Startups face a range of challenges, and a new study sheds light on the most common reasons why businesses fail in the current climate.
Skynova, a company that creates invoicing software for small businesses, surveyed 492 startup founders in November 2022 and analyzed data from CB Insights to understand the most common causes of startup failure in 2022.
The study found that lack of financing was the leading cause of failure, with 47% of businesses falling short due to insufficient funding. This is a significant increase from the previous year, as the percentage of startups that failed for the same reason nearly doubled in 2022.
The pandemic also had a significant impact on startups, as 33% of failures were attributed to its wide-ranging effects on businesses and the economy. However, the data shows that this number has decreased from 59% in 2021, indicating that many small businesses have recovered from the worst of the pandemic and are returning to normal, even as others continue to struggle.
These findings provide valuable insight for anyone looking to start a new business in 2023, as securing funding may continue to be a challenge in the current economic climate. It is important for entrepreneurs to be aware of the most common reasons for startup failure and to take steps to mitigate these risks in order to increase the chances of success.