The 3 Main Reasons Tech Startups Fail
One of the most common questions I am asked by clients is how to secure funding. Yet, 75% of venture-backed companies will fail, so if it’s not funding, what is going wrong?
In reality, funding is only one of the first hills in the battle faced by thousands of startups each year. Whilst securing it may be hard, a quick Google will reveal millions of pages worth of resources and information on the topic. What is harder to uncover, is what to do with that money once you’ve received the investment.
Give your business a fighting chance by avoiding these common start-up fails:
- No Product/Market Fit
Finding a gap in the market isn’t enough to be a successful startup. One of the questions you need to ask, is will people be willing to buy this? It comes down to whether there’s a bigger reason that your product is currently not already on the market. There are many reasons for bad market fit, including ineffective data analysis and market share miscalculations.
Ultimately, you will find out very quickly if customers aren’t willing to buy what you’re trying to sell. To ensure an accurate market fit, iteration is key. Continuously checking and double-checking your market assumptions should continue from the ideation stage throughout your business timeline, as the market will inevitably evolve. Start with a singular problem for a specific group of people and make sure that your product is directly addressing that problem. Then keep checking those assumptions that built your solution against the market, and iterate until you have something they are willing to buy.
2. Scaling With No Product Roadmap
Being focused on the larger picture is great, but what about the execution? Even those with strong business acumen will struggle to form a product roadmap if they have little knowledge of the tech industry. I work with a range of individuals who have experience in starting successful businesses, however, this doesn’t prepare them for the blueprint needed to build a successful technology startup.
Product roadmaps force startups to confront every element of their business from the ground up, and working with somebody to ensure all bases are covered will prevent your startup from failing as a result of avoidable mistakes. Your roadmap should not only include what your product does but what your product is, how people get their hands on it, how it solves the problem, and how it makes for a viable business.
3. Working With the Wrong People
‘Every employee counts’ is a mentality that should be at the core of all hiring, but it’s even more important in a startup; when you’re a small team, dead-weights are not going to slip through unnoticed.
A common mistake is hiring a co-founder too late and employing in other areas too early. Having a co-founder is invaluable in the tech industry, particularly where one is technical and the other is not. Finding somebody who shares your vision, yet can bring their own tools to the table will save you time and money when making later hires.
Looking for more information on the processes and methods of a successful tech start-up? Find out more about what I can do for your business.
