Why Do Most SaaS Startups Fail? Here Are The 5 Major Reasons

Why Do Most SaaS Startups Fail? Here Are The 5 Major Reasons

“You’re not suppose to succeed!”

“The numbers are against you from day one.”

Those were the words hurled at me across the board room from one of my mentors.

Encouraging, right?

Up until that point I had so much confidence that failure wasn’t an option.

But the truth is – and you hear it all the time – most startups fail.

His words set me down a path of learning and implementing strategies to help protect me, my stakeholders, and my coaching clients  from the 5 highest leading causes of startup death.

Over the years, I’ve had the chance to see the inner workings of 1000+ companies.

I’ve listened to the intimate, behind-the-scenes details and decisions from the founders behind them.  

After seeing what works, what doesn’t, and what gives you a one-way ticket to the SaaS graveyard…

I’ve distilled those lessons into the big five for this week’s video.

Exclusive Download: Idea to Exit Mini-Course™
● No Cost Product Development & True Customer Validation
● Marketing Growth Engines & How to Fund Your Startup
● How to Engineer Your Big Money Exit

When I sit back and look at my failures and those of my friends, I believe they can be traced back to one or more of these.

  1. Market Problems
  2. Business Model Failure
  3. Poor Management Team
  4. Running out of Cash
  5. Product Problems

What’s hilarious, and part of #3, is the amount of companies that fail due to co-founder in-fighting…

… meaning they couldn’t see eye to eye on a critical part of the business (funding, product roadmap, market strategy, etc).

The one I see the most often when it comes to technology and innovation is #1…

… founders running around with some cool tech, with no clear customer problem to solve.

It’s a solution in search of a problem.

Always a scary proposition and the opposite of the way I encourage first time founders to start off (find customers before you develop your tech).

If you’ve got questions about either one of these five, be sure to leave a comment with the specifics and I’ll help you turn things around.

Keep up the hustle!


  • Rex Chan

    Thanks for your input.
    Is pricing of service/product included in point 2 “Business Model Failure” ?


  • sasmita pati


    Its worth reading. Startups should read & follow these guide lines. I would like to add some more points to this article. Read here: http://blog.slickaccount.com/2018/01/15/top-reasons-of-start-up-failure-and-how-to-overcome-it/

  • John

    Hi Dan,Good point their.

    I have a question.I am running a small startup in providing online payment solution.My merchants have been frustrated because the bank i work with to settle merchants has failed completely in settling payments realtime affecting my small business.

    Now,from insights of my merchant data,i have clear insights on the top selling products in a particular niche for my merchants.Currently,i am providing only the payment solution.I wanted to go a step ahead and launch a service which is powered by my payment solution instead of waiting for merchants come and to use my payment solution only.I have analyzed my merchant data and can foretell the best niche based on data from my merchants.Reason for this is because all my merchants have now gone to other banks because my bank has failed to settle us timely leaving me with no option than to build now a solution based on insights gathered from what i was providing my merchants.What is your advice towards this new approach i want to take?

    • http://twitter.com/danmartell Dan Martell


      Unfortunately I’m not sure what your question is?


  • http://www.operandi.ca Laszlo Alt

    Great info Dan, I’ve been like a sponge absorbing all your videos and wanted to thank you for all the great information you give out!

    • http://twitter.com/danmartell Dan Martell

      Laszlo, your comment means the world … I do it for eager founders like yourself that are hungry and willing to put in the time.

      Great to have you part of the community.


Learn how your SaaS business can thrive in unprecedented times

Get FREE access to my Crisis Response Strategy System™

A.C.E.S. Growth Engine

3 Secrets to Scale Your SaaS to $10k MRR and Beyond

Join the Masterclass Now

Book A Growth Session Call with my Scale Specialist.

Need a coach to help you scale your SaaS business?
Then let's chat.

Book A Call