10 Reasons Why Tech Startups Fail & How Founders Can Bounce Back

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Reasons Why Tech Startups Fail

The millennials are too tired of 9 to 5 jobs and a monotonous lifestyle for a decade now. They have a good skill set and corporate experience, which pushes, them to open startups with the knowledge gained from their work environment. But does everyone see success in venturing startups, and what are the difficulties they face to be consistent in their entrepreneurial dreams? Let us see the top 10 reasons for tech startups fail and how we can recover and be ready with measures to overcome the failures:

Top 10 Reasons Why Tech Startups Fail

1. Fear Of Losing

For us Humans, the greatest fear is to lose in anything we do. It is the same in business and has high stride in startups because they are amateur to business and would have never predicted any losses. Learning how to take a loss and move on would be an ideal key for the business owners to stay consistent and can neutralize the tech startup fails in the longer run. 

There is an enduring saying on Wall Street, “Cut your losses short and let your winners run,” which applies even to the startup cultures to be successful. Founders have to understand the risk associated with the business and predict the loss that might occur. Then they have to apply the  best strategy to minimize the loss and move forward.

2. Lack Of Investors

Capital is the primary entity for any business, and it is the same for tech startups as well.    

What may go wrong here? 

We would have planned our finances, and still, some tech startups go through a rough phase. It is where we must talk about the values of the founders and the brand. Investors may not be on the same page with the founder’s values. They will lack the basic understanding behind the values derived. 

There is another unsung investment to be talked about when we consider tech startup fails in recent days.

Guess what?

The answer is investing in the skills of our employees. The workforce is the biggest strength of any organization, so investing in your employees’ skills would go a long way in our business success. Hiring a suitable candidate for the organization in terms of values and skill set is ideal for a successful team. 

What is a company without a team, right? I guess we will give it a thought.

3. Poor Marketing

We all would have observed this pattern of only 10% of the tech startups making it to their business journey’s 10th-year mark. Maybe outwardly, we wonder all are doing the same thing, but the reason for this difference in performance. 

So, what they are doing differently? Yes, it is the Marketing. 

We see the high-performing brands still invest in their marketing strategies consistently through their journey even after ranking No.1 in their field of expertise. A great marketing plan plays a vital role in taking their brand to a different level, reflecting in the potential lead and productive sale closure.  

Efficient Marketing strategies and understanding the market need to go hand in hand to avoid tech startup from failing on a larger scale. It will also help the brand presence stay in the market rightly available for the customers(users).

4. User Unfriendly Products

Customer is King” “Customer is always right” is a famous saying of any successful entrepreneurs, and marketing gurus never open a speech without stating these phrases.  So, for any successful business, Users of the Product  (Customer) is the destination of all our efforts.

The startups might not have a protocol or a case study to refer to or understand the user needs. It may lead to tech startup failures as, by the time they know the consumer’s mind, we fail to perform their timely needs.

 To avoid this, we should consciously pay attention to Customer feedback from the initial stage of the development. This way, we can earn the clients’ integrity and neutralize the tech startup’s fails and stay in the market consistently.

5. Lack Of Networking

“No man is an Island” is an important saying when it comes to business. If given a chance to read about the famous business tycoons and successful individuals, we can see a trend of causes that have contributed to the strong networking channels created over time. So, do we jump out and start making connections? Definitely No.

Connections that are relevant to our niche are what we need. Invest in good networking programs and create a long-term relationship with mutual benefits.

We will get noticed when we make relevance in our connectivity and when people start seeing us, it will open the path to newer opportunities. Like-minded intellects always share unique ideas, which will set free the creative talent. Even when you go towards a failure, innovation would have risen.

6. Lack Of Focus

Majorly all tech startups will thrive on climbing the top positions and set a brand image for their company. In the urge to try, they also try to tackle everything at the same time. So not shifting focus on one problem at a time and being the best at one niche will stop you from fails. We hear about tech startups fail very often, and one important reason would be this. 

Any new innovators who would love to have their startups will benefit from the wise knowledge shared by experienced tycoons talking about this same focus. They say, “chose your Niche” and be the best at it. It will only elevate your business to the next level and not detract you from the process.

7. Business Model and Testing

We have the skill, created contacts, and yes, we can bang on hit the bull’s eye. 

But still, why 1 in 10 tech startups fail? 

Primarily it would be because of the lack of a business model. We have concentrated on selecting a good team, have all the infrastructure in place. Provided high-quality skill training to the employees and fixed a niche.  After doing all the above still, tech startups fail because they did not test their business model or did not have a useful business model.

They should have a scalable way to acquire customers and monetize them. When we get new ideas, always put them into the business model canvas and test them before implementing them. 

8. Not Listening To Customers' Needs

Founders should always think of “What is the trend? What do we need to succeed in the Current Market? “

Do not ever fall into the assumption trap. We think this is what is suitable for the customer, but his needs would be different. Stop assuming and start Testing. Always before implementing any new feature, do your A/B testing. This way, we can save a lot of money and sustain the threat of failure.

9. Vision and Passion

A good visionary becomes a good leader. We all know about Dubai how it raised from the barren deserts to one of the world’s wealthiest countries. It all became possible only because of their visionary ruler.

He did not fear the current problems, he found ways to tackle the present issues, but he always had a future craft. Similarly, a startup needs a visionary leader and a passionate team to move forward. 

Handle the existing problem and never stop running towards your goal.

10. Bad Debts

In the initial stage of our setup, we will agree to work on credit and eventually get into a financial crunch. Ideally, we need to build customer relationships and bring in work to stay in business. But we cannot ignore the fact that our company will suffer in the longer run.

So always validate the client’s reputation before issuing credit. We can accept post-dated cheques, and if it bounces back, what can be the turnaround ways to recover the money. Announce the right incentives and offers to the clients if they pay in advance.

Recognize your employees with incentives when they bring in cash in advance.

Final Words

Pat your back! If you are already implementing all the above qualities in your work environment.

For others, do not forget to choose the right investor who is at the same pace with you and passionate about your values, choose the best team, don’t lose focus, and never underestimate your customers. Always their needs will be our priorities.

Good Marketing will keep you elevated in the market and rightly available at the right place at the right time.

If you have noticed any other characteristics followed by a successful startup, we would love to listen to you. As we said, networking is the super-hero to stay in the market and keep innovating.

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