Why Startups Fail!

90% of startups fail. What are the causes?

2% Legal Problems

Some industries are heavily regulated like finance, food and pharma.

Sometimes a startup can evolve from a simple idea and enter a world of legal complexities that can ultimately shut it down. Finance, Food and Pharma are heavily regulated.

Even when the idea was great, many legal obstacles must be overcome (if possible)

Some examples are Binance, Coolest Cooler (China Trading War), Mobile Saving App Beam(FTC)

3% Operations Problems

Don't underestimate the work & paperwork when you create physical products

Lesara was on the way to become the #1 international fast-fashion retailer, but the new logistics centre in Germany created a big loss and ended up filing for bankruptcy.

Warehousing is a different game than online marketplaces.

6% Tech problems

The biggest mistake is over-investment in expensive technology (developer time)

Purchasing and developing software can cost a great deal of money.

There is always that extra feature that is needed to succeed, there is always a big to solve.

Sometimes cancelling features is the best way.

13% Pricing Issues

The silent killer of startups, products and ideas

Pricing is a dark art when it comes to startup success, and startup post-mortems highlight the difficulty in pricing a product high enough to eventually cover costs but low enough to bring in customers.

The 2019 shutdown of genetic testing and scientific wellness startup Arivale came as a surprise to many partners and customers, but the reason behind the company’s failure was simple: the price of running the company was too high compared to the revenues it brought in:

19% Beaten by Competition

Reality is some competitors are more famous

Founders admitted to being edged out of the market by firms that were either bigger, more well-known, or that just provided a better customer experience.

The founders of photo storage service Everpix, for example, realized that Apple and Google had similar products that were more basic but free. Even though the team, and their fan-base believed that what Everpix was offering was arguably better, the startup was not able to position itself well or widely enough to counter such giant competition.

23% Weak Founding Team

A great founding team ism ore than the sum of its parts

Let me make it clear, discussing and dreaming about the successful outcome of your ideas is fun. However, the road is complicated, and when you don't have a strong team at the start, your chances of success are dropping rapidly.

Some hard decisions have to be taken upon the path, and you don't want to lose time, resources and money.

29% Running out of Money

Not only running out of funding but also personal money.

Cash is king for startups. Even a successful business model will fail without proper cash flow.

Cash is king for startups. Even a successful business model will fail without proper cash flow.

Traction and generating enough inflow of money to keep the growth going is very slow. Meanwhile, startups need to make sure they have enough financing.

Meanwhile, the founders need to eat and sleep, and often they burning their savings as well, without getting extra equity in the company

42% Poor Market Fit

Bad things happen when you ignore what users want and need.

Unfortunately, most entrepreneurs miss one important aspect in the early stages of product development: They don’t clearly understand their product’s aim, who they’re building the product for, what problems it should solve, and what it might be able to achieve in the market.

Poor market research leads to misunderstanding of the target audience and, as a result, a product that no one wants.

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