An Insight Into Failed Startups That Went Under And Why?

With a rise in startup culture, the dynamics have shifted towards researching and analyzing the key aspects that decided the success and the future of startups. What are the possible reasons why so many startups do not blossom into a stable full-grown company? Finding out what the real reasons are in each case is quite interesting.

The single biggest reason for the failure of many startups is the lack of market need for their product/service. Either the market was not yet mature or features were developed that were not relevant from the point of view of the target group and which the market, therefore, did not want, cited as the №1 reason for failure, noted in 42% of cases.

# Dave Sloan’s startup Treehouse Logic, launched as SurveyMonkey for Website Configurators, also failed because Sloan wanted to solve a problem that was not relevant enough for customers to generate a profitable business model.

Money and time are finite that need to be allocated judiciously to sail out in tough times. The question of how should you raise & spend your money was a frequent conundrum and the reason for failure cited by startups is 29%.

# An example of this is the drone company Airware, which had to close its bulkheads again a few months ago. Airware desperately looked for financiers for 18 months before the company ran out of money and was shut down. The startup wanted to gain a foothold as a pioneer in commercial drones. However, the market did not develop as quickly as Airware expected.

Another major reason identified was the founders’ failure to select the best-suited team for the job. (Hiring wrong) People are one of the biggest mistakes in any startup and this can create the hardest damage.

# The founder of the online platform Nouncer attributes the failure of the start-up to the fact that he did not have a partner who balanced him and provided plausibility checks for business and technological decisions.

With the emergence of so many new startup, it is of no surprise that many of them get outcompeted resulting in their dissolution. Pricing is a key element in the early stages of a startup.

# When children’s apparel delivery service, Mac & Mia, found itself in a tough spot competing with highly successful companies. Eventually, Stich Fix outcompeted them and they had to shut down just a year after launch.

Not setting the Right Price is proven to be detrimental to the existence of a startup. pricing is in fact core to your business and also to succeed as an entrepreneur. Pricing is about knowing your customer. The customer’s profit is the difference between the price you charge and the benefit they receive.

# In 2019 shutdown of genetic testing and scientific wellness startup, Arivale, came as a surprise to many partners and customers. However, the reason behind the company’s failure is simple: the price of running the company, for instance, collecting the genetic, blood, and microbiome assays that formed the foundation of the program, was too high compared to the revenues it brought in.

It was also noticed that many entrepreneurs struggle to introduce products that are user-friendly, in return end up confusing making them less popular choices. One of the most important things in businesses is to have a good business model, but many founders introduce a product without an effective business analysis.

Even after developing a wonderful product, wrong marketing can kill the entire business structure. Therefore, it is suggested to select the marketing strategy that is best suited for your product and the target market.

Conclusion:

The success of a startup is not guaranteed even the causes of start-up failure are common and clear hence the keys to success are clear and available too. The business world is dynamic & changing at a fast pace. So, any company that is unable to keep up with these changes will likely fail. It does not make much difference even if it has large investments behind it.

Today, the Indian startup ecosystem is home to approximately 38,800+ startups which is inclusive of both funded and bootstrapped. They have the ability to solve complex problems for a better quality of life along with exponential wealth creation for the investors.

That is why the founder of a start-up needs to love what they do and be passionate about what they are bringing to market. Before there are great rewards one must face great risk. Mitigate the risks with careful planning and forethought.

If you are someone running a startup, consider these points to determine what can go wrong. let us know if we can support you to move your business forward. contact@seedvc.in.

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