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Why 90% of startups fail. What do you need to know about the other 10%?

Alexander Prokopiev
Alexander Prokopiev CEO of ARTJOKER
4 min read

We all know about the luck/failure factor in business and natural selection. Some make stupid mistakes, and some succeed. Some people think that failing to find investors for a startup has kept the business running, while others find finances quickly and easily. We will lift the veil of secrecy and find out why some startups fail, while others conquer the top and become multimillion-dollar businesses

How many startups fail?

Nine out of ten startups fail. That's a grim statistic, but it shouldn't stop you. Sit down, meditate. No matter how many startup companies fail, you can succeed.

Why are we talking about statistics then? When an idea hits you, you're overly optimistic and in your mind you're already counting the profits. You need a dose of reality. Cold statistics like these aren't meant to discourage entrepreneurs - they're meant to encourage them to work smarter and harder.

What distinguishes successful startups from unsuccessful ones?

You can read articles on how to do a startup step by step, go to training sessions, and so on. But the point is that there are too many factors that affect implementation. So our goal is to focus on the most important reasons for success.

1. The product is ideal for the market.

"Fortune" reported the "biggest reason" why startups fail: "They make products no one wants". A survey of startups found that 42% identified "a lack of market need for their product" as the single biggest reason for their failure.

The most successful startups always know clearly who they are making the product for 😎.

If you spend your time, finances, and resources creating a product, take the time to make sure it's the right product for your market. In other words, find your target audience.

Unsuccessful e-commerce startups are often due to entrepreneurs offering an unnecessary product to an audience, or failing to find customers who will truly appreciate the project.

2. The entrepreneur does not lose sight of anything.

A unique product idea and a strong technical team are not yet a guarantee of a sustainable business. Don't ignore the company's business processes and problems because it's not your job. And don't let anyone be ?out of touch?.

In the early stages of a startup, the entire team develops organically, and segmentation is minimal. You live the project and act as a single organism. If the marketer thinks that his job is only to advertise the startup, and the developer is only interested in the code, the chance of failure increases.

Don't ignore important things like the startup's development plan, team problem-solving, and involvement in what you do globally.

Successful entrepreneurs understand that they have to work on their business, not in their business. Overwhelmed by chores-presentations, phone calls, meetings, and emails can distract you from the heart of the business.

Why 90% of startups fail. What do you need to know about the other 10%?

3. The company is growing rapidly.

Who says rapid growth is unsustainable and bad for business? - Obviously unsuccessful startups.

Growth is what entrepreneurs, investors and markets want. Fast growth is a sign of a great idea in a hot market.

Growth leads to even more growth, which drives investment in the startup, increases the team and profits. Startup KPIs don't have to meet the single-digit growth rate limit after a few months of implementation. If growth does not occur after a certain designated time, there will be no growth at all. Unsuccessful startups are companies that do not grow, and as a consequence, shrink.

The second main reason that answers the question "why do startups fail" is that they "ran out of money". Why did they run out of money? Because they didn't develop fast enough 😟. If your startup can grow fast, you can effectively outrun some of the biggest startup killers-loss of competition, customers, staff and passion.

Fast growth early on is a sure sign of future success.

Why 90% of startups fail. What do you need to know about the other 10%? - 1

4. The team knows how to recover.

Every startup is supported by a team of people. The more versatile this team is, the greater the chances of success.

"Versatility" is often seen in a limited sense, having more than one skill or talent. Versatility in a startup environment encompasses much more than some skill. It has to do with mindset. Startup teams must have the ability to change products, adapt to different environments, adopt a new approach to marketing, be mobile, rebrand the business or even tear it down and start over without thinking that it's much easier to sell a startup before it all collapses.

It's all about recovering from shocks. Teams that are able to recover together also have the unique trait of working together harmoniously in difficult times.

Notably, startups with co-founders have a higher success rate than single-founder companies. A co-founder creates a partnership. There's much more accountability there, which helps you avoid some of the pitfalls of a single charismatic leader. Also, the co-founder will have skills that you don't have.

Why 90% of startups fail. What do you need to know about the other 10%? - 2

Content of the article


No matter how many startups fail, with the right principles, you can succeed. It is impossible to foresee everything, so it is very important to keep a team spirit, a belief in success, and to be flexible and ready for changes. Teams that possess the 4 characteristics described will be able to implement their product and be successful, and their startup ideas will gain fans and customers.

If you need help, you can contact ARTJOKER. Startup creation is one of our powerful specialties. We have helped mobile startups Ruben, Nobius, Starbar, and also created our own startup, Mycredit. All of them are successful Internet startups, which have found their niche and are constantly evolving. Together we will turn ideas into results.

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