5 essential things you need to know before launching your tech startup

Starting a company is a daunting task. Having a brilliant idea is not nearly enough; you have to learn everything you can about regulations, the market, potential customers, competitors, and much more before you can successfully launch a startup.

The list is even longer if you’re founding a tech startup. The market is very tough; according to a recent study, only 37% of IT startups will make it past their fourth birthday.

Does that mean your brilliant idea will stay just that: a dream never to come true? Far from it. However, there are several things you need to know before you can declare your tech startup open.


Your physical location matters. A lot. Even if you’re launching a fully online SaaS company and don’t need an actual store to meet clients. Even if you’re operating out of your garage or bedroom (like 69% of US small business owners) and employ only remote workers from all over the world.


First of all, your proximity to investors is important. When scrambling for funding, who do you think has more chances to raise investor interest: a tech startup from Alaska or one from Silicon Valley? Yes, we know, it’s not fair. But that’s how the world works.

Also, the proximity to your target market can’t be ignored. Even if you’re fully online, customers may place more trust in a company from a neighboring town than one from three states over.

And let’s not forget taxes and regulations. Is your state/county/town encouraging entrepreneurship? Or do you have to fill out a gazillion pages of red tape while paying a tax rate of 85%?

Relax, this doesn’t mean you have to move to San Francisco. In fact, some areas may be even better for tech startups than Silicon Valley.

However, it’s important that you familiarize yourself with local demand, investment opportunities, regulations, and your target market before you make a decision to launch your company.

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Market research

I once watched the evening news as a kid and had a brilliant idea. What if the news included information about every single person on Earth? What they did that day, what they ate, where they were. (Yes, I basically invented social media.)

But when I told my parents about my great idea, they just laughed at me and said nobody would be interested in such news. (Ha.)

While my market research was far from extensive, the idea was certainly not right for the pre-Internet era of the early ‘90s.

There’s no question that your idea is brilliant. But is it right for the current market? Is there a significant need and demand for your product/service? Are there competitors on the market? If yes, how would your tech startup be different and stand out from the crowd? If not, how do you explain your idea to potential customers and get them to try your product?

Answering these and loads of similar questions will give you a thorough understanding of the market, and of your place in it. You need to know your target market inside-out before you approach investors or apply for a business license.

Business plan

A business plan is an essential roadmap for your tech startup. It tells you where you are now, where you want to be in a couple of years, what resources you have, and how exactly you plan to reach your goal.

Devising a business plan helps you recognize your assets, challenges, and even anticipate eventual problems you’ll face somewhere down the road.

In addition, a business plan is a necessary tool for proving to potential investors that you mean, well, business. A sound, detailed business plan can help ensure your tech startup gets the necessary funding it needs before launch.


Unfortunately, there’s no way around this one. While researching tax rules and incorporation regulations is nobody’s favorite pastime, it’s a necessary evil on the road to your business launch.

What legal form you choose for your startup will define its future. Funding opportunities, equity, tax burden, and much more depends on the legal form your business takes. Make sure you know all the rules, pros and cons, tax exemptions, and liabilities before you commit to a legal structure.

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Securing investors is essential for the successful launch of your tech startup. Even if the initial investors comprise of yourself, your uncle, and your mom’s friend from gym class, your business couldn’t take off without capital.

Acquiring investors is a tiresome and difficult process. You need to convince people to actively support your dream with more than just a benevolent pat on the back. To do so, you need a sound business plan, thorough market research, and clear legal structure. (Do any of those sound familiar?)

But even having them all won’t guarantee you funding. To top it all off, you need a killer pitch to woo investors into parting with their money.

There are several sources where you can find investors. First of all, your circle of friends and family. While you may not want to mix business with personal relationships, think of this: who else knows you better and places more trust in you than the people closest to you?

And you’ll be in good company: 82% of startups get their first funding from friends, family, and the founding entrepreneur themselves.

But what if you need more? Well, there are several options. You may try a traditional bank loan (good luck with that one), angel investors, venture capitalists, or more innovative solutions like fintech lenders, or even crowdfunding.

The road to make your vision a reality and launch your tech startup is not easy. However, with careful planning, thorough research, and that genius idea, your dreams may be closer than you realize.

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