Is it true 75% of VC backed companies fail? Surely improvements can be made with access to advisory?

I have always been fascinated by ideas, and others investing into them. Then what it really takes to grow a successful company. So we did some research into why, it appears (according to some sources) that 75% of #VCbacked companies fail! So much so, I recorded this video.

This statistic, notably supported by Harvard Business School professor Shikhar Ghosh highlights the high-risk nature of VC investments. Ghosh's study found that most VC-backed companies either fail to return investor capital or fall short of their growth expectations.

Other studies, such as those from Failory and CB Insights, confirm this figure, emphasizing that factors like poor product-market fit, cash flow problems, and premature scaling contribute to the high failure rates.

So, with this in mind, what are the top 5 reasons associated with why companies fail?

1. Running Out of Cash (38%)

Skillset: Chief Financial Officer (CFO): The CFO keeps an eye on the money, managing spending, controlling burn rate, and securing enough funding to keep the company going. They also plan for fundraising and make sure the startup doesn’t run out of cash.

2. No Product-Market Fit (32%

Skillset: Chief Product Officer (CPO) and Chief Marketing Officer (CMO): The CPO makes sure the product actually solves customer problems by gathering feedback and tweaking things quickly. Meanwhile, the CMO handles how the product is positioned and marketed to the right audience, adjusting based on real data from the market.

3. Team Problems (22%)

Skillset: Chief People Officer (CPO) and Chief Operating Officer (COO): The CPO focuses on hiring the right people and building a strong company culture, while the COO makes sure everything runs smoothly day-to-day, helping the team stay productive and avoid dysfunction.

4. Outcompeted (20%)

Chief Executive Officer (CEO): The CEO leads the charge in staying competitive, driving the company’s strategy, making key partnerships, and always looking for ways to stand out from the competition.

5. Bad Business Model (19%)

Skillset: Chief Strategy Officer (CSO): The CSO keeps the business model in check, making sure it’s scalable and sustainable. They keep an eye on market trends and adjust the company’s strategy as needed to avoid structural issues that could hold back growth.

So with this in mind, does access to a talent platform, such as FRACTION mean access to advise in these key areas, to bolster existing teams?