Why Do Vast Majority of Startups Fail?
Startups die for a lot of reasons, but much of their failure can be attributed to three easy-to-understand problems:
- Problem #1 - Their idea is poor and will never work, but the Founder / Investors don't understand that yet
- Problem #2 - Their idea is good but they do not have the right people or resources
- Problem #3 - Their idea is good and they have people and resources, but they don't know how to execute or manage their risks
We realize this is a very simplistic analysis, but it's meant to help you understand your challenge and see if we're a fit.
Assuming that you agree, is there anything you can do about this? Does your big business even care? Let's take a closer look...
Your business has no immediate incentive to fix Problem #1...startups with a poor idea. These startups are going to fail no matter what anyone does to try and help. You might however, be interested in what they're working on. You might want to know because it could influence your future business direction or inspire some sort of internal innovation. You might also sell a product or service that doesn't require a startup to succeed for you to make money.
Your business can fix Problem #2...startups without the right people or resources, but as a sales, marketing or operations executive, that's probably not your job or problem. If you have a Mergers and Acquisitions group, that's their task.
Your business can certainly fix Problem #3...startups that don't know how to execute or don't manage risk, as long as you are expert in the subject(s) that are causing execution or risk problems. You don't however, have any incentive to do so until they are ready to pay for your products or services, and most of them have no money to spend...yet. Even if they have money, you don't know if they have a need you can address.
Therefore, most big companies can't really decide which problem(s) a Startup might possess without spending a lot of time and money doing research, attending conferences, buying data, making expensive sales calls, etc. You probably aren't happy if your business is doing these kinds of things now, as it can be really expensive and may not work at all.