AskMe, PepperTap, AUTOnCAB, Purple Squirrel, FranklyMe- These startups are a history now! And if we dig into the world of startups, the list of failure startups does not ends here! Every year, a huge number of startups come into existence, gain popularity but unfortunately, only 20% startups survive to celebrate their 3rd anniversary and afterwards. Why? Here I have gathered some of the top reasons behind the shutting down of startups:



Many of the startups came up with breathtaking ideas, but failed because they didn’t analyzed the market trend. Having a unique idea is not enough to entice people, you must have an idea that they find valuable, that they find as a necessity of their lives. Moreover, an entrepreneur must keep in mind that choices of people changes with time. It might be possible that your idea seems successful now, but by the time it enters the market, it finds no good response.

So, what I believe is that one must do a deep study of the market before planning to take their idea to the execution stage- so that they do not come up with a user “unfriendly” product/service.


Several startups shut down because they felt their idea is too unique to get a competition in the market. If you also feel so, I would like to share that there’s a plethora of startups in the market and it is likely to find one with a similar idea as yours. So, one must be prepared to fight once they decide to enter the world of entrepreneurship. But, this does not mean they should get distracted from their ultimate goal of serving clients and building a successful business empire.

Right Team

One of the reasons why startups could not exist for longer was their poor workforce. They focused too much on their idea and marketing, but neglected the fact that it’s their team that can turn that idea into reality. Either they hired the highly-skilled employees who were outstanding in their only particular field or they have selected anyone ‘just like that’ to save their time, efforts and money.

When talk about team, I go with Jack Ma’s concept, “Hire the right people, not the best people”. In a startup, you have more work than employees. So, a startup founder must try to find professionals who could do more than one task, and help the company to satisfy their needs.

Secondly, it is very much required that there’s a great bonding, harmony in the team. The right team that can uplift a startup business, according to me, is the one where all stay together, no matter what the situation is. They use their strengths to overcome the weaknesses of each other, and thus give productive results under all circumstances.

Neglecting potential users

There are an enormous number of startups that caught the attention of market with their innovative ideas and marketing strategies, but could not last longer just because of one thing- they did not paid much attention to their potential users. Instead of working on the feedbacks of their existing clients and improving their services, they focused on reaching more customers and leave their competitors behind. The consequence is that they lost even the existing users.

So, according to me, one must keep the requirements of users in their consideration and act accordingly.

Remember what Alibaba’s founder Jack Ma says, “Forget about your competitors, just focus on your customers”.


Money can be the reason behind drowning of your startup in case you ran “out of cash” while running your business. Most of the startups, including AskMe failed due to money shortage. They were unable to find investors to sustain their existence, and thus shut down.

Being a co-founder of a Startup, what I have experienced is that an entrepreneur must always remain in touch with investors so that they can seek for a help, whenever required. Beside this, a startup must take care of its cash flow- one must keep a record of each penny spend. This helps in regulating the monetary fund and preventing the situation of bankrupt.

Lost Interest

Many of the startups admitted that even though they were on the top of the market, they quit because they lost their interest. They were no more enthusiastic towards taking their business to next level and were even investing more of their time in additional tasks than in the required business work. In fact, there are many startups that failed due to disputes between the co-founders.


There is no deny to the fact that a business is all about its strong connections. A successful entrepreneur is the one that has a lot of valuable connections, on which he/she can rely in critical situations. Most of the startups failed at this point. They limited their connections thinking it less required when compared to the production, and thus missed their only chance to survive in the market.

If you ask me, I believe startups must invest a little more time in building connections (with businessmen, investors, customers etc.) and in nurturing the relationship.

Do you have any more major reasons why startups fail? Do share in the comment section below!

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