New Analysis of Common Causes for Start-up Failure

Startups that scale properly grow 20 times faster than startups that scaled prematurely, according to research by Blackbox. The findings are part of The Startup Genome Report, an ongoing, collaborative R&D project designed to take a comprehensive dive into what makes Silicon Valley startups successful — and not — and the Startup Genome Compass, a benchmarking tool for startups that helps founders monitor their progress in different growth categories. As of this week, more than 6,000 startups registered to use the Compass.

Blackbox says that the major cause of startup failure is premature scaling, which they define as: when a startup’s core dimensions (product, customer, team, finances and business model) are out of sync. As Blackbox Co-founder Bjoern Herrmann pointed out, “in some cases dysfunctional scaling may be a better description”.

In order to help folks understand the root causes, and how they can be better anticipated, Visual.ly created the graphic below:

why-start-ups-fail

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