The Project and Risk Management Challenges of Start-ups

Start-up companies are essential to maintaining innovation in an economy. However, the high failure ratio of start-ups indicates that market, financial, and other risks require serious attention. As start-ups mostly evolved at the end of the 20th Century or the beginning of the 21st Century, the history of project and risk management practices for them has a shorter history. Overall, 90% of start-ups fail, 10% within the first year, and 70% within two and five years after foundation; therefore, understanding the underlying factors and how proper project and risk management can reduce the likelihood of failure, is worthwhile. This paper reviews the history of start-ups and the typical causes of failure based on a literature review. Finding the appropriate way and tools for risk management, a new approach is introduced. Considering start-ups as projects, a much more mature methodology is available for solving the problems. As a result of the diversity resulting from industry and other specificities, a two-level approach is suggested, including a risk-oriented management framework model and an additional flexible toolset.