Identifying and Prioritizing Failure Factors of Startups Using Analytic Hierarchy Process (AHP) and Proposing Overcoming Strategies

Startups, as innovative and fast-paced entities, play a crucial role in economic development and job creation. These businesses, by offering creative and technological solutions, can meet new market demands and contribute to economic growth and dynamism. However, the high failure rate of startups indicates serious challenges in their management and performance. Accordingly, the aim of this research is to identify and prioritize the factors leading to startup failures and to propose appropriate strategies to overcome these challenges. In this study, first, by reviewing 45 reputable articles on startups, key failure factors were identified. These articles were collected from various sources such as scientific databases, specialized journals, and reputable conferences and analyzed using Atlas.ti software. In the next stage, the Analytic Hierarchy Process (AHP) technique was used to prioritize these factors. Subsequently, a hierarchical structure was designed, including the goal (identifying and prioritizing startup failure factors), options (identified main factors), and criteria (determined based on sub-factors). Then, using the pairwise comparison matrix, the relative importance of each option and criterion was assessed. At each step, the inconsistency ratio remained within the acceptable range, below 0.1. The final weighting results showed that poor and inefficient management with a weight of 0.366892, insufficient financial resources with a weight of 0.221917, and technical problems and an inappropriate team and lack of innovation with a weight of 0.196686 are the most important factors leading to startup failures, respectively. Market problems and legal issues also ranked lower with lesser weights. These results highlight the importance of effective management, adequate financial resources, and strengthening the technical team and innovation. Finally, based on the results, appropriate strategies were proposed to address each of these factors.