The Top 4 Reasons Startups Fail, According to 14 International Accelerators

Source | Entrepreneur : By Michael Houlihan & Bonnie Harvey

As speakers, advisers and trainers in the entrepreneurial space, we’ve been particularly excited by our December survey of the principles of 14 international accelerators. We wanted to know, from their point of view, what were the key factors in startup success … and failure. As far as we know, this is the most recent study conducted on this subject. Although these folks are from all over the world, it’s amazing how much they agree when it comes to why startups fail.

Inadequate Testing

Inadequate Testing was by far the most mentioned reason for startup failure. This factor is identified by several other terms like not getting started, not understanding how to access the market, and not understanding the barriers to entry. But Greg Wright, founder of HATCH pitch, put it quite succinctly: “Failure to test and validate hypotheses and assumptions,” and its corollary, “Premature scaling (seeking/obtaining funding too early, ramping production/team/advertising before achieving product market fit).”

Keith Hopper, CEO of Danger Fort Labs, adds, “Not addressing an important enough need that customers are willing to pay for.” Ben Hsieh, program manager of Nest and Jason Cole, CEO of Da Primus Consulting, both agree that “not finding product market fit” is a main cause of failure.

Ashish Bhatia, founder/MD, of India Accelerator, points out, “Delaying the launch (is) one of the cardinal sins. (Success is achieved) only by bouncing your idea off users. Excessive perfectionism never works. Go out and meet the customer. Get your hands dirty.”

Alyse Daunis, program manager of Launch Alaska, adds, “Poor customer discovery. Early stage companies that do not go out and talk to potential customers often fail. It is critical for founders to test their value propositions and customer segments early on to answer questions such as, Are we targeting the right customers? Is our product or service a ‘must have’?”

Or, as Christian Busch, CEO of German Accelerator Tech NY, sums it up, Lack of focus on solving a specific problem/need, (poor) timing (too early/too late), and scaling too fast.”

Read On….


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