Only 1 in 12 startup survives, that is, 0.8% of all the new ventures around. This is one of the main findings of a study delivered by Startup Genome and the Global Entrepreneurship Network, Global Entrepreneurship Ecosystem Report 2019, published earlier this year.
Yet, the global startup economy continues to grow, creating $2.8 trillion in value between 2016 and 2018. This represents a 20.6% increase from the previous period and more than double what it was just five years ago.
This value creation is on par with a G7 economy and bigger than the annual GDP of the United Kingdom.Source: Global Entrepreneurship Ecosystem Report 2019
Failure to launch
So, why do startups fail in such a big number? If on the one hand balance, meant as finding an equilibrium among many variables to be managed both internally (e.g. customer relationship, product, team, finance, and legal) and externally (e.g. users, customers, product usage and revenue), is a key factor of success, conversely unbalance would generate a crash.
Indeed, by examining data set from over 34,000 companies, experts concluded that the primary reason why startups do fail is due to the inconsistency in managing the two above mentioned dimensions.
In particular, the primacy of the “inner dimensions” which refers to an excessive focus on customer relationship, product, team, finance, and legal would lead to a sort of premature scaling which would eventually result in a fiasco.
Find out more here.