Why tech startups fail — based on auditing 50+ SaaS startups
I’m sure you’ve heard the statistic that 9 out of 10 startups fail. How can you win against such odds? Is there a secret startup handbook to read or an investment due diligence checklist to follow?
This article was originally published on January 19, 2021 on the madewithlove blog.
Madewithlove has audited over 50 companies, usually as part of an investment round. Sometimes CEOs sense something is wrong and want an honest opinion.
We’ve seen the inner details of the ones that succeed and fail. In this article, we’ll reveal the secrets.
What is the startup success rate and what percentage of startups fail?
More startups survive than you probably think. In the US, roughly 80% of startups are still active after one year. The flaw in this metric and others used are that they rely on the US Bureau of Labor Statistics data about business employment. When these statistics are defined, the word startup is defined as a small business that has hired at least one employee. This is not a startup in the way that most people think about it, an entrepreneurial venture to validate a scalable business model.
Startups are counted when business establishments hire at least one employee for…
