The statistics are harsh: 90 per cent of startups fail. About 10 per cent shut down within their first year, and a staggering 42 per cent fail because there is no market need for what they offer. This raises an urgent question: what separates the startups that thrive from those that fade away?
Interestingly, many of the world’s most successful startups—WhatsApp, Duolingo, Noom—were founded by immigrants. In fact, 80 per cent of America’s billion-dollar startups have at least one immigrant founder or a top executive. These founders succeed not just because they work hard, but because they think differently about risk, resilience, and opportunity.
This article explores why most startups fail and what immigrant entrepreneurs do differently to overcome those challenges.
The common reasons startups fail
- No market need
One of the biggest reasons startups fail is that they create products that no one actually wants. Founders, especially first-timers, often fall in love with their idea and assume there is demand without thoroughly validating the market. This false confidence leads to wasted time, money, and effort—often with disastrous consequences.
In 2009, Triangulate, an AI-powered dating startup, launched Wings, a Facebook-integrated app designed to match users based on their social media activity. The company raised US$750,000 in funding and believed that leveraging behavioural data and machine learning would revolutionise online dating.
However, users weren’t drawn to algorithm-driven compatibility—they still prioritised factors like physical appearance and direct interaction, just as they did on platforms like Match.com. Without enough engagement to refine its technology or attract further investment, Triangulate quickly burned through its funding. Despite attempts to pivot, it ultimately shut down.
- Running out of money
Startups frequently underestimate how much money they need to survive long enough to reach profitability. Raising capital isn’t enough—managing cash flow effectively is crucial. If a company scales too quickly before ironing out operational kinks, financial problems will inevitably follow.
Quincy Apparel, a direct-to-consumer brand launched in 2011 by two Harvard grads, aimed to provide stylish, well-fitting workwear for young professional women. The demand was clear, and their concept resonated with customers. However, high return rates due to fit issues quickly drained their cash reserves.
Investors, eager for rapid growth, pressured the founders to expand before they had perfected their production process. With mounting costs and no additional funding, the company folded in under a year—not because the idea was bad, but because they ran out of time and money before they could make it work.
- Weak teams and internal conflicts
A startup’s fate is not determined solely by its idea—it hinges on the strength of its team. Many ventures collapse due to founder disputes, weak leadership, or hiring the wrong people. A visionary founder is not enough; execution requires a team with the right balance of skills, experience, and decision-making capability.
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One recurring issue in failed startups is co-founders who are too similar, leading to redundancy in skill sets and decision-making bottlenecks. Another is the reluctance to delegate: founders often try to do everything themselves rather than surrounding themselves with experts. In high-stakes environments, disagreements over vision and execution can quickly escalate, leading to breakdowns that cripple the company.
- Poor business model
Even when a startup has a great idea and strong leadership, it can still fail if it lacks a viable path to profitability. Some founders assume that user growth alone will eventually translate into revenue—but if the math doesn’t add up, the company is doomed.
MoviePass, a subscription service that promised unlimited theater visits for just US$9.95 per month, banked on the assumption that casual moviegoers would offset frequent users, keeping costs under control.
Instead, heavy users took full advantage of the service, rapidly depleting the company’s capital. MoviePass never had a sustainable monetisation plan beyond investor funding. After multiple pivots and last-ditch attempts to raise capital, the company finally shut down.
What immigrant founders do differently
Immigrant founders defy the typical startup failure traps by leveraging their experiences of uncertainty, adaptation, and resourcefulness. They approach entrepreneurship with a unique perspective, shaped by their backgrounds, and this often gives them an edge in building resilient, scalable businesses.
- They build businesses with a global mindset
Many immigrant founders identify opportunities that others overlook, often because they have firsthand experience with economic and social barriers. Rather than catering to a single market, they design solutions with a global reach.
Jan Koum, a Ukrainian immigrant, co-founded WhatsApp after recognising how expensive and unreliable international communication was. Unlike other messaging platforms, WhatsApp prioritised simplicity, low data usage, and privacy—needs shaped by Koum’s experiences growing up in a country with restricted communication. This focus on a universal problem allowed WhatsApp to scale rapidly, ultimately selling to Facebook for US$19 billion.
- They focus on practical, proven needs
Rather than chasing innovation for the sake of it, immigrant founders often focus on improving existing systems, solving fundamental problems in smarter ways.
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Saeju Jeong, a South Korean immigrant, didn’t just create another weight-loss app when he co-founded Noom. Instead, he applied psychology and behavioral science to help users make sustainable lifestyle changes. By addressing the underlying causes of weight gain rather than just calorie counting, Noom became a billion-dollar company with a loyal user base.
- They master bootstrapping and resourcefulness
With limited access to funding, many immigrant founders bootstrap their companies longer, ensuring financial discipline and a clear path to profitability before scaling.
Luis von Ahn, a Guatemalan immigrant, built Duolingo with a mission to make language education free. Instead of relying on heavy venture capital investments, he focused on sustainable monetisation models, such as offering a premium subscription while keeping the core product free. Today, Duolingo is a public company worth over US$5 billion.
- They adapt faster and see obstacles as normal
Most entrepreneurs struggle with setbacks, but immigrant founders often see them as part of the journey. Having already navigated challenges like cultural adaptation and visa restrictions, they are more resilient in uncertain environments.
Noubar Afeyan, an Armenian immigrant from Lebanon, faced skepticism when he championed mRNA vaccine technology through Moderna. Rather than retreating, he remained steadfast in his vision, pushing forward despite industry doubts. His persistence paid off when Moderna became a key player in COVID-19 vaccine development.
The startup playbook for success
If you’re launching a startup, here’s what you can learn from successful immigrant founders:
- Validate market demand before scaling. Don’t build a product without confirming there’s demand. Use MVPs, surveys, and pilot programs before investing heavily.
- Control costs and bootstrap. Venture capital is useful, but overspending before profitability is a trap.
- Solve real problems. Some of the most successful startups focus on unsexy but essential needs.
- Hire smartly. Surround yourself with industry experts and complementary skill sets.
- Pivot when necessary. If something isn’t working, change the strategy
Startups fail for many reasons, but immigrant founders show that resilience and adaptability can make the difference. They don’t wait for perfect conditions or unlimited funding. They build, adjust, and push forward despite uncertainty. Success comes from learning, adapting, and moving forward—no matter how many times the answer is no.
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