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Firstly, it is very important to realize that there is a problem in the market when you are developing an idea. Your idea shouldn’t just be something you like or want to happen, but you should also be covering or solving a problem. In addition, you should explain how you got to this point: What was the moment that gave you the idea? How did you meet your team? What knowledge do you have regarding the Startup?
Secondly, there’s a need in the market for your product/service. It is important to go and test it with corporates, especially if you are going to a B2B market. It is necessary to understand what their needs are, what they are looking for, and whether it will be feasible for them to apply your solution/service/product to the market. Some key questions to bear in mind are: Is there a gap in the market? Is it efficient? Does it reduce costs? Are you going to sell or persuade?
Surrounding yourself with a strong team of people is essential. There are different factors to consider, including the number of founders in the team, description of roles, mindset, and partner agreement. When creating a company, a team is one of the most important focal points. You need to choose co-founders wisely and set up an agreement partner before you go to market and monetize your product/service.
Steps to Building a Startup
In the beginning, you may ask for money from friends and family. There is an emotional aspect to this since they give you money because they love and support you and think that you are the best. However, this becomes a problem when things start to improve, and business angels or venture capital firms come along to help you with the next step. It is necessary to prepare a good agreement partner and contract with your family and people who are putting their trust in you, so as to avoid relationship difficulties.
Projects start with a very high technology component that is already proven in the market. Once there is proof of concept that works, you can implement the product/service in the market. This is the point where you need to start to invest and hone the team in on sales and marketing. For example, if there are three engineers with the same market, it will prove very difficult to go to market.
If they are always preparing their software to be the best out there and compete with all the others, by the time they’re done with this, the market has moved on and the opportunity has already been covered by their competitors. Fundamentally, we must realize that the team is the most important aspect. In fact, 90% of the reasons for startups failing are because there isn’t a good relationship between founders.
When taking a project to market, it is essential to analyze which type of market you are approaching, whether B2B or B2C, to factor in the budget. For B2C companies, you normally need 60% of your budget to spend on social media and marketing, however, the cost is severely reduced for B2B businesses in comparison. At this point, analyzing the competition is key. You need to analyze who is doing similar things to you in the market and how they are doing it. You shouldn’t tell your investors that there are no competitors and that your product/service is unique in the market because this isn’t true.
Investors see hundreds of thousands of deals per year, so they know perfectly well where to find the same products in the market in different countries or stages. Investors also want to know what your vision is in the short term. How are you approaching the next few years? How are you planning to expand? Are there any other perspectives for selling your product/service? Ultimately, this is how you are going to generate income.
When it comes to networking, this applies to clients, investors, and employees. When approaching clients, it is better when you know them, or somebody refers you to them. For investors, there are different ones depending on your stage or level of maturity. Employees should be people engaged with your project, not with the salary.
In particular, it is very important to build confidence and trust in investors as soon as possible. You need to set time aside to approach investors and ask for their opinions about your project in order to establish a relationship. Even though you might not need investors at this given time, it is still important to reach out to them at networking events before you need them as this relationship will help and support you in the future. If you go to an investor at the last moment when you need money, this is not necessarily going to happen.
This will take up precious time that you could be investing in developing your project. It is much better to build your network little by little over time. It is good to analyze who you are going to approach and who will be the right investor for you according to your level of maturity. Above all, go and make due diligence about your investment because you need to know who is going to invest in you.
SDGs are another important point to consider and how the market is validating social projects using different metrics. In the past two years since Covid, people have started to become aware of what it means to generate social impact when developing a project. You need to know what your added value is in order to develop it as much as you can and present it to the market. This will give you a plus one added value as you are controlling what you are doing.
There are various exit points once you’ve built your startup. Ask yourself the key question: Where are you going? You need to come up with a long-term plan for your startup and be working in a particular direction, whether that’s keeping it for your kids, selling it to a corporate, or going to the stock market.
There is a long line of Venture capital, starting with business angels, early-stage VC, series A/B/C/D VC, corporate VC, and private equity at the end. The main difference between all these VCs is the ticket size that they are investing in startups. When you have secured a VC, they will want to know what your perspective is in the short term because they want their money back eventually.
It is crucial to know where you are going, how you are going to get there, how you are going to make profits and fundraise, who is part of your team, what the market is like, who your competition is, and finally, how you are going to give back the money to the VC. This is the exit stage.
