India is amongst the fastest-growing startup ecosystem globally, with a rapidly increasing number of entrepreneurs pursuing their innovative business ideas. While this rise in numbers is impressive, it is equally important to understand that not all startups become successful. Ironically, a significant percentage of them eventually fail within just the first few years of operation.  

Countless startups are launched every year but only a small percentage survive the competition and accumulate maximum profit. Studies show how only 20% of startups survive for more than 5 years and only 8% manage to survive beyond 10 years.  

As per a study conducted by the Institute of Business Value and Oxford Economics, 90% of Indian startups had failed within the first five years of operation. This high rate of failure was a result of several factors including the following: 

• Lack of market demand 

• Insufficient funding 

• Poor business planning 

• Inadequate mentoring 

• Strong competition  

However, the prime reason behind this failure is due to misreading the market demand. This has been found to be a common problem in 42% of cases. Other contributing factors include a weak founding team (23%) and being left behind by competition (19%).