How to Startup
Back in the 90s almost every startup operating in the ICT market was founded in Silicon Valley or Boston. In 2015 we saw a huge growth in the technology entrepreneurship worldwide, leading to the emerge of startup ecosystems similar to Silicon Valley. The era we are living in has never been a better one for entrepreneurs: now they have tools, resources and more important market conditions to scale a firm to the billion dollar status in short time.
Nowadays, the main key factor leading to an economic growth is the Information, automating the industrial processes and turning the page on the businesses services.
“a marketplace where early stage startup founders, angel investors and business accelerators coexist in armory to nourish.”
Giving the startup the possibility to have a main role in the information economy, in order to increase the life of a recently born one and maintain it healthy, is of vital importance the ecosystem where the startup is active. I have to underline that has stated in the Compass Report “The Startup Ecosystems” (https://startup-ecosystem.compass.co/ser2015/) “If you found a startup, even if your idea, team, product, and plan are good enough to gain venture capitalists backing, the startup have still a 75% chance of failing.”. So how is it possible to lavage this high risk percentage?
A short briefing on the startup universe:
Venture Capital firms usually invest in late-stage startups, in order to fund the next stage of growth and to secure a piece of the company. VCs are well structured to make a multi-million dollar investment in a few late-stage startups in order to guide boost the results to the stars. Very interesting, but I have an early stage startup who can help me to grow more before I start looking for a VC? Well that’s the problem, it is pretty hard to get a loan from a standard bank, because your business model is so innovative that they are not able to compare it to, making loans is too risky for them. The solution comes from angel investors, they spread their investment over a large number of early stage startups gaining a percentage of equity in return, if most of the investments fails, just one could make them owning a “Unicorn startup” with insanely high profits.
Secondly the help might come from the accelerator programme centers that founds the early stage startups preparing them for their first investments. They provide access to mentors, staff training, networking, hardware, ecc. In exchange for their services they usually take a percentage equity in the firm. Once again here comes the importance of an excellent startup ecosystem: a marketplace where early stage startup founders, angel investors and business accelerators coexist in armory to nourish.
Working in an early stage startup is really different than working in a big company. Working in a startup requires way more flexibility on every days tasks, understanding the top priorities, trying to accomplish results never done before and throw everything away and start all over again. It is not easy to find personalities who can successfully work in these situations: it needs the right combination of risktaking, leadership and motivations. In the end the “know how”: only few people can design a user experience intuitive, fun to use and with a high potential. These personalities are easier to find in an exciting startup ecosystem.
Success requires moving fast and to adapt in order to find and fit the product in the right market before someone else or even before the money runs out. That’s also a reason why the desks in an early stage startups are linked together in an office: so everybody can hear and join every conversation and be on the same page as anyone else. Everything that I just stated can be found in a good startup ecosystem.
As already stated a main key factor is information: startups often need to change their strategy by gaining feedbacks from their customers and adapt them to their needs, shaping their product in order to guarantee easy access to their potential clients and sometimes change their core business ideas. It is imperative to ask questions, watch their decision making process and uncover their needs. Listening and learning are the key to success, when talking about startups. Startups guided by mentors are 3 times most likely to experience a faster growth and a higher possibility to rise more money than those without (Compass Report on Startup Genome: https://blog.startupcompass.co/pages/startup-genome-report-1).
The ICT innovations are acting as a supporting role. In a good startup ecosystem the startup is able to find the right concentration of different customers types and engaged mentors willing to help.
In the end it is not proven that a thriving ecosystem can assure success, but surely improves the percentage of success for each individual startup. High numbers of startups, enough of them could be successful, like “seeds sprinkled onto the earth, a lot will die but a few will root and thrive.”