It may seem strange, but the term "startup" appeared as much as 40 years ago. For the first time in the late 70s, Forbes and Business Week magazines defined companies with short cycles of activity in this way. This definition was established in the 90s, and the rise began with the so-called “Dot-com Boom” at the turn of the 20th and 21st centuries.
Today, about startups, venture funds and business angels, not only those who almost never go online. Moreover, many people are keenly interested in this area, both in terms of investment and with regards to launching their technological project.
Today we will analyze the main stages of a startup and their features in the context of modern realities.
Startup Features
To begin with, let's briefly outline the main differences between startups and ordinary companies that do not claim to be the notorious "innovation" and "technological". In a word, what does it take to be called a "startup"? Many marketers and researchers distinguish the following components:
Innovation . That is, a young company must open and occupy new markets (on a global or local scale).
Low initial investment . Investments in the early stages are extremely limited. Most often, the first "investors" are the entrepreneurs themselves, their relatives and friends.
Rapid growth . The normal development time for a startup is about four months. As an exception, work in complex markets or high-tech areas that require longer time periods.
Hopelessness :). The statistics are cruel - 70% of such companies close before they have lived even a year. And 40% of the rest cease to exist within the next year.
Let's talk more about this moment. CB Insights has published an analysis of the main reasons why startups fail.
The main reason - 42% - the market is not interested in the product.
Further - 29% - the founders did not have enough money.
23% of startups fail because of the wrong team.
19% of companies tried to work in areas beyond their competence.
18% - problems with pricing.
17% is a bad product.
17% - problems with the business model.
14% is poor marketing.
14% - insufficient attention to the audience.
13% - the product is out of date (too early/late to market).
13% - insufficient focus on the main goals.
13% - tense relations in the team / with the investor.
10% - poorly developed strategy.
9% - lack of motivation, or lack of "passion" for their work.
9% - bad location.
8% - lack of interest from investors.
8% - legal / legal problems.
8% - ignoring the benefits of networking / consultants.
8% - the team "burned out".
7% - lack of flexibility.
Are you still determined to succeed with your idea? Then let's move on.
Stages of development
Many identify 5 "life" stages of a startup project. Most of them are broken down into smaller stages. Let's consider the main stages of startup development in more detail, focusing on the first one - the seed stage, and all its components.
seed stage
At this stage, the following steps are distinguished: the emergence of an idea - the formation of a team interested in the idea - niche analysis - formulating a concept (concentrated essence of the business) - setting a technical task - developing a prototype - testing - developing an alpha version - creating a closed beta version - open beta -testing.
Pre-seed
Carrying out a general classification, it is necessary to touch upon the so-called "pre-seed" stage of the project. In short, at this stage there is nothing but an idea. That is, the potential founders of the company have neither money nor people - only thoughts about the future of the enterprise and the desire to realize their concept.
This stage involves the “polishing” of the idea, the formation of a team, most often here entrepreneurs will experience a number of fundamental changes in the idea, since a deeper study of the target audience and the market will certainly make adjustments to the original concept.
Seed
Next comes one of the most important moments - market analysis, the formation of terms of reference, a business plan. Here it is important to formulate a clear concept, to describe a number of key theses about business. Who you are? Where are you going? Who is your client? What is his pain? These points should be supported by concrete, measurable data based on research. It is necessary to clearly see the portrait of a potential client - this will allow you to create the most relevant offers for your audience.
Analyze the prospects for the development and monetization of the project through a SWOT analysis: Strengths (your strengths), Weaknesses (shortcomings, weak links), Opportunities (opportunities) and Threats (possible threats to the project). At this stage, it is worth writing down in detail what level of income do you expect in a year / three / five years? What resource traffic must be achieved to meet these levels?
Clarify these points, determine the real level of income possible under your conditions, and only then move on. At this stage, the first tests can also take place, but without a prototype yet.
For quick and easy validation of business ideas at an early stage, use the spreadsheet from LPgenerator
Prototype
A prototype, as the name implies, is a “model” of your offer with a minimum of features and a “draft” version of the interface. Create a diagram illustrating what content and interface elements should be on the resource. This way you can see how the project should work before writing the code.
The concept of a minimum viable product also fits into the framework of the prototype - it is recommended to create it as early as possible in order to “small blood” identify the general market need for your offer and assess development prospects.
MVP, or "minimum viable product" is the initial version of the offer with the necessary minimum functionality that solves at least one "pain" of the target audience. If you create an MVP in the early stages of a project, you will be able to understand whether your company is going there at all - and turn to more promising directions in time.
alpha product
Version of the project, theoretically already created according to all the requirements of the terms of reference, but has not yet passed preliminary tests. Usability testing allows you to understand how to further change or expand interfaces to better meet the needs of the audience. What you did not take into account when formulating the terms of reference can be optimized here - and you can already begin to form the initial client base.
Closed Beta
Option as close as possible to the final. This is where your product goes through a series of closed tests before being released. Ideally, the backbone of "admirers" waiting for the project to appear already exists. At this stage, polishing and rethinking of individual points continues in order to increase efficiency. For example, you can change the colors of some elements, the texts of calls to action, etc.
Public beta
First steps into a big market. The main goal here is to find out if the founders' hypotheses were justified, and if not, in what way? The main advantage is the ability to work out the shortcomings with little blood and attract a more serious backbone of customers.
At this, the seed stage - the most voluminous - stage ends and the project moves on to the startup stage, or to the long-awaited launch.
Full launch of a startup
Your product begins to function, you start promoting the project. There are previously absent questions about the settlement of legal aspects, brand registration, and so on.
Above all, thorough testing, optimization, and troubleshooting are the constant companions of an entrepreneur. A successful company needs to be developed every day, improving both the product itself and the “legend”, the brand image.
This is also where you can start your efforts to attract investors - if you did not start this at the prototype stage or later. It is worth immediately determining the share that you are willing to share. It is popularly believed that this figure should be within 15-25% - a larger share can deprive your startup of chances for success and viability in the future.
We offer data on the TOP-15 global startups that have attracted the largest investments. The top three spots are taken by Airbnb, Dropbox and Zenefits, respectively.
Stages of growth and expansion
In this paragraph, we will combine the growth stage and expansion stage, since they merge in many ways, organically flowing into one another.
Here your project is gaining momentum, confidently occupies the chosen niche and begins to bring the creators the first money - albeit small. Then the project begins to expand - revenues become stable, the number of operations grows, positions are strengthened, and business processes are being worked out. There may be attempts to enter other markets or niches.
exit stage
Sometimes it is called the "maturity stage" - this stage can be called the last stage in the development of a startup. But not because there is nowhere to grow further, but simply because after that a regular business begins.
At this stage, the firm ceases to be a start-up, as you already have a staff of experienced employees, well-established processes and operations, and perhaps you are the leader in your industry.
But why "exit"? The fact is that investors who have invested their funds at the initial stages are leaving the business here. This is done either by reselling the company, or - and most often - by placing shares of the brand on the stock exchange, or entering the IPO.
Thinking of how to make the most of your software development? Order the Discovery Phase to consider all key aspects and ensure your project's success!