What Causes a Tech Startup To Fail

9 Aug 2021

What Causes A Tech Startup To Fail?

Two-thirds of startups never show positive returns because they jump on the bandwagon unprepared. Today, with the help of this blog post we will be unraveling some of the primary reasons why tech startups fail.

If you are planning to start your own business, then here are some things you cannot ignore!

1. Poor Investment Choices

Just like any other business, investors are the primary entity for tech startups. Here are two examples for you to understand how poor investment decisions can lead a startup to its failure.

Even after planning the finances, a lot of startups often go through a rough phase. At this point, the brands start looking for investors. The urgent need to settle the finances forces a lot of founders to collaborate with the investors they don’t share the same values with. Lack of basic understanding behind the values derived may result in added complications.

1 in 10 Tech Startup Fail

Why?

The second example is investing in the wrong team. The skills of employees are the biggest strength of any establishment, so smart investment in that area would go a long way. Before hiring make sure you set two non-negotiable criteria ideal for a powerful team- values and skillset.

2. An Unfriendly Application/Product

For a startup or even an established organization, it is important to tap into the market with an app or product that thoroughly resonates with the target audience. Since the customer is king, all of the efforts must be destined to provide user satisfaction.

But it isn’t easy for a newly established company to completely understand the user’s needs. The major reason behind it is the lack of protocols or case studies. This can be a major setback as, by the time one learns about their users’ minds, they might have already been launched in the market.

But fret not as this can easily be avoided by startups if they focus on customer feedback from the beginning.

3. Unfocused Marketing

The popularity of a startup says a lot about its marketing techniques. Do you know that only 10% of the startups are able to celebrate their 10 year anniversary? On the outside, we may think that we all are following the same strategy, but the difference in the performance of those 10% startups speaks for itself.

Marketing Makes All The Difference

It is the only reason why the best performing tech-based companies continue to invest in their marketing even after ranking No.1 in their respective domain. A focused marketing strategy leads to a productive sales closure. Startups need to prioritize their understanding of the market and create a plan that offers substantial growth to their presence.

4. Fault In Business Model

Even after good investment choices, smart products, and on-point marketing choices, a tech startup may fail. Mostly it is because of the lack of a strong business model. Having all the infrastructure in place with a highly trained team cannot make up for a poor business model.

Startups need to develop a scalable way to acquire targeted customers and monetize them. The best way to do it is to test the ideas for improving the business model before implementing it.

5. Lack Of Vision & Passion

Do you know how Dubai transformed from barren deserts to one of the world’s wealthiest countries? It is because of the vision of their leaders. One who can visualize the success of their brand can come up with solutions to sustain it. It is important to not fear the problems but to tackle them instead in a way that supports the vision.

With the vision of the leader, the passion of the team plays an important role to move forward.

Wrapping Up!

These are 5 reasons why a tech startup fails. If you are experiencing similar inconsistencies with your own company, then we would be happy to assist you with related technicalities. For more information, you can fill up our contact us form and we will get back to you as soon as possible.

But until then, keep innovating!

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By:

Ankit Singh

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