Four Reasons Why Corporate Startups Fail (And How Yours Can Be Successful)

by Amy Bridgewater

Having a great vision is the first approach toward a successful startup, but it isn’t enough. There are several distinct hurdles that corporate startups and entrepreneurs face that enable the success of their vision to be much more challenging.

I had an in-depth conversation with several entrepreneurs, decision-makers and project executives from various startup corporations as part of my recent research on why corporate startups fail and what makes them successful.

I gathered some of the most intriguing learnings from them, including the challenges and successes of their teams (some of which ultimately became spinoffs of corporate startups).

In this article, I have rounded up four main reasons I think corporate startups usually fail and how you can avoid these to make your startup successful. 


1. The workforce is lacking in commitment

Once they’ve identified a useful concept that has the potential to provide actual value, team members are easily motivated. Team members are also inspired by the ability to step away from their day-to-day operations.

Corporate startups should go through the entrepreneurial cycle in the same manner as business startups do. As a result, the team must be filled with individuals who can deal with unpredictable and high-risk scenarios while remaining committed to the concept even in adversity. Corporations must explore extrinsic incentive structures for team members rather than relying solely on emotionally driven workers to ensure motivation and performance.

Create a group of people who are entirely genuinely driven to develop something from the ground up because you won’t finish the work if you hire people who don’t believe in the vision. Companies are still striving to incorporate teammates into the success of startups – their mindset in this area is not there yet. However, there are particular possibilities that corporations are currently using, one of which is virtual shares.


2. Stakeholder management is inadequate 

In most situations, dramatic breakthroughs are a pleasant or a bonus for corporations. Innovation projects are rarely given preferential treatment over day-to-day operations. As a result, justifying the development of such initiatives requires a lot more effort and justification and a lot more convincing on the part of the stakeholders.

Stakeholder and expectation management heavily influence the success of a business startup. There are very excellent standards for key performance measures to be met on the business side. A startup, especially in its early stages, will not be able to meet the traditional key performance indicators. Companies would like to see figures like profit, return on investment, and other metrics that determine project objectives.

Key performance indicators for corporate startups, on the other hand, are frequently centered on benchmarks, such as first paying customers, good comments, and knowledge gained, particularly in the initial stages. Such key performance indicators are unfamiliar to corporations, and they are reluctant to adopt them.

Corporate startups should maintain constant communication with significant stakeholders, have frequent update meetings, and establish a goal-oriented cooperation strategy while monitoring traditional key performance indicators to track the strategic plan in subsequent stages.


3. Solely concentrating on the front funnel

When a vision becomes a hit, many companies spend a lot of time brainstorming and the technique of coming up with a fantastic concept, but they don’t think about the process until the final moment. Companies are largely establishing innovation activities that concentrate on the front funnel and creativity and fail to consider a successful idea. 

Team programs are often interested in creating various concepts and generally conclude with a working prototype. After the prototype, what occurs next is frequently unclear and unplanned, resulting in a loss of pace and desire. As a result, while exploring revolutionary, innovative solutions and ideas, companies must consider a variety of tactics at the outset of every new idea.


4. Adhering to the corporate for too long

Because a startup’s agility and speed are incompatible with a corporation’s large structures and sophisticated procedures, a startup must abandon process compliance favoring the “just do it” approach.

Early on, corporate startups should realize that clinging to large structures will cost them a lot of time and money. Being untethered from extensive infrastructure allows corporate entrepreneurs to make their own decisions on how to proceed, allowing them to choose their speed.

The synergies between corporates and corporate startups are frequently underestimated. At least at the outset of the startup journey, the mirage of synergy between major corporations and startups is expected. When considering the advantages of such collaboration, one can consider exchanging company structures or even supplying a list of potential clients.

Yet, in most circumstances, particularly in severe innovation initiatives, the client groups are so dissimilar that it simply does not sound right. This isn’t to say that a corporate startup can’t profit from such a partnership; but, it might be better for a startup to go its path without relying on corporate backing.

As the startup and parent business become more alike as procedures are developed and the firm grows, benefits will become far more significant than at the outset. As a result, they may profit from each other’s assistance and influence.



You can save your corporate startup from failing! Today, we looked at four reasons corporate startups fail and how you may avoid them to make yours successful. Having these factors in mind will assist you in determining which tasks should be prioritized and will assist you in succeeding in your specialty area. Ensure that your startup begins with a solid corporate strategy and employs the most effective marketing methods possible.

It requires exceptional project implementation and a lot of effort surrounding the process from the start to effectively develop your idea into a viable business that works as a separate spinoff.

All you need for your corporate startup is effort, enthusiasm, and motivation. It’s also essential to connect, have advisors, have acquaintances, build connections, and collaborate. It would be best if you had others to accompany you and aid you, no matter how skilled, knowledgeable, or quick you are.

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Amy Bridgewater is a renowned Marketing Consultant, working with businesses to increase their online visibility and expand their customer base. Join Amy’s community to grow as an entrepreneur.

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