Building a new tech company can be notoriously risky, but thankfully there are plenty of startups who can tell you exactly what they did right (and wrong) when starting a business.
Luckily for us, these industry experts were all in one place when we attended London Tech Week, so we asked them; “What’s the most common mistake you see tech start-ups making?”
Most agreed that there are too many tech startups out there who have exciting new tools but vision for how they’d be used. Always start with a problem to solve rather than a solution to sell.
Be solutions based
“It’s the old cliche,” jokes Michael Smith, Business Development at Quench.AI. “Focusing too much on the tech rather than what people actually want to use it for. I think that technology is a very nice shiny new tool, but the only thing people really care about is how it’s going to affect their day to day.”
He’s not the only one who identifies this as an issue. The most revolutionary tech in the world won’t save a company that doesn’t know the direction it’s aiming for, even if they have the best brains in the business.
“I can say that a couple of smart people, they have a brilliant idea and the first obstacle is that they are perfectionists. They try to master something, they spend too much time on it and then find out that nobody needs it,” explains Tatsiana Shkliar, software engineer for Questlogic.
“I think that you need to start showing [your product] to people to get feedback sooner,” she argues. And this is a common trap, Aleks Trofimovr from CTO2B confirms, stating startups need to reach outside of their tech circles to get a better understanding of their consumer base.
Understanding whether there is a real demand for your product is key, he says, noting, “it feels like a bubble when you just add AI into your logo or whatever and you already think like you are in an AI stream, but most of these products have a large churn [rate] and basically die really quickly.”
Think like a business
Unfortunately, even if you have a clear understanding of your customer base and a fantastic product, it’s not enough. You need to understand your market and have a serious plan to navigate it.
“They use tech without really understanding what they are doing,” House of AI CEO and Founder Fabio Ardossi says. “So it’s like tech first and then the business idea [second]. It should be the business idea first, and then tech.”
He’s not the only one who’s seen this mistake made either. Luis Cardenas from travel software firm Toursys gives three helpful tips;
“First, it’s important to correctly identify your customer persona. What is your customer profile? Second, the startup must create a business plan. Third, make a forecast of budget and how to execute that business plan. That is the problem because some startups don’t have money for this kind of process.”
That brings us to fundraising. Another pressing challenge for small companies in every industry. “I think fundraising has become a lot more important,” argues Notchup CEO Maulik Sailor.
“Especially when you are trying to build a complex AI project where you do need a lot of upfront investment to make it work. So being able to raise up front is something difficult. Not a lot of funds are due, but I think it’s becoming more and more important.”
That wasn’t always the case though, he says. “I think there was a time where you would build products and you’d get validation and go out to the market and aim to raise good funding behind that, and that largely worked. I think the market has changed now because a lot of products are AI driven now that initial validation can be done fairly quickly, but you may still not be able to raise.”
Find your niche
Be purposeful about the problem you’re solving, the experts say. Focus on the area that you know well, and be specific about what you can do and how you can do it.
“I think tech companies starting out are trying to do too much and go too broad,” says Stephen Christou from SentiSum. “Having a niche, having a specific focus and not taking on the world all at once.”
Prad Kapoor from Dotsquares agrees. “Small tech companies are diving into, you know, common technologies, I would say if they dive more into niche technologies they can expand sooner, I believe.”
The good news is that now is a great time to be a tech startup. The tech industry is enjoying fantastic growth and success, and the public and private sectors are both investing heavily in small companies around the world. So, with great tech, a solid business plan, and a problem to solve, your tech startup could be the one to capitalise on the tech boom.
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