What Startups Teach Corporates about Venture Failure

The growing number of corporate-startup partnerships is testament to the potential benefits and value add each entity derives from the other in a dynamic global business environment. While in the past, it was mostly fledgling startups that were beholden to established corporates for handholding them as their venture took off, today, large companies are also in dire need of support.

Corporates have increasingly started looking up to startups for real-life lessons on venture setbacks. Despite the grim statistic that points to over two-thirds of startups failing, legacy corporates that urgently need to reinvent their business model, view startups as their valuable partners in their next phase of growth.

Today’s corporates need to be on a fast-track to innovation to achieve agility and remain relevant in the long-run. Hence, they believe there are valuable hidden lessons to be learnt from even those startups that fail.

Let’s see what these lessons are.

Don’t be a copycat

It’s not easy being a greenhorn in the startup ecosystem. While first-time entrepreneurs may be inspired by the success stories of Unicorns, they should refrain from cloning the market leaders in their category. Several startups blindly attempt to replicate the business model of larger players and burn their fingers—and bridges—too fast. Take for instance e-commerce startup DoneByNone that was launched as an online women’s fashion brand. Although the company was backed by early stage investors, the co-founders had to shut shop as they couldn’t keep pace with the stiff competition posed by e-commerce giants, such as Amazon, Flipkart and Snapdeal. DoneByNone might have failed due to a plethora of factors that usually plague novice e-commerce players: poor distribution and inventory management, low margins, flawed pricing strategy and the lack of customer focus.

Key takeaway: It pays to exercise due diligence before starting a new venture or diversifying the business. 

Don’t ignore customers’ needs

Milk and grocery delivery startup Doodhwala abruptly discontinued its delivery operations in 2019, handing over the reins to Freshtohome, a rival delivery platform. Among the reasons cited for Doodhwala’s failure was its lack of customer focus. Customer dissatisfaction with the app stemmed from its delayed delivery cycles and non-responsiveness to refund complaints. The startup failed to interact better with its customers and keep the conversation going even when the chips were down. Further, the startup faced stiff competition from established players like BigBasket.

Key takeaway: That the customer is indeed the king. 

Don’t be in a hurry to grow if the funds are low

Many startups commit the blunder of pushing for a high growth rate despite being challenged with cash burnout. Yumist, a startup that was launched to serve home-cooked meals using Zomato and Swiggy’s delivery channels had to shut shop due to the lack of funding that further resulted in operational issues. The startup was also on the fast-track to growth without provisioning for funding problems that could prove to be a major setback for the business. 

Key takeaway: Build a strong cash culture to sustain the business.

Don’t hesitate to pivot aggressively enough

History has shown that organisations that failed to pivot to adapt to crisis situations have met with disastrous consequences. Failure to pivot has been cited as one of the most common reasons for the death knell of some startups. Take for instance Y Combinator backed HealthTech startup DocTalk that folded as it failed to pivot strategically at the right time. The company’s original model promoted communication between doctors and patients through a mobile-led platform. Subsequently, it attempted to transition into an electronic medical record (EMR) solution, a strategy that didn’t yield expected results.

Key takeaway: While it’s important to pivot when the situation demands, it’s even more crucial to strategically pivot.


As can be seen from the above examples, new startups often fold up due to a plethora of challenges that they encounter in the startup ecosystem. However, it would behoove corporates to learn from the failure of fledgling entities to avoid committing the same mistakes and taking miscalculated business decisions.  

Like Jack Welch, former CEO & Chairman of General Electric said, “An organisation’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.”