Understanding the concept of startups

Startups are organisations with the grand ambition to alter existing markets and create a better society. Startup initiators usually look to solve a problem in the world by creating a product or service that people want but doesn’t currently exist, ultimately leading to a successful initial public offering (IPO) and stratospheric returns for investors.

Startups are fledgling businesses that aim to develop and provide a novel product or service to the market in order to attract and retain customers. You can also refer to a startup as a disruptor or up-and-coming company that uses cutting-edge ideas to improve upon established products and services or to introduce totally new product categories that shake up established markets. 

Popular examples of startups in Africa include Paystack, Piggyvest, Boomplay, Risevest, and Pocket App. International ones include Amazon, Netflix, and so on. 

What’s the procedure for launching a startup?

There are several things you need to know before kick-starting a startup. First, a startup is not an abstract body. It operates similarly to any other established company, only maybe in a smaller company. Just like in other companies, startup employees collaborate to design a product they’re confident will sell. 

However, most regular new businesses simply repeat what has already been done. This means that they follow a predetermined model for how a company should operate.

The goal of a startup is to establish a new standard. This entails offering a scale that existing providers of their product of service can’t immediately provide.

Rapid expansion: The goal of startups

Rapid expansion is another hallmark of successful startups that sets them apart from more established businesses. The goal of a startup is to rapidly implement ingenious ideas. 

Startups engage several techniques such as iteration to collect user opinions and use that information to tweak and refine their products over time. You’ll find startups using the bare framework of a product to test and iterate on until it’s ready to release to the public.

In tandem with developing better products, startup companies want to quickly increase their consumer density too. They operate with the principle of establishing higher market shares to pursue further funding. This disposition helps the company expand its offerings and its customer base. Taking a company public is the end goal of all this fast expansion and innovation. 

Funding startups

Funding for new businesses typically occurs in stages. When the company’s founders and their close associates put up initial capital, this is called the “bootstrapping” round. The next step is to secure seed capital from external investors, or wealthy individuals who make such inception business investments.

The subsequent fundraising rounds range from tens of millions to hundreds of millions of dollars and are headed by venture capital firms. In the end, a startup may opt to go public and raise capital through an initial public offering (IPO), an acquisition by a special intention company, or stock exchange direct listing. 

When a firm goes public, anyone can buy shares, and the startup’s original investors and backers can cash out for a huge profit.

But startups can fail. In other words, it’s entirely possible that inception investors will receive absolutely no return on their money.

Successfully launching a Startup: What makes a difference?

Many factors need to be in place, and important questions must be answered, for a business to be successful. However, a large percentage of startups don’t fly. Therefore the following positions need clear definition if a startup will thrive.  

The following are general questions to query the startup idea:

What’s the size of the market?

Opportunity for a startup is proportional to the size of its potential market. 

What’s the intention of the tech edge your startup may have?

While specialised technology may give one company a competitive edge over another, the question remains: for what purpose? To what end?

The following are questions for the founders:

Where is the founder’s experience in the field? 

It is imperative that the founders are well-versed in their startup’s industry. Founding a startup requires knowledge of certain things. Founders must be able to break down the aims of the company.  

The need for the big idea must be explicit. What makes it worth the time of workers and the attention of employees? What sets apart the startup’s competition? Founders need to get a hang of all these variables.

Are team members completely invested in the project? 

Without a committed team behind it, even a fantastic idea risks falling flat with its intended audience. Successful completion is crucial.

Does it look like they’re willing to put in the effort? 

A team can be committed, but can they invest long hours to get the idea flying and keep it soaring? It can be difficult for a concept to succeed if the team working on it isn’t prepared to spend the majority of their time on it.

It’s possible that any startup type can join the few early stage ones that succeed, if it can provide satisfactory responses to these questions.

What to know about funding startups

Honestly, access to startup funding is limited. Therefore, you may need to start with your own money. However, later, you can work towards getting a private investor, VC or grant organisations to fund your business. But for a start, bootstrapping may be the way.