Article: Why do Startups fail?

We continually review startups, both successful ones and some that fail. In this section, we present a viewpoint on startup failures and how we can learn from their missteps.


“It’s good to learn from your mistakes.

It’s better to learn from other people’s mistakes.”

                                               -Warren Buffet


Photo credit

Failure is integral to entrepreneurship; and failures could be attributable to various factors. Some of the reasons why start-ups fail include

  • Poor Planning – Even the best business plans may fail if the assumptions are flawed or the analysis is wrong. Execution of the idea should be simple and uncomplicated. In many cases, a simple MVP, product or service with just a few functionalities should help you take off.
  • Expectation mismatch –Entrepreneurs may think that they need to do everything themselves. This is a recipe for burnout. They need to realize that they can’t do everything by themselves, that is why choosing the right team of people is utmost important for a Start-up.
  • Execution is the key to success – An idea is only part of the equation. Successful execution matters more to success of a startup.
  • Ignorance of business basics – For Establishing and opening a new venture, it is essential to ensure that the most important decisions are well documented. Nascence of a Start-up is often accompanied by a very dynamic and creative atmosphere where everybody is well focused on the idea and its implementation thus ignoring the formal point of view.

In this section, we examine a couple of failed startups and try to learn from their failures.


Image: LinkedIn/Townrush


Started in: 2015

Closed in: 2015

Employees: 2-10

Townrush was an on-demand delivery platform that enabled anyone to get local goods delivered in a city within hours. Its novel platform connected merchants and customers to local logistics service providers, who picked up and deliver products anywhere within the city.

Reason of Failure:

  • Entering the hot sector of Logistics during the crazy ecommerce boom, Townrush struggled hard to keep up.
  • Lack of sustainable profit margin.

According to multiple sources, the Bengaluru-based start-up was unable to pay employee salaries for three months before it shut shop.

 Lesson(s) Learnt:  

  • Execute well and fast
  • Master your Market – One needs to make sure that the market is big enough to sustain high growth and that the competitors won’t make it impossible for you to thrive.



Image result for Lumos startup

Image: crunchbase

Started in: 2014

Closed in: 2015

Employees: 2-10

 Lumos planned to develop electrical switches with embedded sensors to detect ambient conditions in a room. Three B. Tech graduates from Indian Institute of Technology (IIT), Gandhinagar started Lumos right after their graduation in 2014. The idea was to build smart switches that can automate all electrical appliances in a home. The switches would have inbuilt sensors that allow them to track ambient conditions and human presence to take accurate automation decisions and they would learn from the user’s behavior.

Lesson(s) Learnt (according to co-founder Yash Kotak)

  • We were neither experts nor target users of the product that we were building.
  • We did not do the due diligence on the idea before we started building the product.
  • We let sunk cost bias affect our decisions about pivoting.
  • We were trying to do everything for everybody.
  • We underestimated hardware.

Author: Sanwar Tagra is currently pursuing his Bachelors in Engineering at BML Munjal University. He is a contributor and researcher for

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