Mehta's experience is also woefully common. Some 92 percent of start-ups fail within three years, according to the Startup Genome report — most commonly because of premature scaling.
Still, entrepreneurs can learn from early missteps. A venture that fails because of high costs, for example, can lead its founder to start another operation with a stronger foundation.
Bill Reichert, a serial entrepreneur who is currently managing director of Garage Technology Ventures, a seed-stage and early-stage venture capital fund, believes cash flow is critical.
"The most important thing for an entrepreneur at the front end is to figure out how you can get to cash-flow positive," he said in an interview last year. "Only when you get to cash-flow positive are you in control of your destiny. Until then, you are at the mercy of your investors and your creditors."
Reichert likes companies whose founders are what he calls scrappy, or penny-pinching, and focused on a lean operation. "We just see this all the time — entrepreneurs just go all of a sudden, 'Oops, I'm out of cash,' " he said. "Just having an ethic of frugality" is crucial, "knowing that a dollar you spend on chairs is a dollar closer to hitting a wall and running out of money."
Keeping close track of finances, both personal and business, is also extremely important, Reichert said. "I'm not going to invest in somebody who is not going to make sure that that monitoring is in place."