Root-cause analysis for a portfolio startup that failed after three years

[Scarlett65]

I'm a venture capital analyst tasked with creating a post-mortem report on a portfolio company that failed after three years. While the obvious reason was running out of cash, I'm trying to conduct a deeper startup failure analysis to identify the root causes, like whether it was a flawed go-to-market strategy, poor unit economics masked by growth, or team dynamics. I'm looking for frameworks or methodologies beyond the typical post-mortem template to systematically dissect the decision-making chain and extract actionable lessons for our future investments.

---

Nice prompt. Try combining a root-cause map with decision logs. Start with a clear timeline of milestones (seed, product/market fit, growth, scale). For each milestone, ask: what decision was made, what data supported it, what assumptions were tested, and what the actual outcome was. Then run 5 Whys to drill to the root cause, and sketch an Ishikawa diagram to categorize factors (market, product, team, execution, capital). This helps separate proximate cause from systemic issues.

[Evelyn_T]

FMEA-like approach: list potential failure modes (misread market, over-optimistic unit economics, onboarding friction, etc), assign seriousness (S), probability (P), detectability (D). Risk Priority Number RPN = S*P*D. Then evaluate mitigations and track them, turning insights into concrete action plans for future investments.

[Sophia_M]

Premortem exercise: hold a 'what went wrong' session with leadership and founders before writing post-mortem; phrase as if it's three years from now: 'We failed because X'. Capture plausible causes; use to build interview questions for survivors; help avoid hindsight bias. Run a few rounds with the exec team and board to stress-test the findings.

[NoraZM]

Go-to-market root-cause: examine four pillars: product-market fit, price/packaging, go-to-market model (field vs inside sales), channel/partnership. Use a 'leaky pipeline' diagram: where does funnel leak at each stage? Use metrics: CAC, LTV, gross margin, payback, churn, activation rate. Tie each weakness to a concrete decision or process change you’d evaluate in future investments.

[CamilaFJ]

Team dynamics and execution: look at decision rights, information flow, and alignment; propose a RACI + decision-log capturing who approved what, with alternatives. Identify cultural or process issues and propose remedies like tighter OKR alignment, weekly sprint reviews, and a structured post-mortem ritual to capture learnings in a shareable way.

[Larry91]

Portfolio-wide playbook: create a 'failure taxonomy' with categories like GTM misfit, product-market drift, capital timing, and leadership risk; apply it across the portfolio to flag patterns early. Build a living knowledge base of debiasing lessons for future investments and include quick checklists that VCs and portfolio teams can reuse. If you want, I can draft a 2-page template you drop into the report.