Out of around fifty Tech Start-ups that go through M-Labs, only five to ten make it past one year. That’s a scary statistic for all entrepreneurs out there. African Tech Bits interviewed John Kieti of M-Lab concerning tech start ups in Kenya and why many of them fail after a short period.

A little bit about John

John Kieti runs M-lab East Africa, a regional incubator that promotes mobile entrepreneurship that’s widely known for organizing PIVOT EAST, a mobile start up pitching competition and conference that’s held annually.

So why do most start-ups to fail?

“Failure is good and it should be celebrated if there are lessons to be learnt out of it,” he says.

Team composition

A typical start-up should have a business guy (hustler) who worries about how the money comes in, a hacker(coder/developer) whose job is to work on the back end of the product, a designer (the hipster) who helps with the user experience design.

When a start-up diverges far away from that kind of team composition, they are likely to develop a bad product. Or even when they have a good product, customer development becomes a problem because they lack the key skills to drive that side of the agenda.

Some start-ups try to create solutions for special problems i.e. in health or agriculture, but they don’t bother to bring in a co-team member that has expertise in that field. The learning curve thus becomes high for the team since they have no idea about the subject matter.

Lack of a market

A lot of start-ups focus on problem solving without having a monetization plan as soon as possible. They end up developing a product for months or even years that remains untested because it lacks a market.

“Go to the customer early find out there most pressing need and start addressing them and capturing value from them in terms of them paying you.”

A startup cannot be successful without research. One needs to identify their market and how often they require the services being offered. Develop products for testing; when you are sure demand is high, create products for your market. By doing so, the start-up can start receiving early income which can be used to get further funding from investors for further expansion.

Running out of cash

Most startups run out of cash for various reasons:

• Failing to budget
• Lacking a financial advisor
• Overspending

Some startups assume they will get immediate customers once they launch their product(s) so they spend all their funds in getting the product ready. When it gets out and is received poorly, failure is inevitable due to losses made.

Poor Marketing

Some startups either completely fail to market their product as they imagine it will be grabbed off the shelves, or they market it poorly, either by doing it inadequately or to the wrong market. This guarantees failure.

Poor Product

Poor products are as a result of lack of research and focusing on the end result rather than the journey. During production, some startups choose cheap materials or a shorter process in order to cut costs thereby compromising the result of the product. Unsatisfied customers will end up looking for alternatives.