Why do Indian startups fail? A narrative analysis of key business stakeholders

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.

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“…Existing literature has extensively examined the multitude of elements contributing to the failure of start-ups. Some of the commonly identified factors include lack of financial resources, inadequate sales, insufficient market demand, poor business development strategies, and technological difficulties (Goswami et al, 2023;Pisoni et al, 2020). Studies have also mentioned the impact of inexperienced entrepreneurial teams, competition, limited resources, poor business planning, inadequate government backing, and legal, accounting, and tax concerns (Denton, 2020;Nigbor-Drożdż & Łukasiński, 2023;Santisteban et al, 2022).…”