The Top 10 Reasons Why Startups Fail

Reasons Why Startups Fail from The Startup Garage
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Steve Rowles has been serving the San Diego startup ecosystem for over 20 years. Beginning in 1987,  he worked in the garages of the first companies to come out of UC San Diego. Steve strives to provide a higher value to the local startup community and serves on the Board of Directors of CommNexus, a non-profit technology industry association that works to accelerate the formation, growth, and success of the industry in the San Diego region. Steve recently spoke to a group of entrepreneurs about the top 10 reasons why startups fail. Performance milestones and a strong business plan are two key components to successfully raising capital from investors, according to Steve.

The top 10 reasons why startups fail:


1. Taking Money From The Wrong Investors

Look for local investors with strong character and domain experience.

2. Fear of Dilution

Understand the difference between dilution and economic dilution, which occurs when the value of the business doesn’t change but the number of shares increases.

3. Neglecting The Legal Foundation

During company formation, the management team needs a solid legal strategy and must be compliance.

4. Half Baked Business Plans

Avoid chart junk, wild forecasts and top-down sales forecasting.

5. Allocate Enough Time for Fundraising

It takes nine months, not nine weeks. Be prepared for a long diligence process.

Reasons 6-10:

To hear the reaming 5 reasons why startups fail, watch this video excerpt from Steve’s talk.


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About Tyler Jensen

I work with entrepreneurs who are looking to attract investment and get out of the "Garage". I am passionate about helping entrepreneurs start companies that matter. I helped launch over 100 Companies, Non-Profits and Social Enterprises. I consider myself a serial entrepreneur, startup coach & trusted advisor. * Launching New Companies (For Profit, Non-Profit and Social Enterprise) * Expert Business Plan Writer * Extensive Network of Business Relationships focused on Launch & Rapid Growth of New Companies * Startup, Growth, Marketing, Technology, Web, Business Systems * Trusted Advisor to CEO’s & Entrepreneurs * Capital Raising Strategy Development * Startup Team Development The first company I started and sold is VAVi Sport & Social Club which grew to over 25,000 members in six years, was recognized as San Diego’s 30th fastest growing private company in 2006 by the San Diego Business Journal and 32nd fastest in 2007, and sold for over 25X the capital investment.