Failure Factors of Early-Stage Digital Startups: A Literature Review

Abstract

Digital startups are increasingly shaping the modern economy, yet a
high failure rate in early-stage ventures remains a critical concern. This study
investigates the underlying causes of early-stage digital startup failure through
a Systematic Literature Review (SLR). Focusing on publications from 2017 to 2025
indexed in the Scopus database, we applied the search string “failure startup”
OR “regression startup” AND “technology” and identified 13 relevant studies.
The review reveals that failure is influenced by internal factors—such as weak
managerial competence, misaligned business strategies, and team conflicts—and
external factors including market volatility, lack of ecosystem support, and rapid
technological shifts. The study also highlights the concept of “regression
startup,” where decline results from a series of poor strategic decisions. A
combination of lean startup approaches, entrepreneurial training, and policy-
level innovation interventions is recommended to mitigate risks. This review
offers a conceptual contribution to understanding early-stage digital startup
failure in a technology-driven context and emphasizes the need for more resilient
strategic planning.