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    Why Startups Fails?: BY - Amit Kumar Praful Kumar Pratyush Tripathi Shekhar Singh

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    Shekhar Singh
    The document summarizes 5 major reasons for startup failures: 1) Market problems if there is little market for the product, wrong timing, or market is too small. 2) Business model failure if customer acquisition costs exceed lifetime customer value. 3) Poor management team with weak strategy, execution, and inability to hire strong teams. 4) Running out of cash before achieving milestones to raise more funding at a lower valuation. 5) Product problems if the product does not meet market needs or achieve product/market fit.

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    Why Startups Fails?: BY - Amit Kumar Praful Kumar Pratyush Tripathi Shekhar Singh

    Uploaded by

    Shekhar Singh
    42 views12 pages
    The document summarizes 5 major reasons for startup failures: 1) Market problems if there is little market for the product, wrong timing, or market is too small. 2) Business model failure if customer acquisition costs exceed lifetime customer value. 3) Poor management team with weak strategy, execution, and inability to hire strong teams. 4) Running out of cash before achieving milestones to raise more funding at a lower valuation. 5) Product problems if the product does not meet market needs or achieve product/market fit.

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    Why Startups Fails

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    The document summarizes 5 major reasons for startup failures: 1) Market problems if there is little market for the product, wrong timing, or market is too small. 2) Business model failure if customer acquisition costs exceed lifetime customer value. 3) Poor management team with weak strategy, execution, and inability to hire strong teams. 4) Running out of cash before achieving milestones to raise more funding at a lower valuation. 5) Product problems if the product does not meet market needs or achieve product/market fit.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    42 views12 pages

    Why Startups Fails?: BY - Amit Kumar Praful Kumar Pratyush Tripathi Shekhar Singh

    Uploaded by

    Shekhar Singh
    The document summarizes 5 major reasons for startup failures: 1) Market problems if there is little market for the product, wrong timing, or market is too small. 2) Business model failure if customer acquisition costs exceed lifetime customer value. 3) Poor management team with weak strategy, execution, and inability to hire strong teams. 4) Running out of cash before achieving milestones to raise more funding at a lower valuation. 5) Product problems if the product does not meet market needs or achieve product/market fit.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    WHY STARTUPS

    FAILS?
    BY –
    AMIT KUMAR
    PRAFUL KUMAR
    PRATYUSH TRIPATHI
    SHEKHAR SINGH
    WHY STARTUPS FAIL?

    • There can be many reasons for the failure of a startup.


    • Some doesn’t have a good core product, some startups fails to capture the desired market
    and some fails to create demand.
    • We have stated five major reasons for the failure of startups and also stated how Snapdeal
    failed in India.
    REASON 1. MARKET PROBLEMS

    • A major reason why companies fail, is that they run into the problem of their being little or no
    market for the product that they have built. Here are some common symptoms:
    • There is not a compelling enough value proposition, or compelling event, to cause the buyer to
    actually commit to purchasing. Good sales reps will tell you that to get an order in today’s tough
    conditions, you have to find buyers that have their “hair on fire”, or are “in extreme pain”.   You also
    hear people talking about whether a product is a Vitamin (nice to have), or an Aspirin (must have).
    • The market timing is wrong. They could be ahead of your market by a few years, and they are not
    ready for your particular solution at this stage.
    • The market size of people that have pain, and have funds is simply not large enough
    REASON 2. BUSINESS MODEL FAILURE

    • One of the most common causes of failure in the startup world is that entrepreneurs are too optimistic about
    how easy it will be to acquire customers. They assume that because they will build an interesting web site,
    product, or service, that customers will beat a path to their door. That may happen with the first few
    customers, but after that, it rapidly becomes an expensive task to attract and win customers, and in many
    cases the cost of acquiring the customer (CAC) is actually higher than the lifetime value of that customer
    (LTV).
    • The observation that they have to be able to acquire your customers for less money than they will generate in
    value of the lifetime of your relationship with them is stunningly obvious. Yet despite that, the vast majority of
    entrepreneurs failing to pay adequate attention to figuring out a realistic cost of customer acquisition. A very
    large number of the business plans as a venture capitalist have no thought given to this critical number, and,
    they often begin to realize that their business model may not work because CAC will be greater than LTV.
    REASON 3. POOR MANAGEMENT TEAM

    • An incredibly common problem that causes startups to fail is a weak management team. A good
    management team will be smart enough to avoid Reasons 2, 4, and 5.  Weak management teams make
    mistakes in multiple areas:
    • They are often weak on strategy, building a product that no-one wants to buy as they failed to do enough
    work to validate the ideas before and during development. This can carry through to poorly thought through
    go-to-market strategies.
    • They are usually poor at execution, which leads to issues with the product not getting built correctly or on
    time, and the go-to market execution will be poorly implemented.
    • They will build weak teams below them. There is the well proven saying: A players hire A players, and B
    players only get to hire C players (because B players don’t want to work for other B players). So the rest of
    the company will end up as weak, and poor execution will be rampant.
    REASON 4. RUNNING OUT OF CASH

    • The valuations of a startup don’t change in a linear fashion over time. Simply
    because it was twelve months since you raised your Series A round, does not
    mean that you are now worth more money. 
    • What frequently goes wrong, and leads to a company running out of cash, and
    unable to raise more, is that management failed to achieve the next milestone
    before cash ran out. Many times it is still possible to raise cash, but the valuation
    will be significantly lower.
    REASON 5. PRODUCT PROBLEMS

    • Another reason that companies fail is because they fail to develop a product that
    meets the market need. This can either be due to simple execution. Or it can be a
    far more strategic problem, which is a failure to achieve Product/Market fit.
    • Most of the time the first product that a startup brings to market won’t meet the
    market need. In the best cases, it will take a few revisions to get the product/market
    fit right. In the worst cases, the product will be way off base, and a complete re-
    think is required. If this happens it is a clear indication of a team that didn’t do the
    work to get out and validate their ideas with customers before, and during,
    development.

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