According to statistics, 8 out of 10 startups fail, primarily facing a lack of funding. Startups entering 2025 and 2026 face a rapidly evolving landscape marked by technological disruption, shifting market expectations, and economic headwinds. Such innovations as generative AI and machine learning have become baseline expectations for both investors and enterprise buyers. As AI features are increasingly viewed as standard, startups struggle to differentiate themselves purely on AI capabilities, emphasizing the need for superior software development to create unique, value-driven solutions.

In this article, we would like to analyze the main challenges this year brings to startups and share our thoughts on how to build a business in such conditions.

Market volatility and customer expectations

Startups today must navigate supply chain issues and geopolitical tensions. To succeed, they need to be agile and resilient, incorporating innovations. Moreover, modern customers demand hyper-personalized, ethical, and sustainable products and services, challenging startups to provide real-time, customized experiences. The popularity of on-demand models and the desire for instant gratification further compel startups to rethink their service delivery and infrastructure.

Such startups as Walmart, Instacart, and DoorDash show a good example of on-demand and instant gratification models. These grocery delivery startups have set new standards for on-demand service, offering rapid delivery options that cater to consumers' desire for instant gratification. Their platforms integrate real-time tracking, predictive analytics, and automation to provide convenience and speed, which are now core expectations for digital consumers.

Such demands in trends and technologies force entrepreneurs to make decisions faster and stay ahead of competitors in finding solutions.

Cyber attacks

Any entrepreneur who wants to start a company in 2025 cannot afford to neglect cybersecurity. Small businesses and startups might easily become the main targets for hackers. In March 2025 , some of the most prominent cybersecurity cases included:

Data exfiltration attacks. A significant attack on Oracle Cloud involved the exfiltration of 6 million records. Attackers exploited a potential undisclosed vulnerability, stealing sensitive data and demanding ransom, indicating a highly organized data theft operation.

Phishing and malware attacks. Phishing schemes targeting mobile devices were notable, with a fake banking app designed to mimic the IndusInd Bank app. This attack was a combination of social engineering and malware, aiming to steal personal and financial information from users.

Exploitation of trust in redirects. Attacks involving malicious redirects demonstrated exploitation of users' trust in familiar website domains. By manipulating redirect functions, attackers led unsuspecting users to phishing pages, increasing the success rate of fraudulent activities.

Supply chain attacks. A supply chain attack on GitHub's tj-actions/changed-files affected numerous repositories. Attackers modified code to compromise continuous integration/continuous deployment (CI/CD) processes, highlighting vulnerabilities within software supply chains.

Startups often invest a lot of time in developing features, marketing, and researching, but they don't care to secure what they create. This puts them at risk of disclosing the company's confidential information.

Cybersecurity is especially important in applications that store sensitive data like bank card numbers and information about the users. Startups need to make sure that their customers' data is well protected and encrypted. Sometimes entrepreneurs need to make their product compliant with different regulations like GDPR, HCISPP, or others.

To learn more about factors to consider when developing mobile and web applications, read our blog.

AI commoditization and differentiation

Generative AI and machine learning are now considered standard features by both investors and enterprise clients. As these technologies become commonplace, startups that once relied on AI capabilities to make their mark in the market are now finding it increasingly difficult to differentiate themselves based merely on these features. This trend towards AI commoditization has created a need for startups to go beyond offering simple AI functionalities. According to research from McKinsey & Company, an increasing number of business functions in most organizations are being performed with AI. Overall, the report indicates that 40% of global organizations have integrated AI into their operations.

In this new environment, startups must focus on delivering tangible value through their AI solutions. It's no longer sufficient to have AI as a technical novelty; these solutions must enhance productivity, improve efficiency, and provide measurable outcomes. This means prioritizing real-world impact over simply embedding AI as a feature, as customers are looking for benefits that translate into meaningful business results.

However, in the rush to keep up with industry standards, many startups feel pressured to integrate AI features, often leading to hasty or superficial implementations. These inadequate solutions may fail to add real value, ultimately undermining the startup's ability to stand out in a highly competitive market. To truly succeed, startups need to offer robust and thoughtfully designed AI implementations to address significant challenges effectively.

Funding pressures and sustainability

As we've already mentioned, lack of funding is the number one on the list of startup risks, and this problem is still relevant. According to Techcrunch research, the surge in startup shutdowns in 2024, a 25.6% increase from the previous year, is largely attributed to the massive influx of companies that received funding during the venture capital boom in 2020 and 2021 at lofty valuations and with limited due diligence.

Many of these startups, funded during this frenzied period, faced sustainability challenges and were unable to secure additional funding due to high burn rates, lack of product-market fit, and overvaluation, leading to cash flow issues as market conditions shifted post-pandemic. Looking ahead, industry experts anticipate further closures into 2025, especially among early-stage companies, as these startups either adapt, find new pathways, or continue to face financial pressures in the wake of macroeconomic challenges such as interest rate changes and decreased venture funding.

In fact, investors want to get some kind of guarantee that the capital they invest in a startup can pay off. Entrepreneurs need to show them the value of the product and the stability of the company in the market.

Risk management, compliance, and buyer scrutiny

As Gartner reports, enterprise buyers are increasingly focused on various risk factors when considering technology solutions. This heightened attention includes critical areas such as data privacy, AI ethics, security, and regulatory compliance. Buyers are becoming more vigilant, looking beyond basic product features to assess how solutions align with their organizational standards and legal requirements. This growing scrutiny means that companies offering technology solutions must be prepared to demonstrate their commitment to ethical and secure practices convincingly.

Startups, in particular, find themselves under pressure to meet these expectations and are encouraged to obtain industry-standard compliance certifications early in their lifecycle. These certifications serve as important indicators of a company's dedication to meeting established benchmarks in security and regulatory compliance. By achieving these certifications, startups not only enhance their credibility but also improve their chances of attracting clients and securing funding from investors. Potential customers and investors view these credentials as assurance that the startups are committed to maintaining high standards of risk management and operational integrity.

As buyers continue to closely examine the resilience of vendor operations, there is an elevated demand for companies to act as trusted advisors in their field. Startups and other technology providers are expected to proactively address any concerns related to risk management and demonstrate an ability to navigate and mitigate potential challenges. This shift highlights the importance of developing strong risk management frameworks and creating transparent, trust-based relationships with clients.

Labor issues

Startups always struggle to hire outstanding specialists to scale faster and make cool products. Unfortunately, not every startup business can afford to offer a competitive salary, that's why they face skills shortages. Large companies usually hire people within the country, while startups seek to fill in the gaps by hiring employees from abroad, as this way is easier to find talented workers who are ready to work for a lower price. Many people work from home, and large companies outsource or hire remote workers more and more often. Of course, they can pay a much higher salary than a local startup.

Competing with big players for specialists for the sake of expansion is not the best idea. First of all, you should take care of your current employees so they won't leave. Give them more freedom and space for creativity in projects — this reduces the chances that your company will face the talent outflow. If you need rare specialists, you should arrange training within the company. For example, you need another motion designer in the team — instead of looking for a new specialist, you can teach these skills to a graphic or UI/UX designer.

Another proven method to retain employees is convincing them of the idea of the startup. If they believe that your idea can solve a relevant problem, that the timing is right, and you're the leader who can make it happen, they will want the startup to skyrocket as much as investors. Thus, working for your company can become for them a mission rather than just a job.

Management issues

During a crisis, it's especially important to manage the company properly. The first problem that leaders often face is micromanagement. When a person creates a business from scratch, it's difficult to let go of their brainchild and allow others to help.

Such entrepreneurs strive to control every aspect of the startup because they are convinced that they know what is best for it. A founder of a company may be a technical genius who understands all modern technologies, but it doesn't mean that they also understand other areas like marketing, sales, management, design, etc. And even if you are an expert in everything at once, you still need to delegate tasks and trust your team. Otherwise, such business ambitions can lead to burnout, and there will be no one to lead your team to the goal.

Ineffective marketing

Creating a startup is still half the trouble. To attract customers to buy your goods and services, you need to sell them the idea that your product is the best — that's what marketing is for. Not all entrepreneurs understand the difference between marketing tools and can easily get carried away with new trends without making sure that they work well, particularly for their business. This can lead to them spending huge sums on advertisements which can not lead to sales.

The secret of effective marketing is to spend the marketing budget wisely. Poorly studied tactics are not worth spending money on them. You also need to constantly monitor and check these methods in order to adapt them to your needs or replace them with others.

Also, focus on your target audience and choose a marketing strategy based on what they like and don't like. For example, there's no point in advertising your product on TikTok if your target audience does not watch short videos regularly.

Wrapping up

To be honest, no time is perfect to start a business. There are always problems you have to deal with whether it's inflation, a pandemic, or a geopolitical situation. Entrepreneurs need to adapt to the current circumstances in order to develop their businesses.

Our advice is to look for opportunities regardless of external circumstances. Those who prepare for the startup problems can take a better position, survive the crisis and bypass competitors. In 2008, Netflix survived the recession although they weren't a big company at that time. They presented a new product to replace the dying video rental stores — a streaming service. Then they started collaborating with companies like Xbox so that people could watch videos using such devices. Thanks to these innovations, the number of Netflix subscriptions grew despite the recession, while other companies were trying to maintain revenue.

Thus, innovations, the use of modern technologies, collaborations, adapting to consumers, searching for new suppliers, being smart with finances, dealing with labor issues, developing recruitment strategies, taking care of security — all this can help you cope with startup challenges, and the sooner you start acting, the better.

If you need help with the design and development of digital products, we are at your service. Our team of professionals can help you create a stunning product and show its value to investors. Learn more about Ronas IT services and never hesitate to contact us.