Why 9 Out of 10 Start-ups Fail?

And what you can do differently.

When it comes to startups, failures have become the norm. Over 90% of the startups fail. Even the latest successful startups falter at some point. Failure has become an integral part of the startup ecosystem and it is the norm to some extent. Most of the time this does not happen due to lack of innovation and brainstorming; instead, it happens most often because of the reasons listed below.

What are some of the most common reasons startups fail?

1 No market demand

Most common reason is lack of market demand. 40-45% of the companies introduced a product no one was interest in. The startups tackling problems that were interesting to solve rather than a problem that was relevant to the target audience. In some cases, the market was not yet mature or features are being developed that are not relevant

Run out of money

Knowing how to allocate money and time is crucial for startups. Another important reason for the failure  is the lack of capital resources. CB Insight study puts the proportion of companies that failed due to liquidity problems at just under one third (29 percent)

The wrong team

A diverse team with different skill sets is often cited as being critical to the success of a company. 23% of the companies fail because of difficulties attracting the right team or not hevang the right competences on board.

Strong competition

The reality is that once an idea gets hot or gets market validation, there may be many entrants in the space. In 19 percent according, startups were overtaken by their competitors and forced to give up.

Pricing issues

Finding the balance between high enough pricing to cover the costs, but low enough to bring in customers.

What can you do differently?

Speak to customers before writing code. Make a prototype of the product and test is with real customers. Once you have a good understanding of what your customers really need and you are sure the idea’s work you can start writing code. Build a minimum viable product. An MVP, is a product with enough features to attract early-adopter and it can be used to validate a product idea early in the product development cycle.
Competition can be stiff, so it's important to stay on your toes and keep innovating.

BURO.ONE Digital is a Digital product design company based in the Netherlands with focus on technology, design, privacy and sustainability. We help start-ups, scale-ups and big tech companies with the development and validation of digital products.