Name: Insights: Five Reasons Startups Fail
Uploaded: 2020-01-15
Duration: 2 min 47 s
Description: Fortune's Leigh Gallagher breaks down the top reasons some startups don't survive past two years. (October 2014)

[MUSIC PLAYING] Everybody wants to work for a startup, but it's estimated that nine out of 10 fail within just a few years of launching. In September, research firm CB Insight published a poll of 101 failed startups, citing the specific reasons they went belly up. Here are five reasons startups fail. [MUSIC PLAYING] Starting us off at number 5, a bad product. 17% of startups said their flop was due to a poor product. Early or beta products often come with glitches and bugs that can turn the customer off forever. At other times, the final product doesn't deliver on the initial idea. Without a good product, your company will not be successful. And the best path to a good product involves research, development, and testing, all of which cost money. Underestimating the competition is another reason for failure. If you have an idea, chances are someone else probably has an idea too. Remember, startups aren't only facing competition from other startups. Big, big companies are also always launching new products. And they have more money and more resources, which means that they can easily beat you to market. To have a great product, you need a great team. Many startups fill their space with young, eager, talented people who are so excited to be working on a new idea, but you can't underestimate the value of experienced leaders. Not having the right team accounted for 23% of the reason a startup failed, according to CB Insight. One very important person you need on your team is someone who's worked in the actual market you're trying to reach. And number 2, of course, money. 29% of the companies surveyed said they failed due to a lack of investment. Brand new businesses are the most vulnerable. 55% of failed startups raised just under a million dollars. Many of the startups surveyed said they underestimated how expensive it would be. You really need to factor in the cost of lawyers, test products, employees, and real estate, all things you need to account for in your budget. And at number 1, a lack of need. According to CB, 42% of polled startups said a simple lack of demand for their product was the reason their startup failed. One of the main drivers for any business is demand. In order for any company to succeed, their product has to be able to solve a specific problem in a scalable way. Once you find your fit in the market, the investors will come rolling in. That's all for this week's 5 Things. For more, go to fortune.com. [MUSIC PLAYING]

Insights: Five Reasons Startups Fail

Uncategorized

The top reasons some startups don't survive past two years.

Five Reasons Startups Fail

Fortune's Leigh Gallagher breaks down the top reasons some startups don't survive past two years. (October 2014)

Everybody wants to work for a start up, but it's estimated at nine out of 10 fail. Within just a few years of launching. In September, research firm CB Insight published a poll of 101 failed startup, citing the specific reasons they went belly up your five reasons startups fail. Starting off at number five a bad product. 17% of startups said their flock was due to a poor product early or beta. Products often come with glitches and bugs that can turn the customer off forever. At other times, the final product doesn't deliver on the initial idea. Without a good product, your company will not be successful on the best. Have a good product involved research, development and testing, all of which cost money. Underestimating the competition is another reason for failure. If you have an idea, chances are someone else probably has been idea, too. Remember, start ups aren't only facing competition from other startups. Big big companies are also always launching new products, and they have more money, more resources, which means that they can easily beat you to market, have a great product. You need a great team. Many startups filler space with young, eager, talented people who are so excited to be working on a new idea. But you can't underestimate the value of experienced leaders. Not having the right team accounted for 23% of the reason the start of failed, according to CB insights. One very important person you need on your team is someone who's worked in the actual market you're trying to reach at Number two, of course, money. 29% of the company surveyed said they failed due to a lack of investment. Brand new businesses are the most vulnerable. 55% of failed startups raised just under a $1,000,000. Many of the start of surveys said they underestimated how expensive it would be. You really need to factor in the cost of lawyers, products, employees. I'm real estate. All things need to account for your butt. And at number one, a lack of market need. According to CB, 42% of cold startup, that a simple lack of demand for their product was the reason they're startup failed. One of the main drivers for any business is demand. In order for any company to succeed, their products have to be able to solve a specific problem in a scale of away. Once you find your fit in the market, the investors will come rolling in. That's all for this week. Five things. For more, go to fortune dot com.