If there is any industry that has witnessed an increased rise of start ups, its the tech industry. Numerous start-ups keep emerging every week in the tech community. While this is considered as a good development, one is still forced to ask “How long will these start-ups be in existence?” I am not being pessimistic, you know. In my little years in tech, I have seen numerous start-ups fold up only a few months after establishment, including one of mine. Hey, I am being honest there, right?
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Imagine a 21 year old graduate who has a great idea for a Social Network. To him, his idea is better than what facebook and Google Plus are currently offering. All he has with him is just $100 (about 16,000 naira). He has been told to also pursue his endeavours with faith. This dude proceeded with his $100. He spent the $100 on domain name registration and hosting of the site. Cooked the code and uploaded. Pham! He thought, that will be the beginning of his success. Instead, it was the beginning of his failure. Why? He needs money to advertise and accomplish some foster some other stuffs for his new Social Network to succeed; but he couldn’t lay his hands on it. Oh!, I’ll put Google Adsense on it; perhaps I can generate some revenue from that. He did, but the problem was that there were no enough visitors to click the ads. The few people that visited the site never bothered about the ads. To cut the story short, his Social Network, intended to be a world mover, eventually became a network of only him and his friends. After one 14 months, his social network died.
Among many other factors, here are three reasons why Nigerian tech start-ups fail as I shared in my YNaija column, Technology 101:
- Inadequate Funding: This accounts for the major reason for the failure of start-ups, whether a tech start-up or that of any other sector. Nigeria’s tech industry has still not attracted more investors. There are numerous young guys in this sector who have fabulous ideas but lack the financial strength to push it forward. Many of them started a company but left business after the first year when they could not sustain it.
- Lack of Business Sense: Just like Michael Gerber appropriately wrote in his book “E-Myth Mastery”, technical know-how does not guarantee business success. That implies that the fact that I am a good app developer does not guarantee that my app start-up will be successful; and the fact that I know nothing about app development does not mean that my app business will fail. So, there’s more to an app business than just being an app developer. This is another reason why tech start-ups fail. Most of the founders of this tech start-up lack adequate entrepreneurial skills.
- Lack of Vision: The vision of a start-up definitely affects the decision making process of such start-up. The founders of most start-ups are just too concerned about what’s in for them today. Many tech start-ups settling are for less, trading future benefits with present crumbs they’re getting. For a start-up that lacks vision, its future is predictable.
In this light, I also gave a few recommendations to the founders of these start-ups:
So, if you’re the founder of a tech start-up or maybe you’re considering starting one up, you want to ensure that these variables do not limit your success. You want to sit and plan your start-up well. Make it as Future-proof as possible. What does your start-up hold for the future? State clearly what your income streams are (or will be). How do you intend to approach investors, or is it just going to be solely run by you? If you lack appropriate business skills, you will want to ensure you partner with a friend who has strong business skills. If partnership is not your thing, you will want to sign up for those Start-up monitoring schemes to help monitor your business progress; perhaps a consultant may be good (if you can get one without breaking the bank). After all said and done, you should then ensure that you “Keep Evolving”.