The infancy of a startup involves a lot of searching. Startups talk a lot about pivoting, changing their mission or product to suit the market ahead of them. What may have seemed like a great idea in theory for a startup can hit a wall very fast in practice. However, despite all the assurances that a company can pivot and change in the future, decisions that its founders make at the very beginning will still have a profound effect on whether the startup actually goes anywhere.
The LIFE (Learning Incrementally from Failed Entrepreneurship) project conducted a survey of European startups on the problems, challenges, and failures they encountered during various stages of their development. LIFE divides this development into four phases – Discovery, Validation, Efficiency, and Growth. It provides a snapshot into the obstacles that entrepreneurs face at different stages.
Earlier we looked at the supposed skills gap in European tech. This time we’re looking at the mistakes startups make in their formative days when it comes to founders and defining one’s mission statement.
The startups surveyed were all able to identify where they went wrong with the benefit of hindsight. However, most interestingly, they were unable to pin down any concrete solutions. They were only able to give some advice on what they would have done differently when founding and launching their startups at the earliest stages.
According to one of the startups surveyed, not having a technical co-founder leaves the company in a bind when it comes to hiring and making decisions on the product development side of things. Often startups are founded by business-minded founders who lack technical input.
BrightArch regaled its challenges with focus across every phase. According to the startup, its biggest problem was not having co-founders with “different areas of responsibility”. This could mean one person focused on raising funds and another working solely on product development.
At the same time, this sort of structure can cause rifts if not addressed early on. Filmgrail from Norway cited problems it had with its “tech guys” having little understanding of the customers’ needs. This rift between the technical and business sides of a startup is not uncommon and can be remedied by better communication.
Nonabox from Spain described how early on it started to move too quickly into new markets and attributes this error to a lack of advisors.
Getting the right founding team in place early on is just one hurdle, according to the white paper, and there are other key decisions to be made in the early phases.
“A solution looking for a problem” is common mantra for a startup that has created a product or service with no real substance and long term potential. A startup’s formative days should be spent identifying a problem to solve rather than developing a solution that’s looking for an audience.
One startup that was surveyed experienced this very problem at its Discovery stage. “The solution that we proposed was well-liked and people saw a lot of potential but it was difficult to identify what the problem really was that we were solving,” stated Origo. The startup added that this ties together with communication issues among founders.
In its chapter on best practices, the LIFE white paper makes a number of recommendations to startups and founders.
Along with having a technical founder, it recommends that startup founders have some prior experience in a startup, which helps in identifying common mistakes and in developing network opportunities. A team of advisors can also help in this regard.
Retrieved from: Tech.eu
