Failure of Tech Startups: A Systematic Literature Review

Abstract

Tech Startups are exposed to multiple challenges and are known for being inserted into uncertain and risky scenarios. Initially, new businesses face great uncertainty and have high failure rates, but a minority of them go on to become successful and influential. The purpose of this study is to determine the main causes of failure of Tech Startups in their early stage, for which a systematic review of empirical studies regarding why Tech Startups fail was carried out. The search strategy in the databases: ScienceDirect, IEEE Xplore, SpringerLink, Emerald and EBSCO identified 1996 studies of which 36 were identified as empirical studies and after applying the inclusion and exclusion criteria, 23 primary studies were selected that classify to the factors in 3 categories: organizational, technological, and environmental. Among the main factors for failure are the characteristics of the owner, poor location of the business, products/services that do not meet the needs, high costs of ICT, lack of skills in the entrepreneurial team, external and competitive pressure, few benefits perceived ICT use, low resources, low government support.