Why Major Software Product Based Start-ups Fail?

Do you know that even though India has the third-largest start-up environment, 80 to 90% of start-ups fail within the first five years?

Have you ever questioned why so many start-ups failed?

If not, don’t worry; we’ll highlight some of the major factors that contributed to the failure of many start-ups.

  • Market issues

Most of the start-ups have this delusion that their invention is so unique and appealing that the market will beg for it and cash will begin to flow in.

The majority of start-up founders are unable to comprehend what their products can do on the market, especially in the early stages. This is the reason for many pivots, when a business changes its course and product appeal to a different market. Before releasing or beta testing, entrepreneurs should validate their products in pilot projects to lower their risk of failure and market rejection.

  • Lack of research and planning

Many start-ups skip out on conducting adequate research and preparation because they think their idea will be enough to bring the success.

A brilliant idea will help you in the beginning phases of establishing a Startup, but if you want to achieve success, you must incorporate this idea into an appropriate business strategy.

Lack of planning and research leads you to make decisions regarding your product direction and marketing strategy virtually every day, which may be time-consuming and irritating at times.

In addition, it can be difficult to resist distractions when you are unsure of your goals. At first look, creating a business plan might seem like a challenging task, but it gives you a blueprint you can use in the future.

  • Cash crunch

Another big reason why start-ups fail is running out of money. Most start-ups rely on investors and venture capitalists for financial support until their product or service starts generating revenue, and if that doesn’t happen right away, investors can continue to shell out money for a considerable amount of time.

The start-ups will quickly come to the conclusion that they cannot cover operational expenditures under the intended business model if they do not make enough effort to locate fresh funds when the original capital burn up.

One of the main causes of start-ups ceasing operations is funding or cash flow problems, which are even more common among start-ups. Even without the support of investors, new enterprises might fail if they are ineffective at meeting customer demands or if they set their pricing point too high or low.

  • Saying yes to every customer request

Saying yes to every feature request made by a customer is another significant mistake that rapidly growing businesses frequently make when they start to scale up. You run the danger of making unfulfilled promises in this case.

  • For instance

Gene Caballero, a co-founder of GreenPal (dubbed “Uber for Lawn Care”), once had this to say about the mistake the company made while trying to scale up: “One mistake we did when trying to scale up, was to present our customer with too much authority when it came to setting their schedule. We didn’t provide homeowners the option to readily plan weekly or biweekly appointments; instead, we gave them the freedom to add one-at-a-time appointments whenever they pleased. For the lawn care professionals who used our platform, this is a logistical nightmare.

  • Poor marketing

Regardless of how fantastic your product is, if no one knows about it, it is useless. One of the main causes of the failure of many start-ups is improperly handled marketing (or sales).

At first, you might manage without a dedicated PR/marketing team, but you’ll need to generate awareness about your business or products on social media and in the press.

Make sure your publications in magazines and online are credible and well-known to the people who will be reading them. If your business is unable to effectively manage marketing, nobody will be aware of your product and, ultimately, nobody will buy it.

Although it may seem like a waste of time to certain founders and more technical teams, getting word about your brand in front of an audience, but is essential for a business to succeed.


If you want to start a start-up, you should be aware of the primary reasons behind failure of start-ups, so that you may decide correctly and lead your business to success.

Keep checking back with Stellar Digital, the top digital marketing company in Delhi NCR, and Gurgaon that provides services in digital marketing, mobile app development, and web design and development. To reach us, just send an email to contact@stellardigital.in