10 Signs Your Startup is Going To Fail

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May 1, 2018
I wish I hadn’t experienced some of these symptoms myself.

After failing my first start-up I started researching this topic a lot. Let me list my 10 key findings, and hopefully you can use these pointers as a checklist for your idea or business. Sources are at the bottom.

1. Founders that don’t learn. Startups that have helpful mentors, track performance metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.

2. Pivoting more than 2x or not at all.Startups that pivot once or twice raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all. A pivot is when a startup decides to change a major part of its business.

3. Scaling prematurely. They tend to lose the battle early on by getting ahead of themselves. Startups can prematurely scale their team, their customer acquisition strategies or over build the product. Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.

4. Having too much money. Many investors invest 2-3x more capital than necessary in startups in the discovery phase. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.

5. Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.

6. No business founders, or no technical founder. Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.

7. No commitment. Founders that don’t work full-time have 4x less user growth and end up raising 24x less money from investors.

8. The wrong mentlity and incentives. Most successful founders are driven by impact rather than experience or money.

9. No product edge. 72% of founders find out that their initial intellectual property is not a competitive advantage.

10. Overconfidence in market size and expected traction. Startups that haven’t raised money overestimate their market size by 100x and often misinterpret their market as new.

With no real product edge, no technical founder and scaling prematurly, I should have known better at the time.

Some lessons you’ve got to learn the hard way. But avoid these mistakes on your journey.

To read more on this topic, the best source on start-up success & failure is a study covering 3200+ high growth tech start-ups with fascinating findings.