The Most Frequent Causes Startups Fail


Pricey SaaStr:  What are some widespread causes for the failure of startups? How can these errors be averted to extend their possibilities of success?

My expertise throughout main 30+ seed investments, together with 4 billion+ exits to date, on why startups fail:

  • Not 200% dedicated to successful it doesn’t matter what. Even the neatest founders aren’t all the time 200% dedicated. Generally, they’re extra in a “I’ll give it a shot” mode. To date, I’ve all the time misplaced my cash right here.
  • Good However Not Nice CEO. It’s simply too aggressive on the market for a pleasant however not nice CEO to win.
  • Refusal To Handle / Deal With The Burn Fee. Some founders simply cover from burning an excessive amount of money. That may be OK for a number of months, however past that, startups fall right into a decay curve they don’t recuperate from.

There are different causes startups one thing do “Good However Not Nice” or simply OK, however that don’t result in failure IMHE:

  • Nice CEO, Merely Good CTO. I don’t see these producing massive class winners, as a result of they’ll’t sustain on the product aspect. However they usually can nonetheless be a good #2 or #3 within the area and product a great exit. Simply not an enormous one.
  • Rising, However By no means Getting Environment friendly Sufficient. It is a delicate level, however some startups develop fairly shortly however by no means fairly get their unit economics below management. Some fail, sure. However extra usually in my expertise, they simply find yourself promoting for an OK however Not Nice worth.
  • Lack of Founder DNA. This will occur for lots of causes, however I haven’t had a really nice end result the place all of the founder DNA moved on. An organization run 100% by non-founders can battle to essentially get forward of change, even when they’ll handle the present environments fairly properly.
  • Can’t Recruit a Nice VP Workforce / Solely Capable of Recruit Mediocre VPs. Some founders can do loads on their very own with a small staff, however simply by no means recruit nice VPs. They usually can get to $10m, $20m, $30m+ ARR in some way this fashion, however no less than in SaaS, by no means scale previous that.

(good however not nice picture from here)


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