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6 Signs your Startup Could Be Among the 90% that Fail

We speak to Farah Ehsan, Falak Startups’ programme manager about the mistakes she has seen startups make that foretell a misfortunate future.

Failing startups is a phenomenon that has been active since the term "startup" was coined in the 1990s. While it's true that literature celebrating successful startups outnumber the ones dissecting this issue, the signs of an entrepreneurial failure are becoming clearer. Scrolling down my LinkedIn feed on a not-so-exciting day at the office, browsing for startup news, I come across a post (below) which later becomes the inspiration behind this very article. 

Before joining Falak Startups, the incubator affiliated to the Egyptian Ministry of Investments and International Cooperation, Farah Ehsan was the Project Manager at J. Walter Thompson, where she spearheaded the launch of the first annual Gouna Film Festival. She also developed a brand strategy and plan for Nxtvn, a global cluster of data center parks. Ehsan is also the co-founder of French Silicon Academy, an edu-tech startup. She was responsible for building the company’s marketing and brand strategy, communicating with the press and developing partnerships that lead to a successful acquisition.

The programme manager of Falak Startups (which also happens to be our neighboring Greek Campus tenant) lets us in on some of the red flags one can spot at the early stages of a startup. 

1. Scattering your equity

"When a huge portion of the equity is distributed to people who no longer provide value to the company. For example, hiring a CTO to develop a website and giving him 40% equity and he doesn’t plan to continue working on it full time, it’s just a one-off project for him."

 

2. Jumping from one accelerator to the other

"When you join more than one accelerator. Startups that jump from accelerator to accelerator and give up too much equity early on are really likely to never raise further investment."

 

3. Cornering yourself in a niche market

"When you are operating in a market that is too small, it will be much harder to succeed." 

 

4. Pairing with co-founders in the same field

"If you and your co-founders have the same experience, i.e.: three guys working in advertising; their skills will not be as broad as the group of one guy working in finance, one in advertising and one in management consulting."

 

5. Juggling so many tasks at once

"When the founders are insisting on working on too many things at the same time rather than focusing on one thing. A lot of early entrepreneurs truly believe that they can handle many services at once but it’s much better to focus on one then expand later down the line."

 

6. Being vague with the revenue streams

"Relying on advertising is not going to cut it anymore. You need to implement your revenue streams early on if you want to have a sustainable business."

 


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