Several startups have already failed in their first few years because of their business idea. Only one in ten people is still in the race after more than five years. Startups fail for a variety of reasons. It is usually a combination of factors that prevents success, rather than just one. This blog discusses the five most common factors.

Low Demand In The Market

Most of the research explains that 40 percent of businesses fail because they do not have a proper guideline about market demand and investing in a product is out of favor in the market. 

In other circumstances, the market characteristics were not suitable for the product.

The latter is true of Woodero, an Austrian company. The company could gather the necessary funds through crowdfunding but ultimately failed due to a lack of demand for its handcrafted wood smartphone and tablet cases.

Sloan’s startup Treehouse Logic was developed as SurveyMonkey for Website Configurators, likewise failed because Sloan attempted to solve an issue that was not sufficiently relevant to customers to establish a lucrative business model.

See Also: How To Raise Investment For Your Startup? Funding Rounds Explained!

Insufficient Capital

Another reason for the failure of a startup is a lack of capital resources, follow financing is too much necessary in the growth phase. Airware, a drone firm, had to close its bulkheads again a few months ago. Airware searched for lenders for 18 months before running out of cash and was closed. The company aimed to establish itself as a commercial drone pioneer. The market, however, did not develop as swiftly as Airware had anticipated.

Also Read: How To Find Investor For Small Business: Top 5 Ways For A Startup To Get Capital

Inappropriate Team

Problems and inconsistencies inside the team are another sure-fire way to ruin a startup. If the team members’ collaboration fails, the startup will fail as well.

“The first five employees will make or ruin the startup.”

Overtaken by competitors

Competitors overtake most of the startups. Mint looked at the flaws in Wesabe’s MVP and decided to launch the platform only after they had come up with a better solution. This, among other things, gives Mint a competitive advantage. Wesabe was more powerful and had more features than Mint, but it was more complicated to use.


Another issue that many businesses face is determining a price that is both high enough to pay costs and low to entice clients. For example, Delight had the vision to create a new mobile analysis: visual analysis. The monthly plan with the highest price tag was $300. For this price, customers had hoped for more.

TRD Author

Sajeel Shamsi

Sajeel Shamsi covers Big Tech, Global Technology news, AI, security, platforms, and apps for TRD. A social activist who loves to edit videos, learn new technologies, console games, and sports.