Too Long; Didn't Read
Every year around the world, billions of dollars were lost due to business failures. Therefore, the purpose of this analysis was to gain a better understanding on why companies from around the world shut down.
Out of 500 companies, 59 (11.8%) companies had no product-market fit advantage, 75 (15%) companies suffered from poor business models, and 96 (19.2%) companies faced strong competition. Respectively, 73 (14.6%) companies shuttered due to the lack of funds, while 40 (8%) companies from failed fundraising. The shutdown rate was high among 131 (26.2%) startups, 141 (28.2%) small companies, and 82 (16.4%) SMEs after they had secured seed, early stage, and M&A funding. Non-innovative new and small companies generally shut down within 1-3 years (11 companies at 2.2%) and 3-5 years (26 companies at 5.2%) of operation. Overall, the 385 (77.2%) companies that operated in technology related industries were predominantly co-founded by 821 (87.5%) males founders.
A majority of the reasons for shutdown are technical shortcomings which could be avoided through experiential learning, coaching, and mentoring. This report implicates that failure may be part of the process of building a successful company, especially an innovative one.