Three most common barriers startup founders face in early stages

Starting a business is never easy, and sustaining one is even harder. The rhetoric ‘survival of the fittest’ is painfully accurate within the world of entrepreneurialism as early-stage startups face many challenges, both internal and external. To understand these further, we’ve interviewed several tech founders within our own community to identify the three most common barriers they faced in the early days of starting up.

1. Access to capital

At the top of the list is capital raising. It is among the top reasons why over 90% of startups eventually fail. But why is it so challenging for early-stage startups to get funded? The reasons are threefold.

a. Lack of scalability

Investors often look for the most apparent and viable opportunity for remuneration. Startups that struggle to demonstrate scalability, otherwise known as the potential for growth, will likely also struggle to raise capital.

b. Limited support

Daish Malani, founder of medtech startup Add-Life said, “Money seems to come from completely different sources than I originally thought they did. It seems the more tangible your idea the less likely it is to get funded through regular means.”

When speaking about tech startups, Daish alluded to the fact that investors often fail to connect a product to its ability to generate returns, especially if they can’t see themselves as a user of that product. This means you should be prepared to seek funding from sources other than angel investors.

c. Lack of preparation

As the old adage has it, luck is what happens when preparation meets opportunity. Hubble co-founder, Marcos Salinas, identified “a lack of preparation” as the big reason that founders fail to raise capital. This could be a hastily constructed business plan, poor financial structure or just bad timing, i.e. seeking capital too early.

Preparation will help you articulate what you do better for when that elevator pitch is bound to happen. It will also instil into investors a level of confidence in your skills and capabilities as a founder.

2. Misplaced priorities

Founders run into trouble when they try to cater for everyone. More impractical features and flashy interfaces often don’t equate to traction if your core product is undercooked. Daish agreed by stating, “The companies that do well don’t care at all about their UI.”

As a founder, you should learn to recognise when priorities are misplaced and work to change course. Until you’ve found a product-market fit, dedicating your time and resources to developing a complicated, high-end user interface is a misplaced priority. Remember Google and what they first brought to market?

James Thompson, a UX designer of twenty years said, “The best products/apps/software typically do one thing, and they do it better than any other out there.” For early-stage startups, balancing the need for usability against building a winning product is a difficult barrier to overcome but one that’s crucial to long-term success.

3. Human resource management 

A tech startup must have a framework of support coming from its employees. The fact remains that while employees are the single most important asset a business can have, they are also a definitive challenge most founders must face. From a large pool of applicants, identifying and hiring the right candidate is a monumental task. Not only does the candidate have to have the right skillset but they must also share the company vision and culture.

In addition, you should take into account the financial commitment it takes to find the right hire. Within the tech industry, talent with exceptional technical skills may require larger compensation than anticipated. For example, highly sought-after programmers within the VR tech industry can often ask for remuneration that outweighs even that of the CEOs.

For most founders, finding the balance between the best talent and affordability is like walking a tightrope. Nonetheless, it’s worth noting that hard skills are but one of the many criteria based on which you should evaluate a candidate. In most cases, you may find that those with more transferable soft skills and the right attitude are a better fit for your startup.