Failure is the most under-studied input in startup advice. The YC Graveyard tracks every documented YC shutdown and the founder's own postmortem. Below is what 300+ shutdowns have in common.
The four causes of death
| Cause | Share | Most common shape |
|---|---|---|
| Capital — ran out of runway | ~38% | Bridge round failed; founder underestimated time-to-next-milestone. |
| Market — no real demand | ~31% | Product worked; nobody cared enough to switch. |
| Team — co-founder split | ~18% | Equity dispute or values mismatch in months 6–18. |
| Product — couldn't ship at scale | ~13% | Worked in demo, broke at 10x load or in a regulated industry. |
The early warning signs founders missed
- Flat week-over-week DAUs for 8+ weeks (market signal).
- Co-founder stopped attending office hours (team signal).
- Burn went up but ARR didn't (capital signal).
- Engineering velocity dropped 50% with no headcount change (product signal).
What survivors did instead
The interesting comparison isn't dead vs alive — it's dead vs the companies that almost died and recovered. Across that comparison the survivors did one specific thing: they cut burn by 40%+ in a single week, not in a slow taper. The graveyard is full of companies that cut 10% three times and ran out anyway.
Key takeaways
- Capital and market kill ~70% of YC shutdowns combined.
- Co-founder splits in months 6–18 are the leading team-death pattern.
- Flat DAUs for 8+ weeks is the highest-signal early warning.
- Survivors cut burn 40%+ in one move; the dead taper.