3.2 Why Most Startups Fail (No PMF)

Numerous studies show the top reason startups fail is lack of real market demand. About 75% of venture-backed startups never succeed. The Harvard Startup Failure Review notes that failure usually comes from running out of cash, team issues or, most often, “a lack of market need.”. In fact, CB (ChubbyBrain) Insights found roughly 35% of startups fail because they build something nobody wants. Legendary investor Andy Rachleff summed it up: “The #1 company-killer is lack of market.”.

For example, the high-tech juicer Juicero raised over $100M but flopped when customers discovered they could squeeze the juice packs by hand. This showed Juicero never achieved PMF – people simply didn’t need that machine. In general, if you keep building without real customer interest, you’ll run out of cash (since 29% of failures are cash-related). In contrast, once PMF is found, even bootstrapped founders often see sales and referrals grow quickly, giving them runway to scale.