Why 90% of Startups Fail at Demand Generation
(And How to Be the 10% That Won’t)

Around 90% of startups fail. I know, shocking. If that scared you, then this might be even scarier.

Nearly 42% of failed startups cite “misreading market demand” as their primary reason for failure.

That’s not a product problem. That’s a demand generation problem.

After helping startups raise over $425 million in venture capital and achieve four exits valued at more than $2.5 billion, I’ve seen this pattern repeat itself. Brilliant founders build amazing products, then wonder why nobody’s buying. They blame the market, the economy, or bad timing.

But they NEVER created demand for what they built.

It’s a harsh truth, but founders need to know that having a great product isn’t enough. You need people to want it, be aware of it, and understand why they need it. That’s demand generation, and it’s the difference between joining the 90% that fail or the 10% that thrive.

The Demand Generation Crisis Facing Startups

Let’s start with some hard numbers. Only 2 in 5 startups are profitable. That’s only 40% of startups that turn a profit!

The problem gets worse when you look at startup marketing budgets. The average marketing budget dropped by 15% in 2024 compared to 2023 spending. Startups are cutting marketing spend just when they need it most.

But here’s where it gets interesting. Startups that invest in demand generation see remarkable results. Companies that implemented a demand generation strategy saw a 35% increase in qualified leads and up to 10% revenue growth.

The difference is that these companies understand that demand generation is a proven and effective business strategy.

What Startups Get Wrong About Demand Generation

I’ve worked with close to a hundred startups, from early-stage companies to unicorns. The ones that struggle make the same mistakes over and over.

Confusing Demand Generation with Lead Generation

Lead generation captures individuals who are already interested in your product. Demand generation creates the want in the first place. Most of your buyers aren’t ready yet, so demand generation keeps you top of mind for when they are.

Skipping Foundation Work

You can’t generate demand if you don’t know who you’re targeting. B2B customers will respond to salespeople who connect by sharing relevant content and insights. You can’t be relevant if you don’t know who you’re talking to.

Put Focus on Quantity Over Quality

Most startups still chase vanity metrics, such as website traffic, instead of meaningful engagement. Spend your valuable time and energy on improving lead quality rather than focusing on lead quantity. Treat it like a top priority.

The Five Pillars of Startup Demand Generation Success

In my experience helping startups scale from zero to hundreds of millions in revenue, here are the five pillars that separate winners from losers:

1. Know Your Ideal Customer Profile (ICP)

Understanding pain points, buying behavior, and decision-making processes allows you to go beyond “marketing managers at SaaS companies”. You get to deeply understand your customer’s daily struggles, budget constraints, and what keeps them up at night.

Create ultra-detailed buyer personas with names and personalities. When you can picture exactly who you’re talking to, your messaging becomes laser-focused instead of generic. You’ll know them inside and out.

2. Create Relatable Content

The key is creating content that addresses specific problems at each stage of the buyer journey. Early-stage content to build awareness. Middle-stage content for educating and building trust. Late-stage content has to demonstrate value and drive decisions.

Companies with blogs are more likely to generate leads than those that don’t have one. But make sure that the blogs you create fit into a content strategy that moves people through your funnel.

3. Use Multiple Channels (But Do It Right)

B2B marketers will say that email is their most effective distribution channel for demand generation efforts. Email works, but it’s not the only game in town.

The best demand generation strategies combine multiple channels:

• Content marketing for thought leadership and SEO
• Email marketing for direct communication and nurturing
• Social media for brand awareness and engagement
• Webinars and events for high-touch relationship building
• Account-based marketing for high-value prospects

Each channel serves a distinct purpose, but they all work together to create a consistent touchpoint with your audience.

4. Leverage Data and Intent Signals

Monitor intent signals like:

• Content downloads and email engagement
• Website behavior and page views
• Social media interactions
• Search patterns and keyword research

Innovative startups use data to understand these specific signals to know when prospects are ready to buy. This data helps you prioritize leads and deliver the right message at the right time.

5. Measure What Matters

53% of marketers allocate 50% or more of their budget to lead generation, but many struggle to prove ROI. Track the metrics that impact your business:

• Cost per acquisition (CAC)
• Customer lifetime value (CLTV)
• Pipeline velocity
• Quality scores