Why 90% of the startups fail and how to be in the 10%

As a contributing member of EBAN Kobi Kaldron knows his way around the angel investing world and has worked with many startups through the years.

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Kobi shares his  knowledge and experience in this field with the EBAN community to shed light on the most common mistakes startups make, which set them up for failure, and how to avoid them.

Here are 3 common things to avoid:
Supply but no demand - The first mistake one could make is to act exclusively out of emotion, be excited about the technology created or that the product works, and don’t think through rationally or logically. From the get-go, start-ups adopt a tech perspective which doesn’t align with real market needs : and without demand there is no need for supply.

Lack of deep market research
Staying on topic, in many cases, the founders don’t actually pay enough attention to deep market research, competitor analysis, and entry barriers : all necessary topics to be looked at in depth by the startup. If these steps aren’t checked off the to-do list, the natural consequence of this unfortunately falls on the user experience of the product, which is compromised, and usually lacking when faced with competitors. Therefore, completing this research is key to the success of your startup. You can begin this process by asking yourself and your company a series of questions : Who is the target audience to your “solution”? What are their weak points? What to expect from the “solution” or product? and What should be the business model that could fit their expectations? Deep insights about user experience is needed and the GUI (graphical user interface) needs to be taken into account.

Undetermined rights & blurred lines
Another mistake to be made refers to the legal framework between startups and developers. This miscommunication is the root of the failure of many startups: they wish to attract developers that will aid them in the creation of their product, which they’re unable to produce due to lack of skill or know-how, but don’t sign or write up a formal contract. The developper can then sue the startup for which they worked for and obtain the IP and full rights on the product.

 

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