Failure in Startup Companies: Why Failure Is a Part of Founding

Abstract

The purpose of this paper is to provide an overview of the reasons for the failure of a company foundation. For this purpose, the current studies in this area are discussed. These studies clearly show that the number of startup companies has declined in recent years. In addition, the number of startup companies is lower than the number of company closures. This raises the question of how the failure of company foundations can be avoided. In the following, the individual studies are presented, in which possible causes for the failure of founding teams could be identified. The authors particularly examine studies on startup companies from which a typology of the failure of startups is derived. For the individual cells of this typology, examples are shown in detail below. Furthermore, it is investigated whether cultural differences of failure influence company foundations. The article finishes with conclusions for the practice, which should help future start-up companies not to commit the same mistakes.