40% of startups fail due to lack of market needs. How to successful scale and keep up with a steady growth? My personal tips

Every year thousands of startups worldwide fail to scale their business. It is estimated that, over 40% of all new startups, end up failing due to lack of market needs. If you are planning a dynamic growth of your startup but you can’t implement proper plans and strategies, your mission will most likely end in failure.

I am writing this article, because for many years I have been observing the fast-changing startups market in different regions of the world. The Silicon Valley is still the world leader, here is where the majority of the most successful startups are born. However, the European scene shouldn’t be underestimated. Plenty of startups in Europe are developing dynamically, a trend which I observed during the EU-Startups Summit in Barcelona. In particular, my attention has recently been drawn to the PropTech industry.

Property technology is no longer a niche phenomenon, in fact, over the last few years, the European real estate investment market has seen more and more startups of this type – companies which, with the support of new technologies, help you buy, sell and manage real estate investments. Comparable to the way FinTech takes advantage of technology to support finance related issues, PropTech companies create technologically innovative products to turn your business model into success.

However, not all startups are able to break through the market and calibrate their business. I started to wonder what might be the reason. Why do so many of them, despite having really interesting products, after a year or two of activity, eventually fall? I believe there are several decisive factors that prevent them from successfully scaling the business. I am once again writing about scaling, because this very often turns out to be decisive for the survival of startups. Here are my thoughts and tips for all startups.


Verify your business model. Make your product for users, not for you

Statistics show that over 40% of startups around the world are failing because of no market needs. I believe that this is one of the main causes of failure. Someone will come up with a great idea, go into action and invest funds without really knowing if there is a market demand for that product. Therefore, remember – your potential clients are the most important aspect for your business. They determine your success or your failure. You must examine their needs and preferences and adjust the product based on their realities. Only then you can have a chance for success.

Hire the best and boost engagement

Nearly 70% of startups in the USA started their business from their own home. Interesting, isn’t? Regardless of where in the world your company is based, the moment comes when you have to recruit the first employees. It is essential to choose reliable and qualified partners. Someone once quoted “Your startup is as good as the people you surround yourself with.”. I couldn’t agree more. It is indeed a critical aspect to keep in mind.

Obviously, recruiting employees is not a simple task. Building a startup from scratch is usually very challenging and requires sacrifices. It’s essential to remember that your employees should see you as a leader. Someone with authority that can set a vision of development. We have written about the most important competences of a good leader in this article.

Scale business only when you have reached a position of stability

Do not rush. Scaling is a key stage in the development of your startup. If you decide to take this step too soon, you will burn the budget and you will quickly lose momentum. Personally, I adhere to the principle that, scaling a business is good when your organization is able to bring in first incomes, so that you can be sure that your customers want to use your product. It is also a good time to get additional financing, without which the scaling may turn out to be unattainable.

Take care of software quality

I have already previously explained what I mean with software quality. This concept includes several factors such as:

– reliability

– use of the most modern and effective technology

– user-friendly product

– software regularly adapted to constant changes and improvements

A while ago I wrote some articles related to my analysis of the e-commerce market. Through the process I’ve learned that a user-friendly product can increase the conversion to sales by up to 77%. It’s really impressive. Here we touch the topic of user experience. In fact, whether you’re in the E-Commerce, PropTech or even AdTech industry, you need to keep in mind the reliability of your product. It must be refined so that customers who once visit your website or application, remember you positively and will be more likely to come back to you in the future. Quality software is a bit like a good PR.

Another important issue is the ability of the product to constantly improve and, at the same time, introduce changes. Startups, during the scaling and business development stage, must be prepared for thorough changes. You must be flexible. This will only be possible if your product is also flexible and adaptable for changes. Therefore, regardless of whether you are developing your inhouse team of developers or working with a software house, be sure to remember that change is the key!

Quality software

Be smart, go with MVP

Minimum Viable Product (MVP) is what your startup really needs. The advantages of this solution? Much faster development process, lower costs, high flexibility and a product in line with the needs of your customers. It’s a really smart solution.

Why wasting your time and money into something, if you don’t really know if it’s going to work on the market? Start by creating a basic product, implement it on the market, follow and DRAW CONCLUSIONS.


In this article, I’ve described my tips, which I hope will help you to look at your startup from a new prospective. I direct my thoughts not only to startups who are just starting their activity, but also to those who intend to scale their business or are already a strong and profitable organization.

If you would like to exchange information or remarks with me, please feel free to contact me at nuno.barbosa@codesthq.com or find me on LinkedIn. I am happy to talk about any topic and exchange experiences and views on the business world 🙂

Read more:

– Where is the best place to find developers in Europe?

– EU- Startups Summit in Barcelona. Great conference with inspiring startups like a Mietwise, TransferWise and Badi

– Codest’s weekly report of best tech articles. A better React Native for Windows (5)


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