Top Reasons Startups Fail

It’s a well known fact that startups have way higher probability to fail than to succeed. We are talking about 95% vs 5%. It is massive.

At BGI, we have a 53% success rate, which is incredibly higher than the market, but still… We can learn a lot from failure. That’s why, this year, when we put together our iconic BGI Summer Bootcamp, we went through a lot of topics on what makes startups fail. And to be honest, what are the startup typical mistakes?

Well the number one, statistically pointed by the startups, is no market need for the product. That happens mostly because the deep tech startups don’t have business people involved, and fail to interview, talk and follow the consumer.

What are the current solutions? How do they use my solution? Will they continue to use my solution and why? What would facilitate repeating the purchase? Talk to the consumer until exhaustion! Startups don’t fail because they lack a product/service. They fail because they lack customers and a proven financial model.

At BGI we really try to solve this issue at our bootcamps, workshops, mentorship programs and hence the biggest problem identified is actually the team. How much equity to share? How can we bring on board key people on the company? What happens if they want to leave?

Most startups fail because the tech guy trusts another guy to run the administration and business and it turns out to be someone not trustworthy. Maybe someone who after receiving shares won’t even work that much. It ends up being a real problem… How can you trust someone? How do you know it will work? That is why, just like in a marriage, you need to sort very well what happens if you want to “break up” with your business partner, so that all situations are accommodated.

On a round table with serial and experienced entrepreneurs it was clear for us that trust and loyalty are the most difficult aspects to get out of a co-founder or employee. How do you attract and retain talent? In the end, we all work for people, to satisfy the needs of others, and in the process we need to motivate a lot of people to do so. So all in all, one can say startups are all about people, but being honest, what isn’t?

Enjoy this holiday to reflect on that, and to understand how to read and inspire those around you to make sure you have the most important resource to make your startup succeed.

Also read: A day in the life of a Project Manager