Why Do 7 Out Of 10 Startups Fail?

7 Out Of 10 Startups Fail

      Startup failures can be pretty bad; time and money losses can throw you into despair. But why is there are a high rate of failed startups as compared to successful ventures? The success of a startup can be stripped down to the basic product or service and the potential market for it.This is a crucial step that you need to consider before launching your business; unearthing customers for your planned product or service idea. Certainly it would be foolish to create a product for which people have no need for because that is a sure recipe for failure. A proper market and consumer research is essential to determine the validity of your idea.

      You must have come across an old saying on startups, “Being early is the same as being wrong.” Although startups most fail because of an internal fault but it is common to come across failed startups that went into the market too early. Market timing is a very critical point that can determine if your product idea would be successful or not. You can even find instances where other entrepreneurs took a previously flop idea and brought it forward to the target market at the right time and became billionaires. Based on the game, Six Degrees of Kevin Bacon, SixDegrees.com was the first ever online social network in 1997. The idea did not work at that time because the market wasn’t ready for such social networking and ripened to welcome Facebook in 2004.

Other possible reasons that could be attributed to startup failures include:

  • Unable to raise sufficient funds.
  • Disputes among investors/co-founders.
  • Lack of strategic planning and poor management.
  • Poor location choices.
  • Pricing issues.

      According to the National Business Association, almost 64% of small businesses fail because of lacking of marketing communications. The authors of Inside Secrets To Venture Capital, Dee Power and Brian Hill surveyed venture capitalists and found that 28% believe startups fail because of a lack of marketing strategy. It is important the startups properly convey their message to the right people without ignoring their competition. Lack of communication about the business can likely cause the business to fail.

      Business videos are one such way of effectively communication to your target customers what you do and how you do it. It is a brilliant way to let others know what you have to offer to them and how it would be a great product or service. Here is a list of benefits that startup explainer videos provide:

  • Heightened conversion rates with video marketing.
  • Direct product testing through a video explaining value proposition.
  • Easier promotion across different platforms.
  • Fans can become your marketing evangelists.
  • Startup explainer videos have a higher retention power as compared to plain text.
  • Search engines love videos, thus a better chance of SEO for your site.

      When creating business videos, make sure you show how product or service would make a difference in the user’s life. The element of virality is unpredictable and therefore is simply based on how your product is able to leave users in awe. Short videos with a concise script, good design, lucid visuals, and good quality audio all make a difference in a effective explainer video.


  1. Raghav says:

    9 out of 10 startups fail. Still it’s good idea to have great marketing video for startups. It’s even helps to attract angel investors.

  2. George says:

    If the concept is strong, the product will survive else it’ll perish.

  3. Gene Towle says:

    Being a consulting co. for Real Estate develers, my experience is that in addition to the above, startups fail because the operator has unreal expectations of the when and how much income he/she can earn, and does not have the gumption to stay with little or no income as long as it takes, get tough, and strengthen the vision.

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