Strong Reasons for the Failure of Startups and Ways to Resolve/Avoid it


Whenever you move ahead surveying of startup failures, especially tech startups, you often give a single common reason i.e. lack of technical talent. However, according to experts, technical failures often stem from the inability of supply chain to supply the necessary tools to fulfill the vision of technological professionals or engineers. This means, the gap does not present in engineering/technology talent, but failure prevails in proper product management. Based on this, experts of React App Development Company have found a few major reasons behind failure of startup groups with relevant examples.

Run Out of Money/Cash

According to the research on tech startups, we the experienced App Developers Canada can say that about 29% of startup groups often failed because of fund crunch. This situation takes place because of many reasons, like for instance, startup failed to raise fund or spend/invest a big amount in the production and purchasing of parts. For instance, if we talk about iPhone and iPad, during that time, present prices related to production process and relevant parts were very high.

Read also : Importance of Mobile App Development for Your Business

Even if we talk about iPad, we have found the cost is similar to the cost of an engineering workstation i.e. about $10,000. Indeed, this may not work whenever you target college and high school students, as they want to pay only pennies for a product. Other prime reasons related to fund crunch include failure in raising fund properly and the initial investment failed to last up to the end. The latter case often takes place because of poor/improper planning of valuable resources at a particular disposal or poor resources’ allocation in accordance with the specific requirement of the startup group.

Fail to Identify the Exact Market Pain

After this, experts of Canadian App Development Company have reported that approximately 42% startups suffer failure, as they fail to identify the exact market pain. Accordingly, even though marketers put efforts, skills and energy to resolve an interesting issue they fail to identify the one plague the entire market. They fail to identify and/or resolve any specific major problem faced by the modern market. With the availability of latest technologies and apps available, commuting becomes an easy task. In addition, Google algorithms and Amazon rules have brought drastic changes in the entire e-commerce industry. Because of this, startups should essentially understand key requirements of the modern market (tech market in this case) and should identify the ways, in which they could resolve the problem. However, irrespective of your wonderful idea, it will doom to fail if you and your team fail to identify or address an actual market pain point.

Improper Calculation Work

Next, we the App Developers reputed have observed that many of the startup companies and individual engineers/technologists/developers fail to do the calculation job properly. To understand this point, you should have a look on the inflation-adjusted price of an iPad or iPod device. You will definitely find that it is of relatively higher cost as compared to the costs of iPads and iPhones available today. Reason for this is that economic scale designed for iPod have gone down the cost associated with its parts/pieces.

Product Lacking User-friendliness

You have created a product and after that, your team founds that the product lacks user-friendliness factor i.e. its users are unable to enjoy or willing to use it. For instance, if we talk about Alibaba, Jack Ma operates any of the new technology-operable products firstly and in case he fails to do so or understands it in a right way because of his non-technical background, it is assumed that most of the people with non-technological background will not be able to understand or use it properly. In this case, it is essential for you to test the newly launched product. As per the reports generated by our Canadian App Development Company, about 17% startup companies have failed because their products lacked user-friendliness. Hence, you should keep in mind that in case your target customers/users face difficulty to use the newly launched product, they never go to buy it.

Product Lacking Sound Product Management

Unlike the time when Apple Group launched its iPod drawings for the first time, today, it highly focuses on knowledge and skills of manufacturers. Even Apple has qualified and experienced product managers, while it has direct pipeline towards the top level. Reason for this is that sound product management plays a critical role in the success of any startup and the level of authority required by a company.

Overlooking Marketing and Sales Strategies

Another prime reason, for which a large number of startups suffer loss, is that they often overlook marketing and sales strategies. Moreover, a few of them although spend big amount of money but do not come up with proper marketing strategy to implement in the market. Hence, marketers should essentially consider various important factors associated with effective marketing, which include understanding of the entire market and the way, in which product would cater to the entire market. In addition, it is essential to know the target audience. If you still have queries about significance of sales and marketing activities related to your newly launched app, we would share a good example by referring startup groups of Canada.


A majority of Canadian startup groups belongs to B2B startup groups, while B2B community does not show any type of impulse buying. In this situation, if you have strategic product, it is essential to highlight about it among functional groups consisting of your target customers into the proper alignment. Yes, you should make sure about an inbound marketing program. This step lets you to create a good reputation and achieve lucrative deals. Along with this, you should keep in mind that products, promotion and customers are the prime things to focus on as a startup company. The moment you deviate your focus from any of these factors, things will start to change.

Therefore, will full awareness on the mentioned reasons related to pitfall of startup companies, you will definitely adopt sound strategies to avoid repeating any of the aforementioned situations and become a successful startup group or a successful entrepreneur.

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