6 Reasons Why Tech Startups Fail


Most tech startups have embraced Thomas Edison’s philosophy of “failing first” before you win. This can be costly in the modern-day tech ecosystem where tech startups that receive millions of dollars in funding fail before even celebrating their second year. As much as failure is a prerequisite for success, it is crucial that one is validating an idea before producing for it for the mass market. There are a couple of reasons why tech startups fail and we’re going to highlight some of them here.

team-building-activitiesLack of Segmentation

You can’t launch a product when there is no clear market focus. Emerging tech startups are desperate to do anything just to generate revenue to show the investors that the idea is viable. This could mean that they’re targeting everyone which shouldn’t be the case. A company that is unable to serve the target segment is doomed to fail from the onset.


Not Enough Money

This is one of the reasons why a lot of startups fail. When you’re starting a business, you will put all your focus and energy into it. This could be a challenging endeavor when there is no money coming in. At the end of the day, you need to eat and so does everyone in the company. The startup might have received investor funding but it isn’t enough to sustain the employees the whole duration when there is no money coming in. The first hurdle that most startups have to overcome is getting the initial investment. The majority of startups don’t even make it to this stage.

For a startup to secure investment, it must have a solid business plan. No investor wants to put their money where there is no promise of returns. Once the investment is secured, there is also the challenge of managing the day-to-day operations of the business.

Incomplete Products

Startups have a tendency of launching incomplete products because of excitement. This behavior is common in the gaming industry since it is lucrative and there are always people willing to spend. There could be integration and compatibility issues with the product but the startup still goes ahead to launch the product. Customers will not be too pleased when they’ve bought a product that is not working. It will be hard to win back people when you’ve already messed up by releasing an incomplete product. Look for a complete image search solution like that developed by Zenserp.

Slow Growth Rate

Every tech founder dreams of the day when the company will be valued at $1billion. If it is not happening fast, chances are it might never happen at all. The momentum to sustain growth might not be there in the first place. In order for a startup to be successful, aggressive growth should be a priority in the plan.

Irrelevant Market Research

You might have a good product but you’re misinformed about the needs of the market. That could be equated to developing a product that no one needs. Statistical surveys from customers might not be enough to provide qualitative information which is just as important. Consumer demands are always shifting and you might be developing a product meant to address a fad that is likely to disappear.

It will be suicidal to start developing a product when the demand hasn’t been established. It is not every day that a startup will come up with a revolutionary idea that has not been invented. Logic dictates that you determine if there is a demand before wasting time and resources developing a product that one cares about.

Focusing on a Silo

You’ve probably seen those movies where tech startups are so obsessed about the product without really focusing on the external environments. They will be missing out on the most important bit, which is developing a product that people want. Those that are too focused on the silo might not be aware of the competition or trends that could have a negative impact on the product that they’re developing. For a startup to be successful, they have to have a thorough knowledge of the competitors. You can only develop a better product when you know what the competitor is offering.

To sum it up, tech startup founders need to be aware of the common pitfalls to avoid. As we’ve established, the lack of funding isn’t the only reason why startups fail. Sometimes the issues are within their control but they fail to take the necessary actions. Don’t be another statistic.