A startup is a project that aims to create a product or service that can be monetized. It can be done through an investment from a third party or collaboration between the entrepreneur and a company. In 2020, some of the most valuable companies in the world were startups such as Google, Amazon, Apple, Tesla, and Microsoft.
The startup ecosystem has grown significantly over the past decade. In 2020, over $1.3 billion was invested in new business models within the construction industry.
Through these six phases, people can identify promising startups on the way to becoming indispensable products or solutions in the market.
Pre-Seed
The analysis phase is crucial for identifying a potential problem within a specific niche market. It will help determine the viability of the proposed solution and identify the challenges the company will face in addressing the issue.
The analysis phase is also considered the idea phase, as all it takes is to convince someone to come on board with the project. Drafting the legal basis for the project is also crucial.
Seed
During the seed phase, the entrepreneur must determine the business model used for the company. This stage also involves making important decisions, such as choosing the methodology that will be followed. This step can be done through the development of prototypes. These are small experiments that are used to validate the initial idea.
The next step involves the formation of a financing strategy. This stage is mainly focused on the entrepreneur’s personal resources and the company’s revenue. In addition to traditional financial institutions such as banks and investors, other forms of support such as business angels and public aid are also commonly used by entrepreneurs.
Early Stage
The development of the concept during the early stage is the start of a process that will lead to the eventual emergence of a product or service that will be useful to the market. This step is also vital to ensure that the company’s idea is viable.
The acceleration and funding agencies seen during the previous phase are now commonly used by entrepreneurs during this stage. These organizations help new business models get the necessary support and market access. Another dynamic that’s gaining popularity is the emergence of crowdfunding.
Growth
A startup can achieve strong market demand during this phase, which means that the company will be able to attract more customers and generate more revenue. This is when the team begins to grow. The company’s profitability is also crucial during this period, as it allows the team to expand.
The failure rate during this phase is higher than during the other stages. It does not mean that the company can indefinitely maintain its product or service. Instead, it suggests that the company will have to adapt its approach to meet the needs of its potential customers.
Expansion
Scaleup is a proven business model allowing a company to accomplish ambitious goals. For instance, it can expand its operations to other regions or hire more workers. After a company has successfully executed its business model, it can start to move forward. This stage allows the company to consolidate its growth and increase its profitability.
Before a company can start expanding its operations, it usually must negotiate with large companies. This step involves getting the necessary support and financing to develop its business model.
Exit
Although this phase is not mandatory for most companies, it is often the last step that a startup needs to take before it can start to grow. Usually, a company will sell its assets to fund its exit. However, not all entrepreneurs reach this stage. They are typically characterized by their high potential and robust business model.