Why only 25% of Venture-backed Start-ups Succeed

One Harvard Business School professor says that a high number of venture-backed start-ups kick the bucket, while the industry says otherwise.

Source: Inc. Magazine Article here.

This estimate is different from other studies and the discrepancy may be due to different definitions of failure. Ghosh’s research estimates 30% to 40% of high potential start-ups end up liquidating all assets–a failure by any definition.

corporate venture capital investments climbed to $2.1 billion in the second quarter, a five quarter high, according to investment research firm CB Insights latest announcement at the time of published article on Inc.

According to Harvard Business School’s Working Knowledge Page on the topic: “IN SILICON VALLEY, THE FACT THAT YOUR ENTERPRISE HAS FAILED IS ACTUALLY A BADGE OF HONOR.”

https://hbswk.hbs.edu/item/why-companies-failand-how-their-founders-can-bounce-back

Start-ups often fail because

• founders and investors neglect to look before they leap
• surging forward with plans without taking the time to realize that the base assumption of the business plan is wrong.
• They believe they can predict the future, rather than try to create a future with their customers.
• tend to be single-minded with their strategies—wanting the venture to be all about the technology or all about the sales, without taking time to form a balanced plan.
• do not give themselves wiggle room to pivot midstream if the initial idea doesn’t jibe with customer demand.

REITx is a different FinTech that understands and considers the above studies in it’s strategy. Implementing the Lean Startup Methodology is why the Business Model Canvas is presented early and open to potential customers to receive feedback.