Top 3 Challenges Tech Startups Face and How to Overcome Them

Anyone who has ever tried to run their own business has an idea of what it takes to get it off the ground. Startups are no different. And while the abundance of success stories on TechCrunch can make founding and running a startup look easy, sexy, and thrilling, the truth is almost always the opposite. And so while we’re excited for you to begin your startup adventure, dear gutsy founder, it would be wise to have a glimpse into the difficulties you’re most likely to face, along with some ideas on how to overcome them.



One of the top challenges that arise immediately is the question of money. Do you have enough of it to build version 1 of your product or service? When you’re literally starting from zero, hustling for investments/funding is like looking for the proverbial needle in a haystack. Raising capital continues to challenge most startups, whether they’re in the UK, US, or China - according to Silicon Valley Bank 2017 Startup Outlook Report.


Sure you can bootstrap your startup with your personal savings to kickstart the business. But a dwindling cash flow and no clear plan for funding can halt your operations pretty quickly.


Pro-Tip: Before you go after the money, it helps to ask yourself these questions: Can you grow without funding? Or is your growth stunted by lack of funds? If you find that funding is critical at the outset, explore financing sources that you can tap into. Note that there are different funding types that correspond to the different stages of a startup’s life.


Y Combinator founder and noted VC Paul Graham in his essay How to Fund a Startup gives an overview of a startup’s successive funding rounds. You can also check out Startup Explore’s piece on the different types of startup funding.


One smart way to make fund-hunting a little less difficult is to grow your business network. Build relationships with your potential investors early on before you actually need money. That way, when it’s time to ask, you won’t find yourself pitching to absolute strangers.


Building a talented core team

Successful founders know that building a great team is one of the most important things to do for a startup. They know as investors know, that a startup is only as good as the team behind them. Without a core of smart, reliable people willing to make your idea real, all you have at best is a plan.


To build a great product or service, you need people who are really good at what they do. But more than their knowledge, skills, and competence is their attitude and work ethic.  Your core team must embody the values and beliefs you want your startup to stand for. To a large part, they’re the ones who are going to define your company culture. No wonder then that building the right team is one of the top challenges founders struggle with.


Pro-Tip: Hiring is the responsibility of the founder, and one of the most important tasks you would do for your startup. Joe Thornton, Head of Talent at Playfair Capital, advises that for venture-backed startups, “founders should spend at least 1/3rd of their time building the team.” Cloud Employee’s very own Sales Director Nina Bromley strongly believes in applying the Pareto Principle when it comes to hiring: “spend 80% of your time hiring, so you only spend 20% of your time managing.”


Since you’re hiring for a startup environment, you must be able to give your key potential hires a good reason to work for your company, a company they most likely never heard of before. You need to be able to make a good case of why they should forego the bigger offers from more established companies.


Finally, your core talent team must share your passion for the bigger goal your startup is trying to accomplish. More than a fat salary, this greater goal or purpose will be their main driving motivation for working with you. It will carry you and your team through the highs and lows of the startup journey.


Getting traction

In a poll created on Tally with the question, What is your biggest startup challenge?,  getting traction (i.e., user acquisition and retention) emerges as the biggest issue startups struggle with. “How do I get customers to use our product or service?”, is one of the toughest perpetual challenges you’re sure to face as a founder.


While social media and other online platforms can bring lots of people to your project’s landing page, getting them to sign up is another matter. Customers are typically wary of using a new product or service that doesn’t have a proven track record or does not come recommended in their network.


Pro-Tip: At this point, you can’t simply throw links or run ads on all the online channels you can find in the hopes of getting your first users. “You can’t wait for your users to come to you. You have to go out and get them,” Paul Graham advised.


As the founder, you must be ready to do balls-to-the-wall initial hustling. Play it smart and aggressive in your user acquisition. Usually, this means manually recruiting users and giving them an overwhelmingly good experience in using your product or service. Your first customers should feel that signing up with you is one of the best decisions they ever made.


This may seem unbearably painful and laborious at first. The small numbers can make you lose heart. But take it from Airbnb’s Brian Chesky:


“Build your business, one person at a time. Just focus on 100 people. If they love you, they will market the product for you and tell everyone else. Go to your users. Do one scalable thing, one person at a time. It’s actually so simple, that’s the secret...that’s all you need to do.”


Startups aren’t for the faint of heart. With the challenges ahead, it pays to be more than smart, tough, and aggressive. You have to be in it for the right reasons. Knowing the challenges and having an idea on how to overcome them can give you a better chance of beating the odds to make your startup a success.



Ready to take the startup challenges head on? Talk to us, learn how Cloud Employee works, or check out our Developer Pricing Guide You can hire offshore developers with us across these technologies.

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