Track: Entrepreneurship and Innovation

Abstract

Tech startups bring innovative products and services to the market, and entrepreneurs manage numerous challenges across startups' lifecycle stages. More than 90% of the startups experience failure despite the support from a startup ecosystem, and therefore, it throws open the following research questions. Why do tech startups fail? What are the causal attributes of startup failure across the lifecycle stages? What are the causal attributes that differentiate a failed tech startup from a successful one? Against this backdrop, this comprehensive study explored the causal attributes of startup failures in India, with the following two specific objectives: (i) Do causal factors vary within the lifecycle stage? and (ii) What are the attributes that differentiate a failed tech startup from a successful one?

We gathered primary data from 151 cofounders and analyzed using binomial logistic regression and identified causal attributes of startup failures. The startup's lifecycle stage plays a significant role and implies how entrepreneurs prioritize and allocate resources to maximize their returns. The other causal attributes that are statistically significant are revenue, product market fit, product roadmap, market promotion, conflict with investors, level of confidence at execution, extent of focus on current startups, and entrepreneur’s experience level.