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Startup Business Failure Rate By Industry | Statistic Brain

Source: Startup Business Failure Rate By Industry | Statistic Brain



Major Cause Percentage of Failures Specific Pitfalls
1 Incompetence
46 %
Emotional Pricing
Living too high for the business
Nonpayment of taxes
No knowledge of pricing
Lack of planning
No knowledge of financing
No experience in record-keeping
2 Unbalanced Experience or Lack of Managerial Experience
30 %
Poor credit granting practices
Expansion too rapid
Inadequate borrowing practices
3 Lack of Experiences in line of goods or services
11 %
Carry inadequate inventory
No knowledge of suppliers
Wasted advertising budget
5 Neglect, fraud, disaster
1 %


Health care startups are booming. Here’s what it takes to succeed – Fortune

Source: Health care startups are booming. Here’s what it takes to succeed – Fortune



Startup Health … was founded by longtime business partners Steven Krein and Unity Stoakes … in 2011 with the mission to help 1,000 startups re-imagine and transform health care over the next decade. To date, they have 90 companies in their portfolio, and three of those startups have already been acquired by the likes of WebMD and Intel.


Here, Stoakes and Krein offer advice for what it takes to make it as a startup in the industry.

1. Plug into the ‘batteries included’ crowd.

“There are two camps: those that are startup friendly, batteries included, energy-providing, idea-providing, helping the entrepreneurs figure out how to get their ideas — or product or prototype — to the market,” said Krein. “Then there’s a whole camp of resisters; people that are ‘batteries not included.’ They take away all of the momentum of the ideas or concepts of the companies.”

The objective is to connect with more of these “batteries-included” people and organizations to build momentum. Find sources that are startup friendly and willing to lean-in with you — that’s where you should be putting your resources, said Krein.

2. Learn to embrace regulation.

From the Food and Drug Administration’s rules to the Affordable Care Act, health care comes with a host of regulations. It’s an industry full of rules, but rules can be an entrepreneur’s friend.

“A lot of people get spooked by the concept of regulation, but the reality is it’s just a process to work through. And if you know how to work through that process, it’s not that difficult,” said Stoakes. “It can be a competitive advantage.”

3. Play with the big dogs.

Healthcare is an industry of established giants: hospital systems, regulators, insurers, and drugmakers. There’s no way to go around these big guys — every entrepreneur needs to work with them.

“In the tech landscape, the idea is that you completely disintermediate — or go around — the established players. So, if you’re Facebook FB -2.33% , Twitter TWTR -2.51% or Whatsapp, you don’t even think about the industry stakeholders. In healthcare, the large stakeholders are so important,” said Stoakes. “You really need to be working with these corporate and government partners in order to speed up what’s actually possible.”

4. Settle in for a long slog.

“You can go to places like Silicon Valley and there’s these short-term bootcamps where you hear stories like ‘Slack grew from zero to a billion dollars in nine months,’” said Stoakes. “In healthcare, the sales cycles are very long, and regulatory hurdles can take significant time and the resistance to change is high, so the entire cycle is elongated.”

“There’s an intense amount of patience needed to be an entrepreneur in general, and in health care even more so,” Krein said. “You need to think of it as a five to 10 year minimum kind of initiative. You might get lucky, you might get taken out, you might IPO, but the reality is that it’s going to take a long time.”

5. It’s all about the network.

When it all comes down to it, Stoakes and Krein name two key elements that make a successful health care entrepreneur: being collaborative and coachable.

“It’s impossible to know everything, and you need to be open to being coached. Be open to other experts, ideas and suggestions. Listen really well at every stage,” Krein said. “It’s very difficult to be a rugged individualist in this sector, in particular. It helps to be part of an army of entrepreneurs working together.”

Biotech investor shares lessons learned from bad investment in healthcareMedCity News

This is an incredibly insightful Article by STEPHANIE BAUM on MedCity News. From their website;

One of the things that makes successful serial entrepreneurs so inspiring is that even when they fail, they evaluate where they went wrong, begin again and learn from their mistakes. Frequently they share that knowledge with others. Anyone looking for confirmation of that should take a look at the wealth of insights in CB Insights collection of 51 startup post mortems (we did a shorter version based on the post). There are even some investors in that group, namely Bruce Booth, an Atlas Venture partner focused on emerging biotech therapeutics companies and author of the blog LifeSci VC. As he hastens to remind readers in the post, not every deal is a winner.

He shared the experience of a poor investment in healthcare, specifically in a cancer diagnostics firm Q-ity, and why it didn’t work out. It was one of four investors in a $26 million Series A round in 2009.

From Booth’s perspective, the company had several strong points in its favor. It appeared to have a game-changing technology involving cancer and personalized diagnostics and circulating tumor cells, a team with decent experience in the diagnostics market, strong IP, good valuation and several different exit options, either through an M&A by a diagnostics or oncology company or a possible IPO.

In retrospect, it’s not like Booth didn’t see potential risks with the investment. They just were not as magnified as they should have been, he writes. One of the biggest issues was the baggage of the company — it was the product of a merger, which led to a rocky integration. It also proved to be an instructive reminder on deal structure. “If a technology can be validated on a smaller financing, it should be. It gets back to our mantra at Atlas of Prove-Build-Scale. Instead of raising a ‘Build-stage’ $26 million Series A without any tranche or milestone points, we should have broken up the capital to prove the story first. Sadly, we knew within months that the DNA Repair story was going to be an uphill battle. I remember the late 1Q 2010 board meeting well: the initial trial data were far from clear, but clearly far from what we had all hoped for.

Booth’s post also offers some valuable perspectives on the downside of personalized medicine and diagnostics, from an investment perspective. “Diagnostics aren’t for the faint of heart and are a much tougher place to make returns today than other life science subsectors. Despite the frothy commentary about personalized medicine and the dawn of diagnostics, it’s a very tough business that faces many of the risks and costs of drug R&D but without the upside.” It also “needs to get to commercialization before a material exit outcome.” It would be great if more investors had the courage to share investment mistakes they have made. It only adds to the understanding of the complexities behind life science investments and to the appreciation of the relatively few deals that succeed.

Source: Biotech investor shares lessons learned from bad investment in healthcareMedCity News

6 causes of startup failures every healthcare entrepreneur should read – MedCity NewsMedCity News

This is an incredibly useful Article by STEPHANIE BAUM in MedCity News;


From their website;

A recent report by CB Insights surveyed startup casualties in the past few years and revealed that more than half (55 percent) of startups that failed last year had raised $1 million or less. It also calculated that they had an average life span of 20 months from the last funding round if they couldn’t secure additional funding or find a buyer.

The list of reasons behind those failures is as long as a piece of string, and many of those reasons could apply to new companies in most industries. I have whittled the list down to ones that seem most relevant to healthcare startups.

Never assume, always validate: Dave Gallant of BrightCube’s point is critical for any industry but especially healthcare. It also involves taking careful measure of your customers’ experience. He wrote: “You need to validate that your product or service solves a real problem, and whether your target market is willing to pay for your solution. In other words, test your idea before dumping a huge amount of cash on it. When we launched our startup, we did neither. Because of the market we were targeting, it was difficult to validate (at least we thought so). So we launched with the hopes of validating as we went along. Bad idea.

It’s tough to run a startup alone: Melissa Tsang’s experience launching a curated restaurant finder was a solo operation that could have benefited from a co-founder. Although the technically savvy experience that many co-founders lack wasn’t the issue, having a business partner to share the workload of research, sourcing new users, and outreach was. Otherwise, it can easily turn into a cheerless grind. You can lose your perspective and you have no one to ground you within the business. Or as Tsang puts it: “It was overwhelming both physically, mentally and emotionally — morale wise, it was incredibly exhausting. Without anyone else to keep me accountable or really caring about Cusoy as much as I did, it was hard to deal with all my self-doubt and still persevere on when I was essentially my own cheerleader.”

Slow to adapt to market reality: For Steven Schmidt, who served as the CTO of a knowledge management startup, the startup’s aggregation of blogs, wikis and  document management in 1999 was a bit premature. Few understood the benefits of wikis and blogs. From the healthcare IT, companies see there’s an appetite for big data but even though the industry is hungry, it’s not quite sure how that should be packaged.

Too technology-heavy: Just as startups can be hampered by not having an effective technology co-founder, they can also be undone by too many technology professionals. The risk is spending too much time talking about the technology issues you might find compelling and not enough getting a sense of what your customers want and need.

Money Part 1 – Didn’t recruit the right investors: On the investment side, that can mean identifying which investors would be the best fit for a company and cultivating relationships with them long before the search for capital begins in earnest. Do they focus on early-stage companies? Are they rock stars or are they smaller investors with more time for the companies they work with?

Money Part 2 – Figure out your business model, particularly revenue, early: This came up in a few of the startup failure stories but it also has particular importance in the healthcare industry. I covered a panel discussion by digital health CEOs at the JP Morgan Healthcare Conference earlier this month and quoted one as saying “revenue is a trap.” It spurred author and investor Lisa Suennen to write a thoughtful entry on her Venture Valkyrie blog comparing starting a company without locking down how revenue will be generated with the movie Field of Dreams. She concluded: “Companies that want to be taken seriously by investors and partners need to understand their market well enough to devise a legitimate way of extracting cash from customers early in the game. Revenue is the only TRUE proof of concept. Having broad market appeal is critical; having a product that has proven efficacy is essential. But if no one wants to pay for the product despite your having those things, you have built it and they don’t come. Just saying.”

Source: 6 causes of startup failures every healthcare entrepreneur should read – MedCity NewsMedCity News