Top 4 Reasons Funded Startups Fail: An Angel Investor’s Perspective
Investing in startups is a high-stakes game, often akin to navigating a minefield. As an angel investor, I’ve seen startups with substantial funding falter and fail, despite their seemingly strong financial backing. It’s a perplexing scenario that prompts an in-depth examination of the underlying causes. Why do these funded startups fail? From my experience, the top four reasons are: running out of cash, having a non-viable business model, failing to gain enough traction, and being outcompeted. In this article, I’ll go into these reasons, offering insights and to shed light on these common pitfalls.
For most founders, the most difficult is those who can’t raise money, so they think why can there be those that fail even after raising millions of dollars?
1. Running Out of Cash
One of the most prevalent reasons startups fail, even those with initial funding, is running out of cash. It’s a scenario that’s more common than one might think, and it often stems from a combination of mismanagement, unforeseen expenses, and overly optimistic financial projections.
Cash burn rate is a critical metric that represents the rate at which a startup is spending its…
