Excerpt from (very long) article by Fred Wilson about why start-ups usually die:
So why do venture investments fail? Well if I look at the ones I’ve been involved in (including deals my partners led but where I shared the pain of loss) there are two primary reasons.
1. It was a dumb idea and we realized it early on and killed the investment. I’ve only been involved in one investment in this category personally although I’ve lived through a bunch like this over the years in the partnerships I’ve been in.
2. It was a decent idea but directionally incorrect, it was hugely overfunded, the burn rate was taken to levels way beyond reason, and it became impossible to adapt the business in a financially viable manner.
