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20 Main Reasons for Startup Failure

20 Main Reasons for Startup Failure

Entrepreneurs start a business with the single goal of achieving success. But we also see them fail miserably. 80% of startup companies witness closure since three years of commencement says a statistics.

So, what should entrepreneurs do to be in that 20% population range of successful people?

One good way to start is to learn from the mistakes committed by other startup companies.

Research Giant CB insights has analyzed 101 failed startup companies and found out 20 important reasons categorically. CB insights is a company that focuses on business, investment and investment strategies. Also they supply valid information on startups and their founders, venture capital and Angel investment.

These are the 20 main reasons for startup failures:

  1. No Market Need – 42%
  2. Ran Out Of Cash – 29%
  3. Not the Right Team – 23%
  4. Get Out-competed – 19%
  5. Pricing/Cost Issues – 18%
  6. Poor Product – 17%
  7. Need/Lack Business Model – 17%
  8. Poor Marketing – 14%
  9. Ignore Customers – 14%
  10. Product Mis-Timed – 13%
  11. Loose Focus – 13%
  12. Disharmony on Team/Investors – 13%
  13. Pivot Gone Bad – 10%
  14. Lack Passion – 9%
  15. Bad Location – 9%
  16. Not Financing/Investor Interest – 8%
  17. Legal Challenges – 8%
  18. Don’t Use Network/Advisors – 8%
  19. Burn Out – 8%
  20. Failure to Pivot – 7%

SIDBI, a government based financial organization caters to the financial requirements of small and medium enterprises. It plays a crucial role in the growth of SME’s. Startup India and Standup India are the two movements initiated by the central government to enhance the spirit of entrepreneurs.

Now, SIDBI has also started SIDBI Startup Mitra to associate startup companies with incubators and investors.

It is quite difficult for the startup companies to get guidance and funding. These two factors are very vital for the growth of a startup firm.  Various investment agencies, angel investors and incubators have associated themselves with Startup Mitra which in turn facilitate the tie-up.

20 main reasons for startup failure

SIDBI startup Mitra also paves way for startup firms to reap the benefits of government plans. The CB Insights tech market intelligence platform analyzes millions of data points on venture capital, startups, patents, partnerships and news media.

India’s top 10 funded startups of 2016

Ibibo Group : $ 250M Investors : Naspers

Industry :  Online Travel Company

Snapdeal : $ 200M Investors : Ontario Teachers Pension Plan, Iron Pillar, Brother Fortune Apparel

Industry :  online marketplace

BigBasket : $ 150M Investors : Abraaj Group, Sands Capital Management, IFC, Helion VC, BVP, Ascent Capital

Industry : Online Grocery Shopping and Online Supermarket

CarTrade : $ 145M Investors : Temasek, Warburg Pincus, Marche Capital

Industry :  online auto classifieds platform

Byju’s Classes : $ 75M Investors : Sequoia, Sofina Industry

Byju’s mobile app has video lessons for IAS, CAT, GMAT, GRE, IIT-JEE & Class 6-12 and comprehensive study material

Lenskart : $ 60M Investors : IFC, Ratan Tata, Kris Gopalakrisnan, IDG, Adveq Management, TPG Growth.

Industry : Shop online for Sunglasses, Eyeglasses and Contact Lenses for men & women

Mobikwik : $ 50M Investors :  GMO Payment Gateway, MediaTek, Sequoi, Tree Line Asia

Industry : Online Recharge, Mobile Recharge & Bill Payments

Lendingkart : $ 32M Investors :  Bertelsmann India, Saama Capital, India Quotient, Darrin Capital, Mayfield India

Industry : SME-lending firm, Short-term loans for Small Businesses

Nestaway : $ 30M Investors :  Tiger Global, IDG Ventures

Industry : Marketplace for shared home, apartments, flats  rentals

Droom : $ 29.8M Investors :  Lightbox, Beenext, Beenos, Digital Garage (Japan)

Industry :  online marketplace to buy & sell used cars, bikes, scooters, bicycles, aero planes.

 

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