When entrepreneurs not only believe in unicorns but want to become one, it is easy to realize that the startup line of business has gathered an air of myth over the years. We don’t doubt that sometimes an inexplicable sequence of coincidences (popularly known as luck) can lead to magical growth and success, but we’re devoted to presenting a practical and replicable approach to aspiring startup founders.
In our series, we’ll gather what you need to consider before commencing your startup business, and what the common mistakes are when your breakthrough idea evolves into a product and reaches its market. We will talk about the validation of your idea, the steps to take before reaching out to potential investors, the type of financing you could consider, and what defines a great MVP.
Before jumping to these topics, let’s lay the foundation first.
Startup seems to share the fate of many trends and buzzwords. In hope of extra clicks and sales, thousands of companies, initiatives, and events advertise themselves with this popular and often overused keyword even if they have nothing to do with the original concept. To clean startups from the expanded, blurry meaning, we go back to the basic definition.
Startup is, all in all, a privately held micro or small business with a high growth potential aiming to reach huge (commonly) international market in the foreseeable future (within 3-6 years) and to evolve into a big corporation. Strictly speaking, a startup preserves its “startupness” until the IPO (Initial Public Offering).
For instance, Facebook has already been removed from the grand list of unicorns (like this one), as the legendary corporation inspiring many into entrepreneurship counts as an ex-startup. Nevertheless, many international companies with a startup past – such as Google – create internal startups long after their IPO. Internal startups encourage innovation, the realization of new ideas while enabling post-IPO companies to participate in competitions and events organized solely for startups. These initiatives add extra blurriness to the clear definition of startups.
Officially the only criterion expected from startups is scalability, yet, innovation is generally mentioned as an essential key of rapid growth. As a characteristic of the startup-era, innovation is usually connected to digitalization, technology, and software. It doesn’t mean that every startup must bring a new software product to the market. Nonetheless, the fresh approaches, solutions, and services are likely to be strongly connected to the software industry (for example with a new online payment method or a digital booking system).
Said tendency is reflected by the sector choice of unicorns as well. The most popular sector among the startup giants – such as Canva, InVision, BuzzFeed, or reddit – is the internet software & services sector. Second place goes to e-commerce with companies like Wish and Allbirds, while bronze is won by fintech, thanks to a long list of companies like Transferwise.
After answering what we mean by startups, it’s time to talk about another crucial question: is it worth following our series? The articles of Startup101 will provide you guidance if you are about to found your first tech startup, or your startup is still in an early phase.
Due to our expertise, we can advise you on how to build a company specialized in software or software related products. Some of the articles will also be useful for those prospective entrepreneurs who have an idea for non-technological startup, and for those who want to hit the market with a new software product but are not sure the growth potential is sufficient to achieve active startup status.
Our ISV partners and clients primarily strengthen the B2B market. We often assist their growth from a very early stage. If you also intend to follow the B2B software path, we highly recommend frequent visits to our Startup101 series. In our next article we’ll share with you why we strongly suggest going down this road first instead of the seemingly glamorous B2C.