Around 90% of startups completely fail.
In fact, approximately 3,200 private venture-backed U.S. companies were forced to close their operations in 2023 alone.
CB Insights reveals that the top three reasons for this are: running out of cash or failing to raise new capital (38%), having no market need (35%), and getting outcompeted (20%).
So, how likely is it for your startup to fail?
In this interview, we speak to LaunchPad Central Vice President Kyra Woodward who shares expert tips to help prevent your startup from becoming another statistic.
Who Is Kyra Woodward?
Kyra is a seasoned, customer-oriented leader at LaunchPad Central, where she has been leading customer-facing activities for nearly a decade. Her prior experience includes co-founding VOZ, a social enterprise that brings Chilean textiles to New York Fashion Week, and working as a Program Manager at the University of California San Francisco (UCSF).
Startups face a broad spectrum of challenges, from scaling their operations to securing funding and standing out in a crowded market.
Having seen her clients struggle firsthand, Kyra highlights that the biggest challenge she has seen is finding product/market fit.
She explains that identifying the ideal first customer and understanding their biggest pain points can be daunting.
“We often see entrepreneurs going about this a traditional “trial and error” way which is to say making a lot of guesses and running through them to see which ones stick and which ones fail,” she says.
However, she believes that modeling excellence and leveraging the best practices and insights from those who have succeeded are ways for startups to avoid pitfalls and navigate this phase successfully.
“With the help of generative AI, we can model excellence upfront thereby helping them get where they are going faster,” she adds.
According to her, after achieving product/market fit, the focus shifts to fine-tuning the marketing funnel to communicate the offering to the audience, optimizing customer channels, and reducing costs to ensure sustainable growth.
If you are looking for a professional partner to lend expert guidance and drive your business’s growth, our DesignRush list of the best business consulting firms is the best place to start.
DesignRush previously spoke with marketing and PR agency Black Chateau CEO Desiree Duffy about what the Ideal Customer Profile (ICP) is. Watch to know more:
But what if initial product/market fit efforts fail?
If a business fails this phase, Kyra advises startups to
- assess what’s working
- identify new directions through quick experiments
- swiftly reallocate resources
“This is a great time to double down with your customers, mentors, and advisors and go into listening mode,” she adds.
Kyra highlights that building beyond a minimum viable product (MVP) before testing the market is risky, as it can waste time, money, and resources without a clear market signal, making lean principles essential for early-stage development.
The Power of Lean Principles in Business Growth
Businesses today should be agile and deliver value sustainably to their customers in order to survive. According to Kyra, Lean Principles are mostly a fancy way of saying “listening to the market.”
“If you want to grow your business effectively, you need to be listening closely to the needs of your customers as they change. The market is always changing and you need to remain adaptable in the environment,” she says.
A prime example is Blue River Technology, a startup that initially aimed to build an autonomous lawnmower. Founded by the students of Steve Blank, the designer of The Lean LaunchPad course, the business failed the market fit phase.
So, they pivoted to agricultural technology, creating the "See & Spray" machine that led to a $305 million acquisition by John Deere.
Their success was a direct result of applying lean principles — listening to customer feedback, rapidly iterating, and minimizing wasted effort.
Balance Innovation by Maintaining a Sustainable Business Model
Startups often find themselves handling multiple tasks and priorities while trying to grow.
Kyra visualizes this challenge by imagining a startup as a garden with different plants at various stages of growth, each needing the right amount of resources to thrive.
Referencing the Boston Consulting Group’s BCG Matrix, Kyra urges startups to divide their projects or products into four quadrants:
- Stars: Innovative projects in high-growth areas. Invest heavily in these as they are the future pillars of your business.
- Cash cows: Stable income streams that keep your business sustainable. Treat these as your reliable foundation.
- Question marks: Experimental projects with unproven potential. Monitor closely and be ready to pivot or drop if they don’t show progress.
- Dogs: Underperforming projects in low-growth areas. Cut these to focus resources on what’s working.
“Focus on what’s working and be ruthless about cutting what’s not,” she adds.
Approaching Funding and Investment Opportunities Successfully
It’s no secret that many startups fail because they run out of cash or fail to raise new capital.
Since the funding market is tough right now, businesses should first consider how much they can support their business on their own or with minimal capital from investors (bootstrapping) and how much they can grow using the money their business makes (organic growth).
This lets them keep full control of their business and decide its future.
According to her, the basics for fundraising are:
- Understand your funding needs: Determine how much you need by conducting a thorough financial analysis and what you will use the capital for. Understand your company’s worth to better negotiate with investors.
- Pursue the right type of funding: Consider bootstrapping to maintain control, seek angel investors for early-stage capital, attract venture capital for high-growth potential, use crowdfunding platforms like Kickstarter, or explore traditional loans and grants that may come with repayment or specific criteria.
- Prepare a compelling pitch: Craft a concise elevator pitch that clearly conveys your goals and value proposition. However, also develop a comprehensive pitch deck that includes your business model, market analysis, financials, and team credentials. Additionally, use storytelling to create an emotional connection with investors and make the pitch memorable.
- Build a strong network: Attend events and conferences, leverage existing connections, and engage with the startup community. Demonstrate traction, growth, and opportunity: Showcase metrics, highlight milestones, and provide evidence of customer satisfaction.
Finally, she advises startups to keep executing their plans, communicate well, and build relationships.
Codacy Co-founder and CEO Jaime Jorge discusses in a DesignRush podcast how to find the right investors for your startup. Watch below to learn more.
Startups often lack extensive resources which is why they need to be strategic in gathering customer insights.
“We think of 1:1 customer interviews as the holy grail but it’s not the only way. It’s really important to start identifying and testing your core target customer so you aren’t wasting too many resources going after everyone,” Kyra explains.
She advises businesses to make sure to the best of their ability that they target the right demographics to preserve their resources.
Thriving as a startup isn't just about having a great idea — it's about staying focused, making tough decisions, and keeping the big picture in mind.
The journey is a marathon, not a sprint, so pace yourself, stay true to your values, and always aim for sustainable growth.
