Top Reasons Why Startups Fail
Top Reasons Why Startups Fail

By Niall McCarthy (Statista)

Why do startups fail? This chart shows the most frequently cited reasons for startup failure.

Some startup businesses succeed spectacularly and Facebook is an obvious example. Back in 2005, Accel Partners made a $14.8 million investment in "thefacebook.com" and they made a whopping $5.6 billion return, 378 times their original outlay.

More often than not, however, startups tend to fail and fail brutally.

CB Insights found that 70 percent of upstart tech companies fail, along with 97 percent of seed crowdfunded companies.

They also analyzed a selection of startup post-mortems, helping to paint a picture of where founders and investors go wrong. The following infographic shows the top-20 reasons startups tend to grind to a halt with products or services not serving a market need in first position. Not all ventures manage to attract lucrative investment like Facebook and in 29 percent of cases, they just run out of cash. It's also important to have the right people onboard and pressing on without the right team is the third most frequently cited reason for startup failure.

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