What do startups need?
Startups exist for many years and do not lose their popularity. There are a lot of founders with great ideas. Usually, these are very creative people who come up with the idea extremely fast and have an indomitable desire to accomplish it. Every great idea fights with reality and, unfortunately, the reality is more often wins the battle. What do startups need to win?
In order to succeed, a startup has to obtain the following:
- business model;
These are basic things to make the startup a real product. Simply put, you transform an idea to the business model, find the team, secure the investments and accomplish the project. Let’s talk about fundings more detail.
How do startups work with investments?
Startups have four follow basic stages of investment in the development:
- Seed funding. At this stage, your funds come from your own savings, investments from friend and angel investors. Also, here you need to present Proof of Concept to get more investments.
- Series A. At this stage, you need to make an MVP – a Minimum Viable Product. If you are doing well, you get a profit on this stage. At Series A, you can have some debts from the previous stage which you can pay from the received profits.
- Series B. This stage is about scaling. The business is growing and investors help to grow faster. The startup has to complete the product and grow the audience. Investments are used for business expanding – adding new product features, advertising, customer support, hiring new specialists, etc.
- Exit. Exit means you sell the startup and can reinvest the money for future ideas. Alternatively, you become a well-paid white collar for a global company and continue to develop your product according to their strategy.
How to raise funds and move to a new level?
The basic task is to convince investors about product quality and demand. You should evaluate your abilities reasonably and make a good business plan presentation for the investors. Also, try to present each team member, it’s good if somebody of them already worked with this investor.
But you shouldn’t speak about all the positive traits of your team. Investors have dozens of applications, so the shorter and more meaningful will your presentation be, the bigger your chances for securing the investments. It will be a plus if all team members have a LinkedIn profile and you give references to them. Thus, the investor will have the ability to know more about each team member and make sure they are competent.
The next important moment – to present the speed of your project. If you wasted time without a result, you can say about it but immediately show how you solve it. This will show the investor how you learn from mistakes and increase your own efficiency. Also, a good practice is to show investors the traction with your target audience. This will show the investor the scope of the product demand.
What else is needed?
We talked about investments but this is not the only thing you need. What’s about the team and accomplishment? Startups face a lack of human recourses and specialised talents. How to deal with it on a limited budget? The remote dedicated teams can be a solution. You can hire an outsourcing team from, for example, a Managed Service Provider (MSP) to solve specific technical problems. There are MSPs who already work with startups and have experience with common startup’s challenges.
Wrap Up: how to become a successful startup?
There are a few pieces of advice to the startup founders.
- Try to make a viable product version as fast as possible and present it to investors.
- Be honest with investors and make a short and meaningful presentation of your product.
- Find a reliable team. If you can’t hire people in-house, refer to a trustworthy MSP.
- Focus on the end-users, not only on the idea. The good traction with the audience is a benefit for your business.
A startup needs a lot of resources and faith. Sometimes you need to discard perfectionism and just get a product done.