42% of tech startups fail because there is no market need for their product, according to Raconteur’s special report, Accelerating Tech Startups. Consumers demand innovative solutions to their problems and unique products to satisfy their needs. Successful tech startups that meet those expectations succeed; the rest fail.
Accelerating Tech Startups presents the industry’s most pressing challenges, highlights advice from expert leaders, and shares how other startups around the globe benefit from similar lessons.
In this post, we explore the report’s key findings, present the top takeaways for tech firms seeking the most promising markets, and showcase how startups achieve longevity.
Want Longevity? Find the Demand for Your Product and Pivot
For long-term success, startups need to develop a solution-focused mindset that applies to both business-to-business (B2B) and business-to-consumer (B2C) startups. Using this approach, startups must:
- Focus energy on understanding their customer base
- Identify consumer pain points or market gaps
- Determine which products or services fulfill customers’ needs
- Provide solutions to existing and emerging market demands
However, no two markets’ needs are the same. Startups must also learn to accurately measure initial success and continue practicing due diligence through:
- Customer reviews
- Transaction and pick-up rates
- Referrals from current customers
Each of these factors enables startups to adequately assess if their product or service fits within the market. For each new business, connecting with consumers—exploring their wants, needs, and whether the product solves consumers’ problems—is key to success.
Understand that Age Doesn’t Always Equal Success
By nature and name, startups are young. But many of the leaders behind them break from the popular narrative that founders are mostly males in their 20s and 30s. In fact, among the top 0.1% of the most successful startups, the average founder age is 45. Data suggests that wisdom and experience are more important than youth in terms of longevity.
However, age is not an explicit indicator of success. Accelerating Tech Startups shares that seasoned entrepreneurs often take tumultuous paths to achievement. All entrepreneurs featured in the report say that patience, pattern recognition, and communication skills are traits that remain essential to longevity.
Each featured entrepreneur properly evaluated and determined the right market for their product or service, enabling long-term growth—a valuable lesson young entrepreneurs need to emulate, especially in highly competitive sectors led by unicorns.
Where the Sector-Leading Unicorns Roam
Unicorns, or private startups valued at over $1 billion USD, exist only in select countries. Perhaps unsurprisingly, most unicorns call the United States or China home, with 205 and 100, respectively. Other top countries include:
- The United Kingdom: 21
- India: 18
- Germany: 11
- South Korea: 9
- Israel: 6
- Brazil: 5
- Indonesia: 5
- France: 5
- Switzerland: 5
- Australia: 5
- Japan: 3
- Rest of the World: 18
Digital media companies dominate the overall startup scene at 20.7%, followed by fintech firms at a distant 8.7%. Other startup sectors leading the pack include:
- Big data
- Life sciences
- Advanced manufacturing and robotics
Tech startups’ offerings vary wildly, both in market application and scope. However, these variations present ample opportunity to identify market gaps and target markets in need of unique solutions.
Work with the Right People—and Grow with Them
20% of startups fail within their first year, and those that succeed usually do not exceed ten employees. Companies with higher headcounts must find qualified talent to scale successfully. To do so, leaders need to consider the following tips:
- Hire externally. Remember that external hiring is temporary. Find the right talent for short-term growth and adapt when the needs and markets change.
- Do not hire too quickly. Pacing is essential; there is no one-size-fits-all hiring timeframe, and hiring too many people too quickly leads to problems down the road.
- Anticipate and adapt to rapid changes. Startups must plan for the unexpected, and pivot products and services to meet the market’s newest needs.
No matter how rapidly or slowly companies grow, they must hire at a sustainable, manageable pace. Otherwise, longevity becomes increasingly difficult—no matter the market.
Europe’s Startup Hotspots
Raconteur deservedly calls Stockholm, “Europe’s unicorn factory.” Sweden’s capital generated more billion-dollar startups per capita than any other country outside of the U.S.’ Silicon Valley. Swedes are early adopters of new technologies, and the country’s progressive values generate creativity and openness to new ideas—two essential traits for successful startups.
Berlin has an equally impressive startup scene. Half of Germany’s startups call Berlin home, and they employ nearly 100,000 people. Berlin also boasts 50% more female founders than any other Germany city.
Like Stockholm, English is the universal language of business in Berlin, which helps attract global talent. A common language, paired with a high quality of life, affordable rent and office spaces, enables startups to pursue—and realize—their dreams.
Accelerate Your Global Expansion with an Experienced Partner
Tech startups and scaleups grow at varying rates. However, young firms looking to outpace their competition and define their market fit can learn how to accelerate their growth in Raconteur’s full report. Growth is not limited to startups and scaleups. Seasoned firms routinely find new markets and consumers for their products—and getting there is easier than you think.