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Exploring the Blackhole of Entrepreneurship: Why Startups Fail

Updated: Sep 21, 2022

In the world of entrepreneurship, failure is not a one-way street, as shown by CBInsights’ post-mortems of over 100 failed startups in the last four years.

It is a black hole of unfortunate cases filtered into a dozen reasons ‌startups fail, ranging from failure to raise capital, which ranked highest (38%), to burnout and lack of passion as the lowest ranked (5%).

The above statistics clearly explain why, according to Failory, 9 out of 10 startups fail, 7.5 venture-backed startups fail, and 2 out of 10 new businesses fail in the first year.

The nature of entrepreneurship demands that entrepreneurs, innovators, players in the startup ecosystem, and anyone who dreams of building a business, put a stake on an idea to create and scale value. However, putting a stake on an idea can be in different forms and can certainly go in different ways.

For example, Fred Smith, founder and CEO of FedEx, famously gambled $5000 in Las Vegas in their early days to keep the company from closing. His gamble paid off. FedEx reported a revenue of $22.6 billion in 2021.

Meta’s Mark Zuckerberg put his future at stake by dropping out of university to pursue an idea that would bring people together on a social network. His gamble paid off, too. Meta (formerly Facebook) reported a revenue of about $117 billion in 2021.

In 2018, Facebook tweaked its feed algorithm, which led to the “death” of a startup called Sharing his story via Twitter, the founder, Joe Spieser, explained how he lost his company with 110 employees and $100 million.

It is all about taking risks, and it is only logical that uncertain processes, such as those experienced in entrepreneurship and innovation, are likely to result in failure.

Risk is the name of the game. To enjoy success, despite the harsh realities of entrepreneurship, one must be open to the idea of failure. The next step is to give your startup a fair chance of survival by taking calculated risks, with the guidance of experienced mentors in a startup accelerator like SABAH.lab.

Experience is the ultimate reward in entrepreneurship. It is invaluable and can sometimes be the difference between success and failure. Therefore, failing forward—learning from failure and not giving up—is perhaps the surest and wisest path to success.


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