The Dreamstake team probably has more exposure to early stage tech startups than almost anyone else in Europe right now; over 150 startups at Google Campus Demo Days, as well as all those passing through our weekly startup academy. We see a lot of great things but we also come across some common #fails. We can all learn from these:
- Ignoring current best practice
Books like The Lean Startup have codified the startup process and made it easier for founders to follow a series of well defined steps. Experts such as Paul Graham and Steve Blank give excellent guidance through their books and blogs. Ignoring current knowledge will extend the launch phase and ultimately risk failure.
- Failing to solve a problem
This probably the most common fail. Do not assume that there will be a market for your startup. It is too easy to assume that your idea for a social drinking app will find a ready market. However, you need to test your assumptions. This is called validating Problem/Solution fit. Firstly, check that others perceive that there is, in fact, a problem. Then check that the problem is not already solved by other solutions. Finally, check that your app. provides enough extra utility to make it worth switching.
- Scaling too soon
It is easy to fall into the trap of rolling out your app before checking that it adequately addresses the market need and more importantly that someone will pay for it. In the early days obsess on proving that you have Product/Market fit by testing an MVP (Minimum Viable Product). Don’t convince yourself that you are ready just because an investor has agreed to fund you. It doesn’t matter how much money you pump into scaling your startup, it won’t happen if the proposition is not right.
- Failing to attract a team
Founders have lots of excuses for not having a good team around them; ‘no money to pay them’, ‘I can do it all myself’, ‘I can’t find anyone who will work with me’. These are all warning signs. There is little doubt that attracting a great team is the hardest part of launching a startup. However, if no-one buys into your vision, then maybe it is not so strong. Investors invest in teams. This is the only thing they have to go on at the seed funding stage. If you can’t afford to fund the whole team, you may have to be clever at managing some part-timers until the first round of funding comes through
- Believing that Dev is all you need
We commonly hear non-tech founders saying that they are looking for ‘a dev’. In reality, this is often the wrong starting point. Firstly, they need to get their own act together and get as far along the line of specifying the product in as much detail as possible. For consumer facing apps the next stage is to find a good UX designer. Dev comes last, after the proposition has been fully specified.
- Under-estimating the difficulty of funding
Getting funded is always difficult and sucks up valuable management resources which should be directed to the product development. Tech startups invariably require multiple rounds of funding and each stage often takes as long as 6 months. Real investors rarely visit pitch sessions or read unsolicited business plans. Most source their deal flow from trusted third parties. Make sure your startup is totally investment ready before pitching to investors. We are always happy to help with this process.
To summarise, the startup process is well defined and simplicity is the key. Make sure to follow the main steps. Get some great advisory board members into the team and listen to what they say. Make use of the amazing resources that are available to tech founders and most importantly, Never Give Up!
Blog by Paul Dowling – Co-Founder of Dreamstake an online network, that provides end-to-end support for entrepreneurs wishing to get a tech startup funded in the shortest possible time. The startup rating system allows entrepreneurs and investors to monitor startup progress and inject capital and support at the appropriate time.