Why do most students’ startups fail?

Startups, startups everywhere. Where is yours? The wave of startups has swept across the country. It is no wonder that college students want to ride it too. After all, startups bring everything which makes the eyes of college students dilate: money, fame, and freedom; all three at an early stage of their lives.

Many startups go bust. The failure percentage is much higher for the startups founded by the students. The author has jotted down few reasons for the demise of the dreams of young entrepreneurs. The intent is not to belittle ambitions but to give a guide-map that is marked with the location of landmines.

1. What is a startup? By definition, a startup is a business that solves a problem and grows at a face pace. Is your idea solving an actual problem? If yes, is it growing fast in terms of users, revenues, customers, etc? Miss either of the two, it may be just an ordinary business idea that may not excite investors, future team and prospective customers.
2. Factor important costs: Due to the lack of industry experience, most first-time entrepreneurs end up making this mistake. They don’t factor in the major costs which take hold as things materialize. For example, (i) operating costs like server costs and office rent (ii) compensation of accountant and HR. No matter how smart, skilled and dynamic you are, as your startup grows, you will have to bear some costs.
3. Is your idea scalable? Many ideas of students fail particularly on this front. They are simply not scalable. It can be in terms of costs, mature and competitive industry, long-road to profitability, etc.
4. Flying Elephants: The most common mistake college entrepreneurs commit is when they come up with ideas that don’t match their skillset. Like, a Zoology majoring student wants to build a dating app. As for the initial 1–2 years, the founders are the only employees, pursue an idea which you can implement yourself.
5. Funding: It is very tough to get funding. A large number of startups that get funding have either, (i) attained fast growth, (ii) have founders with pedigree (for instance, an IIT-IIM tag), or (iii) have a good prototype. So, make sure that your business is earning enough to keep your nose above the water till you achieve a proof of concept.
6. An army of interns: After the launch, the college entrepreneurs start working with an army of interns to get things done. It helps to keep costs low. The majority of interns are junior students who receive nothing except certificates as incentives. But it backfires on the product development and feedback loop. Let the author simplify it. Most probably, your basic startup idea will evolve over time. You’ll like to drift in the direction of what works and away from what doesn’t. All this happens on the feedback that your users/customers give. The interns employed seldom pass on the necessary feedback to their founders. Prefer a close-knit team over a large one.

It is good to keep yourself involved. But pursuing a startup only for the sake of it is not a healthy decision. Startups take time and are intensive. Compare all the facets before taking the plunge.