WHY DO SOME

STARTUPS FAIL

WHILE OTHERS

SUCCEED?

#AUTOPSY

Agenda

Introduction

1.Methodology

2.Autopsy: causes of startup failure

3.Success factors

4.Key takeaways

525 000 companies Created in France 2015 1

80% Probability of failure within first 5 years 3

10 000 startups Going concerns in France 2015 2

Sources: (1) Insee (2) Estimate of Olivier Ezratty in “Guide des Startups” is between 10,000 and 15,000 (3) APCE

REASONS FOR

FAILURE

1. METHODOLOGY

1. Analysis of 78 failures in USA (autopsy.io)

2. List of factors of failure

3. Survey of 108 entrepreneurs

We analyzed 58 failures of French startups,

enabling us to draw significant conclusions

METHODOLOGY

2. CAUSES OF

STARTUP FAILURE

CAUSES OF FAILURE Analysis of 58 failures

.

Cause of failure Occurence* (%)

Team not suited to project 39.7%

Lack of time and involvement 37.9%

Lack of cash/capital 31.0%

Poor market analysis 29.3%

Relationship problems within team/with investors 20.7%

Apathy/burn out 19.0%

Product/service not adapted to market 17.2%

Premature scaling 17.2%

Administrative/legislative problems 17.2%

Poor business model 17.2%

Inability to pivot/poor pivoting 13.8%

Timing 13.8%

Pricing/costing problem 10.3%

Failure to use network/advisers 10.3%

Management problem 8.6%

Customer expectations ignored 6.9%

Poor marketing strategy/positioning 6.9%

Uncontrolled growth 5.2%

Overtaken by competition 3.4%

Wrong place 3.4%

Communication/marketing expenditure not controlled 3.4%

Business model not replicable/scalable 1.7%

% occurrence means cause was responsible for x% of failures

CAUSES OF FAILURE Comparison USA - France

.

USA France

Market 33.3% 39.7% Team

Financing 21.8% 37.9% Time/involvement

Team 16.7% 31.0% Financing

Premature scaling 11.5% 29.3% Market

Lack of scalability 7.7% 20.7% Relationships

Competition 6.4% 19.0% Apathy/burnout

Technical problems 3.8% 17.2% Product/service

Pivot 3.8% 17.2% Premature scaling

Macro environment 3.8% 17.2% Administration

Timing 2.6% 13.8% Poor business model

Wrong place 2.6% 13.8% Pivot

Occurrence

CAUSES OF FAILURE

Analysis of 58 French failures

40% Bad fit between

team and project

38% Lack of time &

involvement

31% Lack of

capital

29% Poor market

analysis

% occurrence means the cause was responsible for x% of failures

CAUSES OF FAILURE Analysis of 58 French failures

Competition was a cause of failure in 3.4% of cases

In USA it was 6.4%

3. SUCCESS

FACTORS

SUCCESS FACTORS

Rank Criterion Score

1 Company listens to its customers 9.09

2 Team members have a range of complementary skills 8.90

3 Company seeks to enhance customer satisfaction 8.77

4 Company adapts to market trends 8.61

5 Entrepreneur is a competent manager 7.97

6 Entrepreneur has a good professional network 7.76

7 Scaling must be controlled 7.64

8 Company must outperform competition 7.27

9 Company can create barriers to entry 6.35

10 Basic project concept is innovative 5.96

11 Company has first mover advantage 5.92

12 Little competition on the market 4.59

Average score of respondents

DIVERGENCE

Sex Number of

startups Age

AGE: youth favours creation, age favours growth

Digital-savvy generation 18-25 and 26-35 have same TOP 4 and

BOTTOM 4 ranking. They favour initial stages of startup.

➜ 36-50 group have a longer term vision with 7 major criteria including

control of scaling and management.

➜ Over 50s have a legacy corporate vision. Demand adapts to supply and

competition plays a key role.

Su

ccess

facto

rs

36-5

0

Team members have a range of complementary skills 9.60

Company seeks to enhance customer satisfaction 9.40

Control scaling 9.20

Company listens to its customers 9.20

Entrepreneur has a good professional network 9.00

Company adapts to market trends 8.80

Entrepreneur is a competent manager 8.60 T

OP

4

ov

er

50s

Control scaling 9.25

Company must outperform competition 9.00

Team members have a range of complementary skills 8.50

Company has first mover advantage 8.33

SEX: Men are less risk-averse

Global TOP 4 are major criteria for both sexes, but…

➜ Women emphasize human values and the long term

- Managerial competence, control scaling, professional network

- Innovative ideas

➜ Men take more risks

- More male entrepreneurs

- More clear-cut in their criteria for success

- Disregard competition

Risk Top

4

Long

term

NUMBER OF STARTUPS CREATED:

Experience favours emergence of precise criteria

The number of startups created doesn’t change the

success factor ranking except for founders of more

than 2 startups.

They attach more importance to:

- Team

- Control of scaling

They attach less importance to:

- Innovation

- Competition

4. KEY TAKEAWAYS

KEY LEARNING OUTCOMES

Competition Gender Culture

COMPETITION NOT A KEY FACTOR

Rank Criterion Score

1 Company listens to its customers 9.09

2 Team members have a range of complementary skills 8.90

3 Company seeks to enhance customer satisfaction 8.77

4 Company adapts to market trends 8.61

5 Entrepreneur is a competent manager 7.97

6 Entrepreneur has a good professional network 7.76

7 Scaling must be controlled 7.64

8 Company must outperform competition 7.27

9 Company can create barriers to entry 6.35

10 Basic project concept is innovative 5.96

11 Company has first mover advantage 5.92

12 Little competition on the market 4.59

COMPETITION NOT A KEY FACTOR

Entrepreneurs are not afraid of competition

→ don’t believe in first mover advantage

→ not concerned by barriers to entry

→ not afraid to enter a competitive market

CULTURE PLAYS A ROLE

Human factors played a greater role in France than in USA

→ time & involvement

→ relationships

→ apathy & burnout

Administrative and legislative barriers in France, not in USA

FEMALE ENTREPRENEURS ARE MORE SCEPTICAL

ABOUT THE ENVIRONMENT

Is France a favourable environment for startups?

WOMEN MEN

22% 44%

33% 10%

FAVOURABLE

UNFAVOURABLE

Are success factors

universal or

culture-specific?

Thanks!

Ines de Beaucorps

Jonas Bouaouli

Leslie Shaw