Founders, take note: here’s why most startups fail

• The Indian startup ecosystem saw the birth of six new unicorns this week alone.
• But far from the billion dollar valuations, are also thousands of startups that continue to struggle to see the light of the day.
• As startups chase the unicorn tag, here’s what entrepreneurs should watch out for to ensure their companies don’t fail.

The Indian startup ecosystem is seeing a massive boom. After all, we saw the birth of six new unicorns this week alone. But far from the billion dollar valuations and the thunderous applause from all, are also thousands of startups that continue to struggle to survive.

While some face difficulty in raising funds, others are struggling to keep afloat during the testing times of the COVID-19 pandemic. Many successful entrepreneurs, who are already running big startups worth billions, celebrated the rise of the new unicorns and welcomed them to the club. They also made it a point to give a shoutout to many other founders, who are finding it difficult to raise funds.



So, it’s important for startups to have an eye on the larger goal. “While the significance of startups in wealth creation may seem obvious, if those startups don’t survive then it seems counter-productive,” said a KPMG report on startup valuations dated March 31, 2020.

According to the report, here are the common reasons why most startups fail.

Crisis continues and challenges stay

And the COVID-19 pandemic has only made things worse for startups. The KPMG report further said that in 2020, as many as 70% of Indian startups had less than three months of runway left, while 35% of them saw their revenues decline by more than 80%.

As the second wave of COVID-19 has taken over the country and lockdowns have been implemented in multiple states, startups will have to continue to innovate to stay ahead of the curve.

But as startups strive for growth, there are also multiple challenges they face. As per an Innoven Capital report, here are the challenges faced by most entrepreneurs today.