Why Startups Fail

why-startups-fail

The guys from CBInsights published a very interesting collection of startup post mortems. They basically compiled a list with posts from startup founders and investors where they talk about the reasons their startups died. The list has 101 startups now, and they seem to be updating it regularly. Here’s the link: 101 Startup Failure Post-Mortems

Using that data, they also elaborated a graphic, outlining the main reasons behind startup failures:

why-startups-fail

This is one of the best summaries I have seen in a while, and I tend to agree with the main reasons mentioned. In the past I have seen people arguing that the main reason startups fails is because they run out of money (if I am not wrong Paul Graham said this) or because the team will start fighting about the direction to follow (many investors say this). In my opinion these two reasons are valid, but they shouldn’t top the list. Not solving a real problem and not having a good market fit is a more significant problem, and the data from CBInsights confirms it.

Another interesting point I noticed is that “Failure to pivot” was only mentioned by 7% of the founders/investors. I think this is paradoxical if you consider that the top reason mentioned is “No Market Need.” If the majority of startups are failing because they are not solving real problem, then not pivoting into something else that solves a real problem is equally problematic. In other words, I believe entrepreneurs and startup founders ignore or at least underestimate the importance of pivoting. Just think about the number of successful startups that had to pivot because they found the right direction/product.

Make sure to visit the link above to read the details about each failure. It’s quite an interesting read, and I am sure you’ll gain an insight or two after going through the list.

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