Zombie startups: why are entrepreneurs failing to grow their businesses?

Only a small percentage of companies succeed past early investment. To fix this founders need to stop thinking short term

Shaun of the Dead film still, a crowd of zombies
 There’s an increasing number of companies that keep going after funding runs out but don’t grow – also known as zombie startups. Photograph: Universal/Sportsphoto Ltd/Allstar

For all the support they promise startups, business accelerators are arguably not delivering. Too many startup founders are not getting to the finishing line of a big pay day on exit or stock market launch.

The UK is ranked third in the world by the Organisation for Economic Cooperation and Development (OECD) for the amount of startups created but only 13th for the number that go on to become established medium-sized companies. Lack of access to financing as a business matures is clearly an issue.

government report has shown that fewer than one in 10 firms that obtain seed funding in the UK go on to receive later stage fourth round investment, compared with nearly a quarter in the US. Last week the Treasury announced it will set up a national investment fund to address an estimated £4bn funding gap between US and British firms.

But an often overlooked problem is that many startups take a disjointed short-term approach to growth which is killing the golden goose before it gets to market.

Source: Zombie startups: why are entrepreneurs failing to grow their businesses?


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