and has it all figured out.
These types are uncoachable and won't take advice from anyone. They have a plan and they are going to stick to it no matter what. Also, they tend not to want to share in success because they are so sure their idea is going to make them millions, perhaps even billions.
How can you spot one of these people? They don't like hard questions about their company, they get defensive when you ask them such questions, they dismiss competition and don't treat it seriously, and they can't understand why you won't put money into their company right now.
When I deal with entrepreneurs, I like to push them a bit or be a little rude because I want to see if they give me attitude. If so, that's pretty much a clear indication that they have founders disease. Investors will never put money into such a company because they almost always fail.
Startups could also fail as result of certain external factors that are beyond the control of the entrepreneur. It is quite comfortable to put the blame on the entrepreneur but it will be unfair if a failure analysis indicates that external factors were responsible for the failure.
A major factor why a lot of start up businesses fail, is because most entrepreneurs find it hard to make the transition from having a hobby to running a business. Most often do not pay enough attention to properly setting up the business, which leads to problems in the long term. A properly structured business and a well executed plan will almost always ensure a successful outcome.
Couple of reasons:
1) Too much dependency on investor capital. As an investor, anyone would want returns in say 3 years, that too minimum 60% upwards on a realistic scale. This puts unnecessary pressure on the system.
2) Response in adapting to changing market demands. Slower the response, faster the start up will die.
3) Problems which are sometimes out of scope of founders i.e. government policy changes which impacts the business directly.
4) Lack of strong ethics. This is one aspect many startups are currently lacking. Most of the old companies have a strong ethical foundation.
More than 50% of startup failed each year globally.
1. Absence of clear vision of future company
2. Founder is not able to find the proper team
3. Not enough resources to finance the activity till the product/service will be launched
4. Poor project management skills
5. Lack of priorities, absent of clear strategy
6. Vague market assessment
7. Underestimate of competitors reaction
8. Wrong pricing strategy
9. Wrong communication strategy
Five reasons Startup fails..
Reason 1. Market Problem
Reason 2.Business model failure
Reason 3.Poor management team
Reason 4.Running out of cash.
Reason 5.Product Issue
I would say that they fail because most of them are busy in growing their finance instead of raising the idea to a higher level to stay in the market..
Timing. Most ventures fail to get on the right growth trajectory - they either fail to recognise the opportunity and miss the market, or overspend to get ahead only to discover the market is not ready.