Why do startups fail? The Startup Genome project analyzed data from 3,200 companies and came up with some answers. At the core of any successful business are two things: a good product and a large market for that product. In other words, a startup should be able to scale. And to scale properly, it must balance the growth of five core dimensions: customers, product, team, business model, and funding. The dominant reason for failure: premature scaling of one or more of those dimensions.