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Why do Indian
Why do Indian startups fail? A startups fail?
narrative analysis of key
business stakeholders
Nayanjyoti Goswami 141
Indian Institute of Management, Shillong, India, and
Received 26 November 2022
Ashutosh Bishnu Murti and Rohit Dwivedi Revised 6 February 2023
Accepted 15 February 2023
Department of Organization Behaviour and Human Resources,
Indian Institute of Management, Shillong, India

Abstract
Purpose – This paper aims to examine the factors that lead to the failure of startups in India and proposes a
‘Four Dimensional (4D) Strategic Framework’ to drive success.
Design/methodology/approach – This study is exploratory and uses a narrative analysis methodology
to analyse the accounts of key startup stakeholders – founders, investors, former employees and consumers;
to identify their failure factors. A conveniently selected sample of 165 startups was studied to understand
better the reasons for their failure within a thematic framework developed from David Feinleib’s (2012)
handbook “Why Startups Fail”.
Findings – Results indicate that a dearth of capital or running out of money and inadequate sales and
marketing strategy, which leads businesses to fall behind rivals and lose money on each transaction, are the
most common factors for startup failure in India.
Originality/value – “Startups” are substantial for emerging economies like India because they fuel
technological innovation and economic progress and provide for the modern workforce’s needs and aspirations.
However, they seem to be typically unprofitable, with a modest probability of survival. Subsisting studies mainly
focus primarily on success factors and very few on why startups fail, with significant disagreement on an
appropriate methodology. To the best of the authors’ knowledge, this is the first study that analyses failure
factors of Indian startups using narrative analysis of its key stakeholders. It aims to aid the conception of
profitable entrepreneurship by reducing the failure frequency in the startup and small business ecology.
Keywords Entrepreneurship, Startups, Failure factors, Narrative analysis, Thematic framework,
Success strategy
Paper type Research paper

1. Introduction
“Startups” is the contemporary buzzword, researched and defined across disciplines
(Baregheh et al., 2009). Ries (2011) defines a startup as a newly founded company that
develops innovative goods or services in uncertain conditions. “Startup” refers to new or
early-stage businesses (Spiegel et al., 2016). Despite their modest size, startups have a
remarkable impact on the economic amplification of any country. They facilitate economic
progress by stimulating employment and promoting innovation (Olawale and Garwe, 2010;
Sulayman et al., 2014), especially in emerging economies (Kelley and Nakosteen, 2005).
Indian Growth and Development
Review
1.1 The Indian startup scenario Vol. 16 No. 2, 2023
pp. 141-157
India’s startup lead may be a turning point in its development. There were only nine or © Emerald Publishing Limited
1753-8254
ten unicorns until 2015, but there are over 70 unicorns as of October 2021. India’s DOI 10.1108/IGDR-11-2022-0136
IGDR Economic Survey 2020–21 recorded 41,000 startups, making it the world’s third-largest
16,2 startup ecosystem. With cutting-edge technology and government support, startups are
expected to grow 12%–15% annually, encouraging entrepreneurship and investor
confidence. India will have over a million startups and 325 million jobs by 2025. Indian
startups are anticipated to generate over US$500bn in value and invest over US$150bn
(Sharma, 2021). Despite this, India’s startup failure rate is frighteningly high. They
142 typically face fierce competition, potent suppliers, wary customers and constrained
resources (Subrahmanya, 2010). Consistent to the IBM Institute for Business Value
Analysis and the Oxford Economics Report (2016), around 90% of Indian startups fail
during the initial five years of operation for a variety of reasons (Kalyanasundaram, 2018;
Krishna et al., 2016; Patel, 2015; Prashantham and Yip, 2017). Figure 1 below highlights
the percentages of closed companies in India.

25,00,000 37% 40%

36% 36%
31% 35%
20,00,000
30%

18% 25%
15,00,000
19% 19%
18% 20%

10,00,000
15%

10%
5,00,000
5%

0 0%
2014 2015 2016 2017 2018 2019 2020 2021*

Companies Registered Number of Closed Companies

% of Closed to Registered Companies
Figure 1.
Percentage of closed Note: Data as of 31.01.2021
companies in India
Source: Ministry of Corporate Affairs, Govt. of India

Despite the idea that startups boost economic development, scholars have uncovered
relatively few examples of their failure factors (Giardino et al., 2014). Limited scientific
studies have examined startup failure, predominantly in the early phases and in the
Indian backdrop. Entrepreneurs, according to studies, frequently make preventable
blunders. This study expands the literature on failure-causing factors to help
businesses avoid these mistakes. While understanding how to evade these traps is not
an assurance of success, it is a significant step in the right direction. “Startup success
can be engineered by following the process, which means it can be learned, which
means it can be taught,” [1] pronounces Eric Ries, progenitor of the Lean Startup
Movement.
2. Literature review: “failure” data analysis and identified factors Why do Indian
Existing literature on analysing startup failure underlines standard approaches. These startups fail?
spans primary and secondary data analysis, statistical techniques, financial modelling and
other novel methodologies.
Lussier (1996) performed a field study among failing company CEOs and owners in six
New England states. It identified lack of capital and abnormal fixed expenses, economic
downturn, creditor troubles, sluggish accounts receivable, levy concerns, losing prominent
clients, lousy management and co-founders, overexpansion and embezzlement as the top 10
143
reasons for startup failure. Giardino et al. (2014) conducted an exploratory case-study
analysis in semi-structured discussions with the CEOs of two failed startup businesses.
Instead of problem-solution fit, these companies focused on product-market fit and
simplifying and improving customer acquisition.
Entrepreneurs blamed internal and external factors for their failure in comparative
research on cognition (Atsan, 2016). This study’s top internal concerns were partners,
finances and a lack of critical information and mentoring. External factors included economic
conditions, policy changes and unanticipated events. CB Insights (2019), a popular business
database and analytics platform, examined 101 startup failure post-mortems through
founder narratives, arguing that the most prevalent causes were lack of experience, deficient
marketing, lack of funds, competition and the founder’s disinclination to receive feedback.
Lussier (1995) conducted a systematic literature analysis identifying 15 critical variables
leading to company failures – data maintenance and financial control, trade and
administration expertise, personnel, product and service launch and promotion and
economic situation. Secondary data analysis shows that financial mismanagement, lack of
investors, incompetent teams, human resource management, slack market demand for
products and services, inopportune market positioning strategy, ecosystem factors and
environmental impact are all factors in startup failures (Akter and Iqbal, 2020; Bednar and
Tariškova, 2018; Ooghe and De Sofie, 2008; Salamzadeh and Kawamorita Kesim, 2017).
Mason and Hornsby (2019) reviewed prior research to comprehend the root causes of new
company failure and developed a structured hierarchy of causes. The main reasons were not
using a minimum viable product and failing to create a sustainable and scalable company
strategy.
Fatema et al. (2020) conducted extensive research on startup software firms, examining
success and failure features and solutions for failure signals. Their study found that
ineffective team building, lack of strategy, poor project management, product-market
mismatch, cash flow problems and competition cause failure.
Lussier and Corman (2015) criticised the generic use of financial ratio-based models for
predicting failure. They used a nonfinancial approach to study managerial factors
impacting success/failure and found that a lack of expert advice to create precise business
plans often leads to the failure of successful businesses.
Cantamessa et al. (2018) created a method to evaluate startup failures through
entrepreneur narratives and post-mortem reports. Using the software, hardware,
environment, liveware people and liveware environment model, they found that startups
often lack a consistent planning phase and focus too much on sales/product enhancement
without considering consumer behaviour.
Hyder and Lussier (2016) used logistic regression to study Pakistani small-scale
companies’ success or failure. Their findings show that a small business needs the right
employees, financial infusions and partnerships to thrive. Similarly, Szathmari et al. (2020)
studied 50 online startup failures using a modified Critical Incident Technique and Spencer’s
IGDR Competency Model and found that businesses failed due to late data collection, flawed
16,2 research methods and putting technology over customer needs.

2.1 Causal factors observed in the Indian context

Following global trends, Indian studies have used widely adopted methods. George and
Padmadas (2020) conducted a pilot study on Kerala startups using a structured
144 questionnaire, a convenience sample and a descriptive research method. They found that
internal factors, such as shortcomings in entrepreneurship promotion and lack of
mentorship and persistence, had a greater impact on failure than external factors.
Indian companies face failure challenges regardless of type. Socio-cultural considerations,
regulatory and economic policy, recruiting, fundraising, environmental and sustainability
challenges and multi-window clearances are notable (Habeebuddin and Sakriya, 2018). Poor
mentoring, markets and infrastructure also cause failures. Startups must have customer
acceptance of competitive goods, follow industry trends and manage unforeseen barriers and
expenses to avoid early closure (Kurode et al., 2019; Kanchana et al., 2013).
Kalyanasundaram et al. (2020) used the Kruskal–Wallis test or one-way analysis of
variance to identify successful startup and entrepreneur profile traits. The startup profile is
about serving customers, getting funding and working with the right people. The number of
startups founders have been involved in, their perseverance and their entrepreneurial skills
all affect the value of entrepreneurial experience.
A detailed examination of funded and unfunded startups is obligatory to understand why
startups fail. However, examining failing businesses has considerable challenges (Bruno et al.,
1987), particularly in India, where addressing “failure” is considered a societal taboo. The
obstructions in identifying ex-entrepreneurs stem from selecting suitable sample frames of
reference followed by the time elapsed between failure and data assemblage. Several variables
make categorisation and comparison difficult for those exploring the subject.

2.2 Research gap

This study addresses the research question of what causal factors drive early-stage startup
failure in India. A study of the literature revealed many consequential research gaps:
 Pre-seed, seed, early, growth, expansion and exit are the stages of a startup. They
confront various obstacles at different stages, mainly in the early stages when they are
most vulnerable. Most research fails to define a startup’s stage when identifying failure
factors. Thus, research on early-stage startups and small business failures is scarce.
 Failure factors have been studied using various methods, but few studies have
examined key stakeholders’ real-life narratives in a free/open setting. The founders
of failing businesses rarely discuss their failures. Self and retrospective reporting
biases are also expected in structured surveys and interviews (Pretorius, 2008).
 Prior studies are conceptual and micro-level. A practical categorisation of failure-causing
factors within a thematic framework that applies to multiple industries is lacking.
 Finally, emerging economies have more startup failures despite a fast-growing
economy and government regulations. Success narratives are often studied, but
startup collapse variables are rarely studied. Given such businesses’ benefits to
developing countries like India, exhaustive and diverse failure-causing factor
analyses are required.

Against these backdrops, the current study has been carried out.
3. Research methodology Why do Indian
The study emphasises understanding and interpreting early-stage startup failure. It adopts startups fail?
the methodology of Prof. Murti (2021) to analyse the failure reasons of 100 global technology
startups. The rationale behind using a similar method is to examine and highlight the
outcomes of such an investigation done in the Indian setting and identify deviations.

3.1 Methodological approach 145

This study used triangulation because the literature suggested it would best meet the
research goals. It lets researchers study failure from multiple perspectives. This exploratory
study seeks to identify factors that cause startups to fail and identify areas that need more
attention to improve their chances of success. The inductive study framework generates a
variety of outcomes that add to the literature on startup failure.

3.2 Sampling method

Convenience sampling is used in this study, which included startups that ceased operations
or were sold due to unexpected events and had stakeholders’ online accounts of business
failures. Failed startups in India are not easily accessible through traditional random
sampling methods. Finding ready-to-use post-mortem reports on failed startups or key
stakeholders’ experiences of such failure and getting in touch with them was challenging.
Most stakeholders did not respond to multiple emails or refused to participate in the survey,
likely because the Indian startup ecosystem does not value failure.
Furthermore, the failed startups come from various sectors or regions, so convenience
sampling allowed selectively drawing samples from every possible sector and region to
make this study more representative of the causes that lead to startup failure in India. This
approach also reduced the subjective element of sample selection and bias, as the population
of interest were pre-defined along with their characteristics, i.e. early-stage startups that
have shut down their operations.

3.3 Narrative data analysis

The literature review suggested using narrative analysis to analyse stakeholders’ real-life
narratives of failed startups. Analytic frameworks in narrative analysis interpret accounts from
research and daily life. Riessman (1993) defines a personal narrative as a conversation about
significant events. To make a moral point, a dialogue storyteller takes the audience to another time
or “world.” These are themed memoirs or snippets of real events (Stavri and Ash, 2003). It becomes
more diverse and visually examines failure from many practical and unbiased perspectives.

3.4 Research process flow

Figure 2 depicts the process flow of steps deployed in this study, divided into three parts.
Firstly, a Google string search was used to find a list of Indian startups that failed or
were sold. The initial search found 190 cases. However, in view of the study’s objectives of
examining narratives of founders, former employees, investors and market commentators to
determine the actual reason for failure, further data cleansing was done based on the
availability of online information for each startup. A standard Google string search was
used to find Web articles, organised journalistic interviews or stakeholder blogs.
This study examined post-mortem reports from 165 Indian startups (Appendix: List of
Startups under study). Crunchbase and Tracxn, two global company databases like
Wikipedia, were used to find company headquarters, founders’ names, industry and
IGDR
Data cleansing &
16,2 Data collection
quality confirmation Data analysis

Available narratives of Failure factors identified

founders, employees, from David Feinleib’s
146 Secondary data investors, and market book ‘Why Startups
commentaries Fail’
Web string search Analysis of causal
[e.g., “start-up name" failure factors of each
Web string search AND ("comment" OR of the start-ups through
[“list” AND "startup" "quote" OR "narrate*" detailed study and
AND "fail*" AND OR "said") AND investigation of
"India"] ("founder" OR narratives
"employee" OR
"investor" OR "market
comment")] Crunchbase and
Eliminating Tracxn, databases used
duplicates to retrieve basic
Cross-verification of company information
information

190 start-ups 165 start-ups 165 start-ups

Figure 2.
Research
methodology map
Source: Figure by Authors

business categories and start and end years. An eight-component Excel spreadsheet was
used to enter the data.
The causal factors of startup failures were derived from David Feinleib’s (2012) textbook
“Why Startups Fail”, which is widely referenced by entrepreneurs and academics [2]. Through
multiple rereading of the book, eight key failure factors were identified, each split into five sub-
factors (Figure 3). To preserve the validity of the results, the data variable was not explored if
details on a particular factor were unavailable. After the analysis, the study hierarchised causal
factors by recognising their frequent occurrences of both factors and sub-factors. Failure
factors have been assessed from the founders, ex-employees, investors and customers’
perspectives, all of whom entirely understand the startup. To identify all startup failure causes,
stakeholder narratives were analysed for up to four key failure factors and their subfactors. As
a result, the failure criteria are not mutually exclusive and do not add up to 100%.

4. Analysis and findings

The study indicated that failure is triggered by the coalescence of various intricate variables
(Dvalidze and Markopoulos, 2020). These factors may be peripheral – outside managerial
control and difficult to predict – or internal – the firm’s characteristics, which are usually
predictable (Arasti et al., 2014). The founder of bike rental company Tazzo Technologies
blamed internal and external factors for the shutdown. In his own words, “It was a
completely new and big segment. We were trying to disrupt it and it required a large
amount of capital to scale to the next level” [3].
 Why do Indian
Wrong timing; Wrong perception about the market;
Idea
Technical/Product issues; Lack of expertise; No Market need
startups fail?

Entrepreneurial vacuum; No business plan; Inability to pivot; Lacked

Management
passion; No plan B or C
147
More thinking than doing; No/wrong cofounder; Lack of strategy;
Leadership
Lack of vision; No mentor

No financing/investor interest; Excessive operating expenses; Not

Finance
focusing on revenue; Delay/No payment; Running out of cash

Difficulty in retaining talent; Not getting good talent; Compensation

HR
issues; Lack of shared vision; Wrong hires

Difficulty in beating competitors; Started selling too early/late;

Sales and Marketing Losing money on every sale; Poor market research; Poor sales and
marketing

Ignoring customer feedback; Lack of process planning; Legal

Operations
challenges; Failure to focus; Pivot went bad

Sudden changes in client requirement; Strong competitor; Arrival of

External Factors better product/technology; Political/Economic crisis; Problems in
personal life
Figure 3.
Factors of failure
with sub-factors
Source: Adapted from David Feinleib (2012), Why Startups Fail

4.1 Occurrences of “Key Failure Factors” and “Sub-Factors”

Table 1 showcases the number of occurrences of “Key Failure Factors” and their respective
“Sub-Factors”.
Each possible cause of startup failure is examined using incidence. The study found financing
(109 occurrences, 27%), sales and marketing (104 occurrences, 25%) and the fundamental business
idea (67 occurrences,16%) as the top three reasons Indian startups fail. Figure 4 shows the
occurrence of “Key Failure Factors”, and Figure 5 shows the top 10 occurrences of “Sub-Factors”.
4.1.1 Finance. After a business starts operations, its finances must be monitored. Startups are
conservative during “bootstrapping” but burn cash after investor funding. Technological startups
founded by engineers are particularly affected by this. They spend a lot of money experimenting
while ignoring product monetisation. InoVVorX’s Technologies, a Mumbai-based app development
firm, co-founder says, “With both products, we did not have a monetisation model good enough to
bootstrap the business. Whatever cash we had earned building websites and mobile applications
was spent on bootstrapping the products” [4].
IGDR Key factor Sub factors Occurrences
16,2
Idea Lack of expertise 9
No market need 23
Technical/Product issues 9
Wrong perception about market 22
Wrong timing 4
148 Management Inability to pivot 7
Lacked passion 2
No business plan 15
No plan B or C 1
Entrepreneurial vacuum 0
Finance Delay/No payment 2
Excessive operating expenses 18
No financing/investor interest 59
Not focusing on revenue 7
Running out of cash 23
Leadership Lack of strategy 13
Lack of vision 3
More thinking than doing 2
No mentor 3
No/wrong co-founder 6
HR Compensation issues 1
Difficulty in retaining talent 1
Lack of shared vision 2
Not getting good talent 3
Wrong hires 2
Sales and marketing Difficulty in beating competitors 42
Losing money on every sale 29
Poor market research 2
Poor sales and marketing 4
Started selling too early/late 28
Operations Failure to focus 9
Ignoring customer feedback 7
Lack of process planning 4
Legal challenges 11
Pivot went bad 6
External factors Arrival of better product/technology 2
Political/Economic crisis 11
Problems in personal life 4
Table 1. Strong competitor 16
Occurrences of key Sudden changes in client requirement 1
failure factors with
sub-factors Source: Table by authors

This lowers investor confidence and deters funding. Investors expect a company to
generate and maintain working capital after a few rounds. “The reason for the shutdown
is that we were unsuccessful in our efforts to raise the capital necessary for sustained
growth” [5]. Said the co-founder of Tinmen, a food delivery app. Founders often extended
discounts and squandered money on each transaction to rapidly expand market share.
Another major cause of startups’ failure is high operating costs, making them cash-strapped.
“We operated on a negative margin per delivery, and in such a scenario, the path to profitability
looked very distant – at least two to three years,” [6] said the CEO, PepperTap. Dazo’s CEO
narrates his wisdom with financial hitches, “We were scaling up and were looking to get into
 Finance
120
Why do Indian
100
startups fail?
HR Sales & Marketing
80
60
40
20
149
Management 0 Idea

Leadership Operations

Figure 4.
ExternalFactors Occurrence of key
failure factors
Source: Figure by Authors

Finance: No financing/investor
interest
60
Sales & Marketing: Difficulty in
Management: No business plan 50 beating competitors
40
30
External Factors: Strong Sales & Marketing: Losing
20
competitor money on every sale
10
0

Finance: Excessive operating Sales & Marketing: Started

expenses selling too early/late

Idea: Wrong perception about

Idea: No market need
market
Finance: Running out of cash
Figure 5.
Occurrence of failure
sub-factors
Source: Figure by Authors

more cities, but were short on capital. At some point we felt we were lagging behind other players
and decided to quit” [7]. To establish a sustainable business, firms must break even, but only a
few concentrate on it. Co-founder of e-commerce logistics service provider Delivree King
mentions, “We had scaled to about 15 cities but it was becoming very difficult to sustain
operations at that level with no funds. This business requires money to scale up and without
funds it is very difficult to break even” ensuing in its operations shutting down within a year of
origination.
4.1.2 Sales and marketing. Sales and marketing mismanagement was another startup
failure cause. Sales promote a firm’s products and services, whereas marketing piques
consumers’ interest. Most founders are domain experts but not marketers or customer finders.
Again, InoVVorX’s co-founder said, “We had a real gap in terms of our in-person sales and
marketing skills. Call it lack of confidence, the reluctance of introversion or the influence of
laziness, both of us as co-founders had a major allergy towards meeting customers.”
IGDR According to the study, several startups collapsed due to profound competition. Contenders
16,2 inevitably appear if a business concept becomes profitable, and disregarding competition is a
formula for catastrophe. According to an official of AutoRaja, an on-demand auto-rickshaw
booking service, “Trying to expand in a market characterised by cut-throat competition and
burning cash, AutoRaja had made some miscalculations, forcing the promoters to feel it was
sensible to suspend the service” [8]. Similarly, deficient market research leads to delivering
150 something customers do not want, making marketing startup products and services more difficult
– market comments to food-tech Spoonjoy’s failure, “Too much supply, fewer demand. Everybody
thought food tech is their cup of tea. Everyone started a so-called ‘food-tech’ company, but demand
did not pick proportionately. All these startups provided no real value add” [9].
4.1.3 Idea. Startups thrive on innovation, and their prosperity relies heavily on how uniquely
they can meet the requisites of their customers. An inordinate number of Indian entrepreneurs
imitate existing successful companies’ concepts and models, only to fail due to competition. The
opposite is also true. Startups often release products too soon or with advanced technology. They
outpace clients, missing markets. Frankly, a microblogging site located in Noida is an excellent
example. Its founder writes, “Despite these early successes, we haven’t been able to achieve
sustainable product-market fit. While the market seems keen on adopting video to consume
happenings around itself, video creation still remains a challenge and probably a problem a little
ahead of its time” [10]. They eventually failed due to lack of funds and product-market fit.
Idea challenges also include incorrect market insight, declining market demand and
systemic product issues. SchoolGennie founders draw attention to a typical market research
error made by many startups, “Do market research (product-market fit) before writing the
first line of code. We sowed the first seed of failure when we started building the product
without validating product-market fit” [11].
The study then examined each “Key Failure Factor” to define startup issues systematically
and contextually. It ascertained that several owners lacked a business plan and a passionate
craving to succeed (Table 1, Management). Similarly, 27 startups were closed due to a paucity
of vision or a strategic roadmap for a sustainable future firm (Table 1, Leadership).
Startups also failed due to human resources (HR) strategy issues. Noteworthy problems
include paucity of a shared vision, poor recruiting and the inability to retain top talent (Table 1,
Human Resources). Startups lose focus on their business model during post-production. They
waste time on unnecessary operations instead of focusing on customer acquisition and
feedback for sustainable growth (Table 1, Operations). The co-founder of SchoolGennie
suggests, “Launch an MVP (Minimum Viable Product) as early as possible and keep improving
the product with feedback from early customers. Unfortunately, we kept investing time in
building an awesome product with great user experience and mind-blowing features” [12].
Finally, entrepreneurs were influenced by diverse external circumstances beyond their
control (Table 1, External Factors). In our analysis, 16 startups failed due to competition.
The odds are stacked against sizeable businesses that are either market leaders or invest a
lot of money and are difficult to outdo. In an online interview, the founder of The Punjab
Kitchen lamented, “Price was our biggest barrier to dominate the market. The competition
was available at half of the price. Though the packaging was good, the customer perhaps
did not care too much about it” [13]. Regarding cab aggregator Roder, an investor with the
startup, comments, “At their peak, they were doing well in terms of revenues. The entry of
new competition, specifically from Ola and Uber, made things difficult” [14].

4.2 Comparative findings among emerging countries

This study identifies finance, sales and marketing and ideas (sequentially) as India’s top
three startup failure factors.
 These findings vary from Murti’s (2021) global study of 100 technology startups, which Why do Indian
identified idea, sales and marketing and finance as startup failure factors. Brazilian early-stage startups fail?
technology startups fail due to founder-investor relations, according to Lemos (2014). Indonesian
startups fail 90% due to product-market mismatch and funding shortages (Endrik et al., 2018),
while funding, lack of entrepreneurial training and high employee turnover are the prime reasons
for startup failure in Mexico (Guzman and Lussier, 2015). In another study of Turkish firms,
Atsan (2016) attributed the failure to co-partner relationships and changes in government policy.
The fundamental reason for startup failure among emerging countries is diverse; lack of
151
funding seems frequent. A developing economy, startups being a recent phenomenon, and a lack
of capitalist culture within society could be the thinkable reasons why Indian and other emerging
countries’ startups find it problematic to source finance beyond the bootstrapping stage.

5. Recommended strategy framework for possible success

Startups are not just about excitement but call for thorough planning and execution. The study
reveals that startups face myriad issues throughout their life cycle, mainly during the early
stages, when they try to establish themselves in an already saturated market. Given the variety of
challenges, developing a one-size-fits-all plan for success is unrealistic. Hence, grounded on the
present study’s findings, a strategic framework for early-stage business success has been
developed and recommended. The four-dimensional (4D) strategy framework (Figure 6) outlines

• Market Demand
• Minimum Viable Product
(MVP)
• Business Model
• Time-to-market
• Leadership & Vision

Define

• Product-market fitment • Funding Strategy

• Passion to succeed • Financial Strategy
• Ability to Pivot Demonstrate Develop • Sales & Marketing Strategy
• Geographical expansion • Human Resource Strategy
• Knowledge & expertise • Operations Planning

Due Dilligence

• External Factors
• Competition
• Cost and Revenue
Optimization
• Customer Feedback
• Networks & Mentors Figure 6.
4D success strategy
framework
Source: Figure by Authors
IGDR the key components that new entrepreneurs should address before and instantly after
16,2 commencing operations (Define, Develop, Due Diligence and Demonstrate). Widening a solid
ecosystem of incubating and handholding startups in the Indian context might be the need of the
hour. From validating the idea’s worth to concocting it for a commercial launch, incorporating an
apt market scan till handholding with the proper venture capital assistance might help the
country solve its “startup” failure contention.
152
6. Conclusion and scope for future research
Startups boost the market and help the world economy by creating inventive solutions that use the
latest technology. Though they fail in substantial proportions, a little empirical investigation has
been done into what causes them to fail. To moderate the peril of collapse, entrepreneurs need to
introspect on diverse fronts: who are their potential customers? What solutions does their firm
offer? How does it stay cost-effective and eventually profitable? The core business concept, as well
as apposite finance, are critical. Converting a startup into a sizable, sustainable company is
a marathon, not a dash. Context-specific learning approaches are quintessential due to the ever-
witnessing startup failures. Drawn from the experiences of failed entrepreneurs, this investigation
delivers crucial learning elements for policymakers fascinated with encouraging entrepreneurship.
Furthermore, these conclusions furnish entrepreneurs with a prioritised list of conventional causes
for failure, lessons learned and an imaginable success plan that may aid them in enhancing the
likelihood of success in their next venture. Recognising predictable slip-ups and learning how to
circumvent them facilitates the success of enterprises.
The study recognises scarce possible causes of early-stage startup failure. As a result,
more research is recommended on several fronts. One of the study’s limitations is that the
sample size is restricted to 165 startups. With thousands of startups bourgeoned in India
each year, a study of a larger population may reveal additional intriguing concerns. The
study’s conclusions were based on secondary sources from the perspectives of the
founders, investors, former workers and consumers. As a result, only limited failure
factors available from their brief interviews, notes and articles were encapsulated.
Primary information could not be acquired because the founders were inaccessible or
reluctant to retort to inquiry emails. This has somewhat led to a research gap, given that
it could not locate any surviving accounts of startup failure. The startup ecosystem in
India does not merit failure, making it harder to persuade entrepreneurs to participate
in research. Finally, the proposed 4D strategy framework should be evaluated in
longitudinal investigations.

Notes
1. ‘The Lean Startup: How Constant Innovation Creates Radically Successful Businesses’ by Eric
Ries.
2. Thirteen citations as per Researchgate.net and six as per Springer nature (excluding duplicates), a
total of 19.
www.researchgate.net/publication/321516108_Why_Startups_Fail/stats
https://citations.springernature.com/book?doi=10.1007/978-1-4302-4141-6
3. www.techcircle.in/2018/09/05/why-dsg-consumer-backed-tazzobikes-skid-to-a-halt-after-a-two-
year-run
4. www.failory.com/interview/inovvorx
 5. https://indianstartupnews.com/news/zomato-funded-tinmen-a-hyderabad-based-startup-shuts- Why do Indian
its-operation/ startups fail?
6. www.business-standard.com/article/companies/from-peppertap-to-localbanya-the-grocery-start-
up-failures-of-2016-116122700368_1.html
7. www.business-standard.com/article/companies/bengaluru-based-food-tech-startup-dazo-shuts-
down-due-to-lack-of-funding-115100700721_1.html
153
8. https://economictimes.indiatimes.com/small-biz/startups/autoraja-winding-up-services-existing-
fleet-may-join-ola/articleshow/50752854.cms?from=mdr
9. www.quora.com/Why-did-SpoonJoy-fail
10. https://inc42.com/buzz/frankly-shutdown/
11. https://inc42.com/resources/seven-reasons-startup-schoolgennie-failed/
12. https://inc42.com/resources/seven-reasons-startup-schoolgennie-failed/
13. www.failory.com/interview/the-punjab-kitchen
14. www.vccircle.com/exclusive-vc-backed-cab-aggregator-roder-shuts-operations

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Further reading
Mehrotra, N., Patrao, C., Marshall, A., Banda, M. and Singh, R.R. (2016), Entrepreneurial India- How
Startups Redefine India’s Economic Growth: IBM Institute for Business Value and Oxford
Economics Report.
IGDR Appendix
16,2

Babyberry PepperTap Purple squirrel eduventures

Coinsecure LocalBanya.com GoZoomo
Contentmart Frankly.me Doormint
156 Ebay India Centre TinyOwl Technology Zupermeal
Ezytruk Solutions Overcart iTiffin.in
Holachef Hospitality PropheSee Bite Club
Just Buy Live Enterprise Shopo Zeppery
MonkeyBox Foodtech Buttercups Ola Cafe
Mr.Needs SMAAASH Entertainment Food Panda
OFO Technologies Reid and Taylor India Fashionara Enterprises
Shotang Jabong.com Ladyblush Ecommerce India
Stayzilla BTVi Klozee
Taskbob Russsh Corporate Services Truckmandi
Tapzo Koinex Parcelled
Tazzo Technologies Loanmeet.com Buildzar
WYDR Kaaryah Lifestyle Solutions Shotpitch
Yumist Foodtech Finomena Autoncab
Zebpay Dial A Celeb AutoRaja
Doodhwala AskMe Bazaar Murmur
DocTalk GrocShop DateIITians
Guruji.com InoVVorX’s Technologies Cogxio
Nivio Cloud Computing India Adleaf Technologies Zopnow Retail
Wishberg Jobridge Tinmen
Etable Services The Punjab Kitchen Cryptokart
Zoogaad Autto.in Aditya Birla Idea Payments Bank
Spoonjoy Mishra Motors Vodafone M-Pesa Ltd
Dazo Wooplr Technologies Langhar Food Services
Eatlo iProf Learning Solutions Eatfresh
DoneByNone HeadLYT Super
Jewelskart HealthnMe Surpluss
Bagskart Hey Bob Taggle
Watchkart Homigo Realty. Tolexo
Talentpad HotelsAroundYou Tooler
Townrush Hushbabies Trevo
Lumos Learning India IndiaPlaza Fabmart Turant Delivery
AAGAAR Inksedge Tushky
ABOF Intelligent Interfaces Unamia
AdMagnet iStream What’s on Rent
AllSchoolStuff.com Koolkart Wopshop
Amber Wellness LazyLad Zimply
Appsurfer MadRat Games Zippon
Cardback Magnet Works Znapin
Chhotu Madpiggy Zobtree
ClassVerse Mavin SchoolGennie
Coinome MealHopper Cube26
Delivree King Miraistore Fabfurnish
Eatonomist MovinCart Karma Recycling
Eazy Meals MrNeeds Moovo
EnCashea Muziboo Patterbuzz
FlashDoor Roder TaxiForSure
Foodyn Roomstonite Salorix
Genie Solutions SeventyMM Yebhi.com
GetNow.at Shubhamilana.com Zumbl
Gopeppers Splitkart Rideji
Table A1.
GrabOnRent Spoonfed Tuwheelz
List of startups under
study Source: Appendix by Authors
About the authors Why do Indian
Nayanjyoti Goswami is a Research Scholar at the Indian Institute of Management, Shillong, startups fail?
Meghalaya. He received his MCom degree in Management from the Gauhati University, Assam, in
2003 and an LLB degree specializing in Taxation Laws from the Gauhati University in 2005. He is
also an industry practitioner with 18 years of corporate experience in senior leadership roles at Top
Fortune 500 companies, like Goldman Sachs and JP Morgan Chase. He is currently serving as Vice
President, Business Planning and Strategy, Statestreet Corporation, India. Nayanjyoti Goswami is the
corresponding author and can be contacted at: goswami.phd20@iimshillong.ac.in 157
Ashutosh Bishnu Murti is an Associate Professor in Organizational Behaviour and Human
Resources at the Indian Institute of Management, Shillong, Meghalaya. He holds a Master’s and
Doctor of Philosophy from the School of Management and Labour Studies, Tata Institute of Social
Sciences, Mumbai, India. Before joining IIM Shillong, he worked with the Administrative Staff
College of India, Hyderabad and Tata Institute of Social Sciences as an Assistant Professor. His
academic and industry work is in the area of Human Resource Management. His area of interest and
research includes – personnel economics, human resource management, labour market, skill gap and
employability.
Rohit Dwivedi is an Associate Professor in Organizational Behaviour and Human Resources at the
Indian Institute of Management, Shillong, Meghalaya. He holds a Master degree in Psychology
specializing in Human Resource Development and Management and a Doctor of Philosophy in
Organization Behaviour and Change from the University of Allahabad. His interest is in consulting
and understanding psychopathology of organizations memetic analysis of narratives; organizational
change and corporate social responsibility; social change and development.

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