The data tells us that the world of startups is fraught with peril. The strength of founding team and a clear direction are critical. A stellar CTO is crucial for tech startups.
- Across all industries, startup failure rates seem to be close to the same.
- About 90% of startups fail.
- 10% of startups fail within the first year.
- The number one reason why startups fail is due to misreading market demand — this is found in 42% of cases.
- The second largest reason why startups fail (29% of cases) is due to running out of funding and personal money.
- Other notable cases of failure are a weak founding team (23%) and being beat by competition (19%).
- Startup owners can spend around 40% of their working hours on tasks that do not generate income such as hiring, HR tasks, and payroll.
- Two founders increase the odds of a startup’s success with 30% more investment, three times the customer growth rate, and a higher likelihood the startup will not scale too fast.
- Startup failure is most common when the company has 11–50 employees. – should we stop at 10? 🙂
- The largest challenge that fintech startups face is the cost of customer acquisition.
Other contributing factors I have personally seen in struggling startups:
- Run out of funding
- The vision is not clear.
- Objectives are not clear.
- Priorities are not set.
- Processes are not prioritized to support and foster growth.