How to avoid startup failure

Tuesday 9th June, 2015

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Some 80 to 90 per cent of startups fail, two experts told audiences at the General Assembly conference on 3 June

Triin Linamagi, co-founder and brand analyst at Bahoui, and Alexandre Covello, CEO at AngelsCube, know all about startup failure. Both of their companies help businesses to grow and develop – but also support them when they face problems.

The pair conducted a survey to understand the reasons startups fail and in their talk, analysed the results and gave advice to new businesses on avoiding mistakes.

Here are their tips:

The Wrong Team

Alexandre Covello, CEO of Angels Cube

“The first problem faced by startups are people issues,” said Linamagi. “It is important to pair up with the good people, the ones who will be as enthusiastic about your product as you are.”

She said it was also easier when there were two founders, and not just one:

“Nobody will take you seriously if you are alone. You should be a minimum of two, and cleverly divide the work: one person builds the product, and the other sells it.”

Once your business is launched, hire and train people. “You do not build a business, you build people and the people build your business,” said Triin.

The Product and Market Fit

Triin and Alexandre’s survey shows that the second problem faced by new entrepreneurs is that their products often do not fit the market.

“It is crucial to talk to prospective customers, and to understand what they want and what they need,” said Cavello.

Your product should bring something new, and become a necessity. Imagine the world would miss something if you had not launched your product.

Running out of cash too soon

Room packed with people during Triin and Alexandre's conference

Finally, plan your expenditure and do not spend money on useless things.

“Having three people working in the marketing department of a startup is useless,” said Triin. “Keep things simple. The same thing applies with offices and equipment. Today, sharing offices with other startups allows everyone to diminish the expenses.”

But even if many startups fail, Triin Linamagi and Alexandre Covello are very optimistic. They believe that it is a perfect time to launch a small business: “Today everybody wants to be an entrepreneur,” said Covello. “This creates a dynamic startup bubble. So take your chance.”