Everything has to go right in the first five years for a start-up to survive. It sounds simple, yet 90 percent of start-ups fail. The research concludes 21.5 percent of start-ups fail in the first year, 30 percent in the second year, 50 percent in the fifth year, and 70 percent in their 10th year. The good news is that while the start-up scene is expanding, the support system grows around them. Professional help and extensive networking opportunities are within reach. In some cases, through the winning of competition, like The Extreme Tech Challenge (XTC).
XTC is a global competition for start-ups, with 3700 entries this year. The Netherlands and Belgium regional final winners were announced yesterday (24th of March) in Eindhoven. The winner, start-up Incooling, will now benefit from global visibility, access to venture capital, and corporate strategic partnerships through the XTC network system. Incooling has discovered a way to cool computer chips more efficiently inspired by CERN technology. Traditionally chips in data centers are cooled by blowing cold air through the servers, consuming lots of energy. Incooling’s solution is a cooling system on a small metal plate that can be screwed on top of the chip itself. CEO Rudie Verweij explains: “Keeping the chips cool will also improve chip performance.”
Victoria Slivkoff, Executive Managing Director, Extreme Tech Challenge, said, “XTC allows start-ups to be heard, seen, and build relationships that can carry them far into the future. Life is all about who you know, and this is how you will get potential investors, corporate strategic partners, mentors.”
A wrong partnership can quickly lead to a dead end. Although a partner is essential for building a business, conflicting visions can stir chaos. A different pace of work, attitude, or radically different opinions can undermine success.
Michael Kimmijser, Small, Medium & Corporate Business Lead at Microsoft, says, “What is extremely important is to have unity within the team in terms of vision. They should have the same passion and purpose.”
Poor market validation
Gert-Jan Vaessen, Manager BOM Brabant Ventures, points out clearly, “What we see, especially with tech start-ups, is that they make a lot of false assumptions about how big the market is. They overestimate it.”
The saying “start small” exists for a reason, and a smart and responsible business is not aspiring to be large immediately. “You have to prove yourself locally first and generate repeat sales to make a mark later internationally,” explains Gert-Jan Vaessen.
He adds: “They do something we call ‘premature scaling’.” Companies tend to follow others who are already doing good, and teams usually jump over some steps, like market validation and start raising money. Once the money is raised, they hire marketers without making repetitive sales.”
Consistent growth is inevitable for long-term success. It means nothing more than going through the necessary steps in the correct order. Many start-ups have a desire to go abroad from the moment they launch. They can make the mistake of getting overly confident based on the repetitive sales and start scaling too early, which eats up all their money.
Support and help
A bright idea alone is not enough because no one invests in just a vision. Microsoft however has a program, the Start-ups Founders Hub, which strives to change this mindset. The hub brings together the technology, guidance, and support start-ups need to hit their next milestone.
A start-up at a more advanced stage should also ask for help and make sure that the service fits into the natural flow of their building process. “I believe that start-ups should reach out to us way earlier for support and help. They come when they’ve already made many decisions in terms of technology, and we often don’t have time and money to reconsider.”
The Extreme Tech Challenge, BOM Brabant Ventures, and Microsoft have in common their approach to keeping the start-up ecosystem colorful and active and making knowledge and connections accessible.