Blockchain startups are failing – and it’s not because of the technology

By Georgie Gould

Up to 90% of blockchain technology initiatives within startup businesses will inevitably fail, according to a new study from the University of Surrey. 

Credit: Getty Images

Researchers have exposed a fundamental truth about the technology that many have hailed as the future of business: without strong leadership and a clear vision, startups are likely to collapse under the weight of their own ambitions.

The study, published in the Journal of Operations Management, found that many founders at blockchain companies don't have the power or influence needed to successfully lead their projects. The research points out key problems in how decisions are made and how companies explore new ideas, which can lead to them getting stuck and ultimately failing. This challenges the common belief that adopting blockchain is just a technical problem, showing instead that the founder's influence is crucial in managing the complicated world of blockchain.

Professor Yu Xiong, co-author of the study from the University of Surrey, said:

"We discovered that the effectiveness of blockchain adoption is not just about technology but is deeply rooted in the management behaviours of founders. In short, blockchain companies may need its own “founder mode” moment to survive.

"Strong leadership can transform a nascent idea into a thriving business, while weak governance can doom even the most innovative projects to failure.

“The way decisions are made in these companies can be problematic. Some founders let everyone have a say, which sounds good, but it can lead to confusion and slow progress. For example, if a team can't agree on a new feature for their blockchain service, they might waste time debating instead of moving forward."

The research examined five blockchain startups over a five-year period. By analysing interviews, internal documents, and direct observations, the study captured the dynamics of decision-making and management behaviours within these companies. 

The results indicate that successful founders actively seek inspiration beyond the blockchain ecosystem, adopting centralised decision-making styles that enable quick adaptations and innovation. In contrast, less effective startups often remain trapped in a cycle of within-blockchain exploration, leading to slow implementations and limited scalability.

Professor Xiong continued:

“By fostering a culture of creativity and encouraging cross-departmental collaboration, startups can effectively align their blockchain solutions with market demands. This approach not only enhances operational efficiency but also prevents the pitfalls of technology adoption that have plagued many firms in the industry.

“There’s an urgent need for a paradigm shift in how blockchain technology is perceived and implemented. We call on entrepreneurs and investors to recognise the pivotal role of founder influence in the success of blockchain initiatives, moving away from a purely technical focus towards a more holistic view that encompasses leadership dynamics.”

The project is a collaboration between Dr Yuanzhu Zhan of the University of Birmingham, Dr Xinjie Xing of the University of Liverpool, Professor Andy Yeung of the Hong Kong Polytech University, and Professor Kim Tan of Nottingham University.

[ENDS] 

Notes to editors