Consider the facts – since 2014, some 2,281 startups have begun operation. But around 43% of them have failed. Entrepreneur-investor and founder of Unspun Consulting, Dr. Som Singh, threw light on why good tech startups are faltering at her session at Nasscom Product Conclave 2016.
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From not getting the product right at the ideation stage to slacking after raising funds, Dr. Som summarised the following reasons as to why tech startups are biting the dust.
Reasons Tech Startups Fail
- Most startups are started by people who don’t have experience in the sector. Neither do they have people on their teams who have experience in that sector.
- Startups do not do proper mapping of their audience – who is going to use it, on which avenues are they going to discover it, and how active are they on those avenues?
- Failing to do a proper demand, supply, and pricing validation.
- Not finding co-founders with complementary skills, rather choosing to build with people who are known to you.
- In 2015, the average age of founders whose startups failed was 27 years. Not having enough experience or a mentor with relevant experience can break the venture.
- Startup founders need to focus on core skills and not delve into everything.
- Making a product viable is important, not getting big names to fund your startup.
- Clarity of purpose is important – are you trying to build a startup to scale or to get acquired?
- Stiffer competition from bigger players means breaking even will be that much more difficult.
- Founders tend to slack after raising funding. Many have siphoned off VC money rather than ideating on their next step.
- Not catching the product modification/enhancement bus. As a startup, one should never stop ideating or pivoting on the idea.