What causes startup failure? You may have seen my response to this – I say we don’t know because we can’t get good data – but I like what David Rose says here:
Since a startup is a new business that doesn’t yet exist, the default outcome is for it to fail. Everything has to go right for it to succeed!
David knows. He’s a super angel investor, founder and Chairman Emeritus of New York Angels, and founder of gust.com. I’m quoting from his Quora answer to why startups fail.
On the other hand, when startups are conceived around need, giving value, solving problems, offering something people want or need enough to pay for, then the odds of failure go down. I bet David would agree with that one. He’s been involved in, founded, and invested in dozens of startups that didn’t fail.
I will add, though, that a good look at this data reveals mostly what is already common knowledge. Startups fail for lack of market need, running out of cash, team problems, competition, pricing, poor product, and so forth. There’s no surprises there.
By the way, notice that the various causes here add up to a lot more than 100%. That makes sense to me because it’s no hard to really identify causes.
And also, please notice how much of those failures are about failing to do something people need and want. If I add up the totals for no market need, get outcompeted, poor product, ignore customers, and product mistimed, that’s 105%.