All About Tech Start-Ups: Why Great Ideas Fail

Abto Software
6 min readJun 8, 2022

From poor project planning, to bad hiring decisions and wrong business approaches, there are many reasons why ambitious tech start-ups can fail. Let’s just face it: Successful projects are rare.

Startups: Why great ideas fail? By Abto Software

According to Failory statistics, 90% of all start-ups do not become successful. This means that only 10% of beginning entrepreneurs remain in the game.

Top reasons why early-stage tech start-ups fail include the inability to raise new capital, the failure to achieve product-market fit, low competitiveness, a poorly thought-out plan, regulatory and legal challenges, and more. But still, the problem lies deeper, namely in project management.

Top reasons why startups fail, according to CB insights. Abto Software

Below, we’ve put together a comprehensive guide for first-time entrepreneurs. We’ve analyzed the most common mistakes that can be made at the early stages, from the idea evaluation to the MVP development.

A closer look at tech start-ups

Not every young entrepreneur has heard of the Lean Startup, but most should be familiar with the term Minimum Viable Product (MVP). This approach is used to validate new ideas and attract potential customers immediately after the release. It is also one of the easiest ways to collect valuable feedback. By implementing this approach, one can remain flexible and get the opportunity to adapt to the market trends and current customer needs.

Those companies delivering a Minimum Viable Product (MVP) benefit from continuous upgrades and product roadmap consistency. This strategy allows to confidently achieve business goals and remain highly competitive.

Core aspects of management to consider when starting a start-up:

  • project planning
  • team composition
  • technology & approaches implemented during the MVP development

Let’s look at each aspect individually.

Choosing the right strategy

Do you have that burning desire to create a successful tech start-up and bring your ideas to life?

Here come three most common mistakes that can ruin everything:

The failure to achieve market fit

A misaligned product-market fit is one of the main obstacles for start-ups on the way to becoming successful. Most companies fail within the first year because their product doesn’t meet the current customer needs.

The key to success: Careful product viability testing. No matter what’s your product about, make sure it meets the needs of your potential customers.

Poor documentation

Often young, inexperienced teams don’t consider product documentation to be an important project part. They’re rushing to get the product to market as soon as possible, and, as a result, they fail.

The more careful the project documentation, the greater the chances of success and return on investment. Think over every detail, from the core functionality and interface to the project timeline.

No retrospection

Some teams don’t consider it necessary to get back to the documentation. Inexperienced managers find this too resource-intensive and inefficient. If you don’t make reviewing your initial goals and your business strategy part of the process, you can lose focus. While this can seem rather harmless, it can lead to financial loss, prolonged time-to-market, and misunderstandings within the engineering team.

Get into the habit of consulting the documentation created at the outset. Review it, track progress, and make timely adjustments.

All about team structure and tech talent acquisition

Building a great team isn’t easy, but crucial.

Here are three advices to follow if you want to screw this thing up:

Building a fully-fledged team first thing

When it comes to tech start-ups, it is not necessary to hire motley specialists at the initial stage. Better focus on finding an engineer who can get the job done. This approach is especially convenient for young start-ups with a limited budget. Headhunting and hiring talent can be rather costly and time-consuming.

Another way to minimize business risks is to cooperate with similar companies. This is a way to get access to global knowledge and experience.

Having too high expectations when hiring

Hunting senior software developers is a popular strategy among large tech companies. However, it’s not the best strategy for first time entrepreneurs.

A usually dynamic environment, sudden changes and the great responsibility for the project’s success are the main challenges software developers and other technical specialists have to face while working for a start-up. In such unusual circumstances, motivation and similar goals can be more valuable than an extensive experience working for corporate giants.

Choose employees based on:

  • Their ability to solve project-specific problems
  • Them being comfortable with constant adjustments to the project scope and goals
  • Their ability to stay highly motivated to extend technical knowledge and a can-do attitude
  • Them being ready to work extra, including communication, design decisions, and more
  • Them being familiar with not only software development but also solution maintenance
  • Their excitement about the company’s mission and the final product

No matter whether you are looking for an in-house employee or a short-term specialist, don’t underestimate the candidate’s personal traits. And, if you feel like you’re not coping with the hiring process, approach experts to fill that gap.

Underestimating proper talent acquisition

Hiring employees is not nuclear physics. But do not underestimate all the potential consequences of poor hiring decisions.

Some developers do great at interviews and simply have charisma. Others have no idea how to sell themselves, but can get the job done. Of course, there are talented developers who combine both traits. But the risk of wasting time and money on the wrong candidate is high.

Young entrepreneurs make decisions based on the specialist’s previous experience. But good hiring decisions are not about that. Not every skilled candidate will be able to work on a project, which requires great flexibility. When hiring, it’s important to consider the project’s unique challenges.

To avoid possible consequences, you can turn to industry professionals. Among the popular solutions today are team extension and augmentation.

Technology and development process’ common mistakes

Focusing on quick scaling

Tech start-ups have usually one thing in common — young entrepreneurs have ambitions in terms of scaling. Such people are driven by the burning desire to bring their project to life, but not by a rational assessment. Software developers often have the same big ambition. Those who are accustomed to working for companies, where processes take place very quickly, often do not understand the peculiarities of working for beginners.

Focusing on rapid growth often results in the waste of valuable resources. To avoid disastrous consequences, one should better focus on good product-market fit.

There is no way to foresee your customers’ future needs without careful market research. One of the solutions offers the feature driven development (FDD), a customer-centric business approach. There is a bunch of tools that help to conduct market research. For example, interviews, surveys, AB/ testing, campaigns, etc.

Another approach is the Build, Measure, Learn cycle, a popular feedback loop of the Startup Methodology. Basically, the BML cycle is a SLDC (software development life cycle) model used to guide teams and achieve product-market fit.

Build, Measure, Learn cycle in Lean Startup SDLC. By Abto Software

Going with an untested technology stack

Don’t be fooled by industry trends without having comprehensive information about the new technology. There might be some unpleasant consequences.

New technology is risky:

  • There is little documentation
  • There is little community to discuss related insight
  • Going with new technology means more time spent on learning and improving than developing
  • Opting for new tools makes the hiring process even harder as there are almost no engineers with the necessary knowledge and experience

Excluding engineers from decision-making

Most of the time, project managers and engineers have a different take on the future product and roadmap. The involvement of engineers does not only help to make thought-out decisions, but increases the engineers interest, motivation and sense of responsibility.

Some managers also seek help externally. Involved professionals with broad industry experience can provide generalized perspectives on some market trends and the core needs of the target audience.

Final thoughts

This article does not cover every possible challenge, which can be faced by young, ambitious entrepreneurs. This article rather aims to point out the most common business mistakes, which can be made at the early stages of a promising project.

When bringing an idea to life, first time business leaders should remember that each tech startup is unique, and there’s no universal, one-size-fits-all solution. When taking on a new startup, beginner entrepreneurs should remember the importance of planning, team composition, technology and approaches implemented, and flexibility to accept constant changes.

Are you thinking about starting a promising project?

Contact a technology provider to cover product engineering from the idea evaluation to launch.



Abto Software

We empower customers business with innovative software by applying science, R&D, and own IP at