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Top 5 Reasons Tech Startups Fail

October 7, 2014
Posted in: Innovation, Software

Data company CB Insights recently polled over 100 entrepreneurs from failed startups to gain an understanding of the factors that were the most influential in their company’s downfall. The top five reasons these startups provided, which are examined below, offer valuable insights into the struggles faced by growing companies, which your startup can use to try to avoid a similar fate.

Tech Startup Failure Reasons*Each company was able to identify multiple factors that contributed to their failure.
For full results, visit CB Insights.


1. No Market Need – Addressing a significant market problem is a fundamental requirement for any startup. If the market for your product or services is too small, then even the most innovative of your services will have difficulty staying afloat.

2. Ran out of Money – Proper estimation and allocation of resources is a significant challenged faced by many startups, particularly those whose team members lack business experience. This is an area where an experienced mentor or business adviser can be invaluable.

3. Not the Right Team – Successful teams require a diverse set of skills, a shared goal, and complementary personalities. If any of these components are lacking, it can severely impact the productivity and effectiveness of your company.

4. Lost to the Competition – A firm understanding of what your competition has to offer and a strategy for distinguishing your company from the crowd are essential for attracting potential customers. If you do not have a handle on what the competition is doing, you will have a hard time convincing customers that you are the better choice.

5. Pricing/Cost Issues – Much like the previous factor, your service must be priced competitively in order for customers to consider working with your company. If you cannot cut costs to stay in line with your competitors, then you must make it very apparent why your services provide a greater value than theirs.


Starting and maintaining a new company is hard, particularly in the rapidly changing field of technology. If your technology startup or small business is struggling, RTS Labs can help. Give us a call today!