5 misconceptions to know before launching your tech startup


With multi-billion tech companies and growing startups making headlines left and right, it's natural to want to take part in the action.

Ant Financial, for example, recently closed a ridiculous round of financing the $ 14 billion Series C – one of the largest in history. The Chinese-based fintech company has raised its value to $ 150 billion with the latest round, according to the Wall Street Journal.

This type of title gives the impression that it is easy to create a technological enterprise that changes the game, but the reality could not be further from this perception.

Many founders of technology for the first time are embarking on the industry with many misconceptions. I have seen far too many founding aspirants go through their crucial beginnings with misconceptions that they were about to get rich quick. As you probably should expect, success requires a ton of hard work.

Five hypotheses that you can throw in the trash

Whether you are new to technology or have already built several successful startups, it's a safe bet that you have some misconceptions about where you want to go. Here are the five assumptions I see most often among the founders:

1. "It will make me very rich, very fast."

Not really. While some tech companies have gained ground from the start, it is much more common for founders to experience friction in the difficult battle for success.

Technology companies share many of the same challenges as traditional businesses: two out of three start-ups fail or become self-sufficient, which is not good news for investors. In the same vein, 99.95% of entrepreneurs will never raise a penny of venture capital. And even for those who raise start-up funds, only about 1% of seed-financed companies will ever attain unicorn status.

2"We will not need to raise external capital."

If you want to take less than 20 years to carry out these big evaluations of the technology sector, you will almost always have to mobilize external capital. Technology companies can proliferate, but successful ones are costing money in their growth.

Take Uber, for example. The global technology company has raised more than $ 22 billion in 20 tours, but has not yet made a profit. When Uber finally decides to no longer invest in growth, it will realize profits and will undoubtedly become a machine to print money. The speed at which technology companies are developing is a double-edged sword.

External financing is almost a given in the technology. Your early funding round can disappear in the blink of an eye and your fast cash flow can limit your growth. Unless a few billions burn a hole in your pocket, you will probably have to at least consider the possibility of obtaining external capital.

3"It will be incredibly different to run a" traditional "business."

Running a technology company is actually going to run a traditional business, but with some twists and turns. The "physics" of firms still applies to companies in the technology sector, but it creates a leverage effect in business models that does not fit with most traditional business models.

Leverage comes from increased access to the Internet via the Internet, revenue growth without increased costs, measurability, relatively small infrastructure, and inventory ( in some cases), reduced initial capital expenditures and a few other factors. If you are trying to escape the delicate aspects of running a business, however, it is best to rethink it all.

4"Everything is about the application."

It's the spirit of finding solutions to a problem. Great entrepreneurs identify a problem that deserves to be solved and create a solution that can generate profits. The applications themselves are not worth much – the business models they enable or improve are the real assets.

App developers do not really swim in the money. Gartner says that less than 0.01% of mobile apps will be financial successes by the end of the year. Instead of starting from the solution, take the time to examine the problems faced by various populations. Once you have your problem, build a business model that solves it.

5"I am too old / too new to start a technology company."

Even if you may not be experienced in the world of technology, your traditional experience in the industry is a blessing rather than a curse. We have found that industry experts are fantastic founders of technology. Why? Their in-depth knowledge, networks and business experience.

Similarly, founders of successful startups tend to be a little older than those featured in shows like "Silicon Valley." are young, with bright eyes and a bushy tail, they are not necessarily destined for success. If you have a viable idea and plan to do it, lack of experience in age or technology should not hold you back. Your unique experience and experience will probably give you an enviable boost.

Do not get me wrong: it can be very difficult to get into the tech sector (being good at what you do is a whole different matter). If you feel like you do not know what you are doing, surround yourself with people who have been there and come back.

Gather an advisory committee that has created successful startups, study lean startup methodology, recruit an experienced product manager, find a technology-savvy advocate, or consider partnering with a startup accelerator. More importantly, know exactly what you are committing yourself to. This is not a trip for sensitive souls, but an adventure that is worth it.

Zach Ferres

CEO of Coplex

Zach Ferres is the CEO of Coplex, a nationally ranked accelerator program that partners with industry experts to create high-tech, growing companies. Follow Zach on Twitter.