Mistakes that might kill your startup, avoid them at all cost!
Sigma School
16th August 2023
We read so much news about the story of successful startups, unicorn and decacorn startups all the time. As of March 2021, there’s about 500 unicorns (startups with a current valuation of US< billion or more) around the world (Source:CB Insights).
In the South East Asia region alone, we have several Unicorn Startups; which are Go-Jek, Tokopedia and Traveloka from Jakarta, Indonesia along with Grab, Lazada and Sea that are headquartered in Singapore and Carsome, who recently became Malaysia's first tech unicorn.
image credit: Cento Ventures
Sure, this is a hard pill to swallow but it's good for founders to have a reality check now and then. The statistics aren't intended to scare off founders to start their business, but to encourage them to learn from others' mistakes and never repeat it.
We summarize six top reasons that could potentially kill a startup. Founders should learn from these startup mistakes and how they can avoid making the same mistakes again.
Money is the bloodline of any startup. Why did the cash flow dry up? The money ran out because it ceased coming in. Was it because of mismanaged costs or a lack of sufficient sales? Money running out also refers to an inability to secure funding or additional financing needed to keep a firm afloat, particularly in the early stages, before it can get off the ground. For most startups this is a problem since they are less likely to be profitable in the early stages, spending more than they make.
A clear sign of approaching failure is when a startup that has just established and went heads up outright competes with the strongest market leader in the industry while also planning to bootstrap his new business. Large businesses have huge resources to deter competitors from even entering their markets. They can undercut your prices, outspend you on advertising, and choke off the startup access to any suppliers or distributors.
As the saying goes: “two heads are better than one”, there are very few startups that are successful on being founded by just one person.
But..what's wrong with having a single founder? To investors, it actually means that the founder couldn't talk any of his friends into starting the company with him and that's pretty alarming. It’s important to have another person onboard with your business who can help drive you when the going gets tough, help keep your ideas fresh, and ensure that you always keep your eye on the prize.
Many startups start with the idea of a product they think people want. They spend a lot of time, perhaps months or even years, developing products based on their own assumptions, without even verifying their ideas first. Only after they release the products, they learn the hard way that no one really needs their products or the features.
One of the biggest reasons why a startup fails is that the founders are not willing to get their hands dirty and put more effort into running the business. As a founder, you need to get involved with all aspects of running a startup – even the parts you don’t want to, or even not familiar with as this will ensure that you know your business inside out at all times.
Well, unlike in the 90’s, most startup founders these days are technically gifted or at least have some coding background. However if you or your co-Founder aren’t programmers,it might be tempting to hire programmers that are cheap – but in the long-term, this decision could come back to haunt you. It’s important for startups to get some top tech talent early. The difference between a great and poor product is a Bad Programmer.
by Alvin Eu Yong, Venture Analyst @thehackercollective
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