Why business must not penalize failed founders

start up failure

5 minutes read

We always talk about the small percentage of entrepreneurs that succeeded. However, there is a larger percentage that, well, don’t. Industry estimates show that 90 percent of startups fail within five years. Nine out of 10 startups are not successful stories, so where does that leave the founders of such ventures? What happens to them?

It is certainly a question worth to discuss because entrepreneurs do not cease to exist even if their business endeavours do. Most startups do not continue past the fifth year simply because they fail to fill a market need, run out of cash or install the wrong team.


wrong team

The startup success rate is staggeringly low - but it does make sense in context. There are plenty of startup concepts and venture capital backers that it is not feasible for every idea to be the next Uber. Building the startup is one thing, but maintaining profitability is another. Cashflow has been and will still be the key concern of startups, and this goes back to filling a market need and adequately creating something that people desire.


startup with revenue

Furthermore, even with the information of what not to do with startups, failure is more probable than success. So, what happens to these entrepreneurs?  Of course, most of them end up back to the workforce, giving themselves a break from the immense pressure to perform.

However, after speaking personally to several entrepreneurs, I have realised that founder failures seem to always be in search for new opportunity.  Entrepreneurs are a famously tenacious bunch and it seems that most of them, although failed at on point, will continue in their quest to build and found.

Singapore is well known as one of the best places to launch a startup due to government support, so there should be no surprise that many people are willing to back their concepts and found prospective businesses here.

Prime Minister Lee Hsien Loong, Credit TodayOnline

 Recently, Singapore Prime Minister Lee Hsien Loong in an open dialogue with some 500 students at Singapore University of Social Sciences shared that he would hire a failed entrepreneur as long as they show commitment and strong belief in their ideas.

Unfortunately, this does not appear to be the mainstream view. Most entrepreneurs that I have spoken to feel it is way harder to be hired after failing in their own startup experiments. This comes from the (wrong) belief that assessing startup founders on their projects’ success. Employers often have no idea how hard it is to run, grow and manage a company - and in reality, its success should be viewed separately to that of the founder.

Kelly Lim, founding team of Pelago, says if you fail in your startup then go out there and start applying for jobs. Failure does not determine your future, and the majority of companies should see the positive side in that you have tried your hand at entrepreneurship and attempted to build something of your own.

Khoo Kar Kiat, Credit: Channel News Asia

Take the example of entrepreneur Khoo Kar Kiat. At 33 years old, Kar Kiat quit his job to launch Fastbee – a hawker food delivery service using vending machines as distribution points. This meant learning how to sustain funding and implement tech to improve business models. While the venture failed, Kar Kiat picked up valuable skills which later translated into new employment as Head of Venture at SATS Ltd. 

Hopefully, there will be an attitude shift as more startups are born and died. Entrepreneurs are a rare breed of dreamers and doers - they should not be penalized for attempting to do something different.