Why do most tech startups fail?



Though we come across many startup success stories that are quite inspiring and motivating, most of the startups are dragged down to the ground in no time. Statistics show that out of every ten tech startups, nine of them fail within a span of 3 years. Surprisingly the success rate remains mere 10%.

But why do these startups fail?
The major reasons why most of the startups fail includes:

  • No market need- An idea is the backbone of any startup. Though your product may seem to be promising, the chances are that it is not required in the market. You might end up investing your time and money in building something that no one wants!

  • Premature scaling- Premature scaling remains one of the major reason why most of the startups fail. Though initial funding might not be a problem, running out of it won’t help. Finding and attracting investors to cash their money on your startup is a tedious task.
    Spending spree is another mistake that many startups make.

  • Not the right team- Finding like-minded and experienced teammates can also be a tough task. Startups require having the “right” set of people and diversity in their office. Disharmony among partners and investors can also cause a startup to fail.

  • Poor networking- A successful entrepreneur is always backed up by a network of investors and connection who can support and lead their startup to success!

  • Competition- Two or more startups may have a similar idea. What makes the difference is their business model and marketing strategy! One needs to analyze the market, already running businesses and their competition and strategize accordingly to stand out of the crowd.

The following infographic from Forbes shows the top 20 reasons why startups fail-