Analysing Startups Failure Factors: Evidence from CB Insights Tech Market Intelligence Platform

Noui Mohamed El-amine, Dehane Mohammed

Abstract

Failure as a phenomenon is roughly inseparable from the startups subject in previous literature, causing a debate among scholars about the diagnostic of the reasons of this pathology, due to the large failure rates of startups that impose risks of ruling out the positive impact and added value they allow. Our paper attempts to contribute to this debate by analysing a database of 353 startups post-mortem reports from the CB Insights Tech Market Intelligence Platform using 65 failure factors based on 245 factors used in 13 prior studies. Results indicate that failure factors related to product/market misfit, lack of capital, great power of competition, law and regulation problems, and bad business model appear as the most important factors that lead startups to fail. Furthermore, findings emphasize that failure factors related to product/market misfit and the lack of capital appear actively in the early stages of the startup lifecycle, to decline gradually in the later stages leaving room for factors related to great power of competition and law and regulation problems, with relative stability of financial problems through the lifecycle of the startup