The term “Startup” is quite common in the information space. Many people understand almost all new projects by it entrepreneurial activity. At the same time, it is worth distinguishing a conventional business model developed on the basis of already applied principles of production or service provision from what can really be called that word. Startup in simple words, first of all, is some kind of innovative project, which can bring quick income. Notably, such innovations are not limited to industry and application. Accordingly, this could be medicine, transport, technology, services, trade, etc.

Difference from regular business

Despite the existing definition of startups, this word continues to be widely used and applied to many projects. This is due to the fact that the existing criteria and characteristic features are somewhat blurred. They do not contain clear boundaries that can be expressed in numbers. However, there are still certain indicators that are worth paying attention to:

• Firstly, unique of its kind and New Product . Moreover, the owner of the idea offers certain things, not necessarily without a so-called base or platform. This could be the improvement of old services and products. It is important that there are no analogues. In most cases, such ideas arise in the process of using objects. For example, if to a certain household appliances add specific details, it will begin to perform functions that are not inherent to it. It is noteworthy that it should be in demand. Otherwise, it will remain just an innovative solution that is of no use to anyone.
• Secondly, having a business idea as the basis. That is, a person must imagine how to organize the implementation of an idea into life, what this will require - production, equipment, premises, software.
• Third, age of startup founders. The average age of a startup is between 25-27 years. Although this does not mean that people of retirement age cannot bring ideas to life. The majority of technology-based projects belong to businessmen over 30 years of age.
• Fourthly, willingness to work and develop during the start-up period without profit in the first stages. According to statistics, startupers invest fully in the idea, if we consider it in terms of the finances they have. Additionally, investor funds can also be raised;
• Fifthly, short period of first profit. In the USA, for example, if after 6-8 months it is not there, then the project is closed. In Russia, such a period can last longer – up to 1-1.5 years. On the other hand, if the return on investment occurs after 2 years, then such projects are already classified as standard business models.

Stages of development and formation of a startup

Startups and the principles of their organization may differ slightly, but most of them develop along a certain path consisting of stages.

First stage

The first stage is the birth of a startup. A unique and innovative idea appears.

The essence of the idea is to improve life, change an existing product, and enhance a certain effect of a cosmetic product. Regardless of the industry or application, it is something new that has not been used or produced.

It is at this stage that a team is formed near the owner of the idea, ready to work on its design and implementation.

In most cases, even at this stage, financing, even minor, is necessary. As an option, at least for office equipment and obtaining advice from lawyers, accountants, and economists.

This stage is characterized by difficulties in finding investors. Even if there is ready-made business plan the organization or individual must believe in profitability and prospects. And it is not so easy to convince them without first results of work.

Second phase

The second stage is the formation of a startup. At this stage, there is already a created working model and a team working on it. A special feature of the team is clearly distributed powers and a strategy for promoting an innovative idea. The first steps towards advertising should already be taken.

In order for the activity to be carried out within the framework of the law, the aspiring entrepreneur must be registered as a business unit. This may be legal or individual. The choice of business form will be made based on the planned volumes of production of goods or services and other parameters. It is worth considering that any actions, including the purchase of materials, payment of rent, conclusion of contracts, must be carried out on behalf of legal entity or IP.

The main task at this stage is the formation and debugging of a system for promoting a new product or service. In addition, sources of financing must be opened up more actively.

One of the options for finding investors, which is beginning to be actively used in Russia, is crowdfunding. The essence of such a project is to publicize the idea and receive funds from everyone who wants to profit from it. To do this, it is necessary to use special platforms where aspiring businessmen and startupers post their proposals.

Third stage

The third stage is the so-called early development of the project. Characteristic feature is the presence of an already functioning company producing the product.

Accordingly, there is a moment of final formation of a service or product, taking into account the identified defects. Most often, at this stage, additional investors join in and no longer need to prove that the project is profitable. They can even offer financial investments themselves, seeing the demand for the product and its popularity.

Fourth stage

The fourth stage is expansion. During this period, the marketing system has been worked out almost to the smallest detail and the company is ready to expand production. New points may open, and broadcast advertising will increase.

At this stage, many idea owners decide to sell the business because they are interested in something new, but are no longer interested in running a business in the standard sense. On the other hand, skillful organization and development can bring large amounts of profit. That is, you should not rush to conclusions and make rash decisions.

It is impossible to say with certainty that such stages are absolutely typical for all startups. Everything can change depending on the purpose, product, location of the business. The need to establish a company and invest funds - personal or investors - remains unchanged.

TOP implemented ideas

Many unreasonably believe that startups in 2019 may be focused on IT technologies. In fact, new ideas are not necessarily supported by knowledge about technology or engineering. The top startup ideas that have already received recognition indicate that even an ordinary person can bring something new to life:

1. An idea created with ecology in mind. Hair shampoo is produced, which is bottled into containers brought by the buyer. Nephentes bottles do not look like the usual form for such a product. They are more like an enema, which is very attractive to buyers. This reduces the amount of discarded packaging that pollutes the environment;
2. Production of edible tableware. Moreover, we are talking not only about a plate or bowl, but also from natural material spoons are made. This startup found application in India, and for production they use ordinary flour. In the future, entrepreneurs plan to release a gluten-free version.
3. Special fingertips for junk food. The idea appeared in Italy and is to produce them based on latex and sell them both as an independent product and as a set with chips, crackers, and nuts.
4. Use of folding napkins. Initially, the material is pressed in the form of washers - small tablets. When placed in an antiseptic solution, the fabric unfolds. Thanks to the properties of the solution, the napkin also becomes an antiseptic, and also has a pleasant smell. The main advantage of the idea is that these napkins are reusable.
5. Opening of WeFood specialty supermarkets in Denmark. They sell products that cannot be found on the shelves of regular stores. Products are sold here with incorrect labeling, with appropriate deadlines, and torn packaging.

Startups based on IT technologies

• Firstly, it is widely known to users of one of the social networks Prism app. It transforms regular photos, turning them into something like artistic canvases. The application was created by Russian startupers. The peculiarity of the program is that it does not just apply a filter, but analyzes the frame and forms an image from scratch.
• Secondly, card-based startup. The Cardberry project is the idea of ​​​​creating a device that combines all the cards a user has. If it is necessary to use one of them, the user enters the application and selects it from the list of available ones.
• Third, creation of a service for finding travel companions for car trips. Such a startup began its life in the USA and is now widely known within the Russian Federation.
• Fourthly, creating a mobile phone application, which allows you to work in the financial market.
• Fifthly, service development, allowing you to create recipes for dishes and adjust fitness programs.

Finally

Despite the seeming complexity of introducing an idea into a business, such actions are quite possible to an ordinary person. The biggest challenge startups face is finding an idea that actually works. To do this, you will need to constantly receive information about developments, the implementation of ideas, and the development of technologies. It would be helpful to have experience and knowledge in a particular industry. Of course, people without education can also be startupers, but the most “long-lasting” projects are created by professionals.

It is believed that the main problem that slows down the development of startups is the lack of funding. The issue of finding investment is especially acute for social startups, which, in principle, do not have the same opportunities to generate capital and a clear strategy for entering the market as other startups, but at the same time have lower margins and less potential for scaling.

To solve this problem and attract funding in our country, there are many grant programs and so-called incubators and accelerators, which are aimed specifically at helping aspiring entrepreneurs present their project and, if they are lucky, hit the long-awaited jackpot.

We figured out the main misconceptions and mistakes that startups make when looking for investors, and talked about how to avoid them.

The main misconceptions of startupers

1. You need to do a startup in IT, as it is now in trend

Only if your technology is truly breakthrough and you have found practical application for it. Now there is too much hype around everything related to IT: a virtual reality, robots, cryptocurrency. These industries attract a lot of attention and money because they promise a quick return on investment. Here companies are sold with a multiplier of 10. And if they enter the American NASDAQ exchange, then with an indicator of 20: they became public, grew to a certain level, and did not die along the way.

In general, the area is really trendy, but too many entrepreneurs want to develop in it. Your project risks getting lost among dozens of other similar products.

What to do to stand out? You can try to integrate new technologies into familiar services. For example, attach Big Data technologies to a network of hairdressing salons and collect data about visitors: hair color, amount of dandruff, and so on. This information can then be sold to large medical companies or cosmetics manufacturers. It turns out that you are cutting people's hair and additionally collecting a database at the same time.

The second option is to find out for what purposes local and foreign funds and the government of your city are currently giving money, and open a startup in this particular area.

The third vector is to look for something else in business, if it is B2B. What unresolved problems exist? This approach is based on studying customer experience.

New markets and opportunities appear all the time, then they disappear and are replaced by others. We need to keep our finger on the pulse.

2. For a startup to work, all it takes is a good idea

Unfortunately, one idea is not enough: any business requires enormous effort and investment. You must become an entrepreneur. This concept includes, among other things, a very careful attitude to finances.

Among startups and aspiring entrepreneurs, there are many people who are passionate about their idea. But often this is combined with absolute illiteracy in business matters and reluctance to deal with trivial things, such as financial accounting, compliance labor legislation. So, you have to study and love all this, otherwise collapse is inevitable.

3. Receiving a grant is enough to reach the international level

Beginning entrepreneurs always want to conquer the world, but very often they do not calculate their strength. It would be very simple if receiving a grant automatically provided access to international markets, but this is not at all necessary, especially if we are talking about a local grant.

If you receive a grant from an international organization, it can help you reach the international level, because you will communicate with people from abroad, and they will write about you in foreign media. But ultimately it all depends on your activity. Obviously, if you have received a grant from a foreign company, you have established a communication channel with this partner. Your task is to expand and develop this channel.

To become successful internationally, you must first conduct thorough market research and tailor your product to the countries in which you want to market it. Developing an idea abroad without understanding its nature and place in the global market poses a threat to the startup itself.

Najla Al-Midfa, CEO Sheraa Entrepreneurship Center in the UAE

4. It is not necessary to draw up a clear plan for the distribution of funds.

When you apply for funding, you should have a clear plan for how you will spend the money. This idea may seem obvious, but there are times when young entrepreneurs at a meeting with an investor voice the amount of a million dollars. And when they are asked to specify what they will spend this money on, there is no answer.

To avoid such a situation, you must have, for which you need investments. It is clear that some part of the money will go to operating expenses- salaries for employees and so on, but this needs to be somehow linked to the team’s achievements: for example, in six months the following functions need to be introduced into the product.

Another “obvious” but important rule: financial plan must be strictly observed. You must show that you spent the money exactly as you intended, and not on the purchase of a luxury car for personal use. Otherwise, very serious claims may arise against you, including lawsuits. More on this in the next paragraph.

5. Once you receive the money, you can relax

There is a popular joke among startups: the first money is given by 3F - family, friends, fools (family, friends, fools). If these sources of financing were not enough (that is, almost always), entrepreneurs begin to look for investors, business angels, grant givers, and go to crowdfunding platforms. However, often receiving a grant becomes a fixed idea, and this also poses a danger.

Getting a grant is really very useful for a startup. And first of all, not because it is financial assistance, but because it is an excellent opportunity for PR, which also provides access to the client base. Through grants, the entrepreneur enters into new circle meets people and makes useful ones. The startup actually receives free promotion; it has a chance to “come out of the shadows.” Industry media willingly cover the grant industry and closely monitor the successes of companies.

But now you have received the money, so what next? Many startups relax after this. But it is important to understand: incubators, accelerators, investors and funds allocate money only for specific purposes. You cannot simply receive funds and spend them at your own discretion. If a startup stated that it needs money to purchase equipment, then it will have to purchase this equipment and then document its actions.

An entrepreneur must have a specific business plan, where he clearly states how much money he needs and for what purposes. This needs to be taken seriously.

It is worth considering one more point: it often happens that an entrepreneur needs to pay a certain percentage of the amount received. As a rule, this is 10–20%, so you need to carefully study the requirements of grants and incubators.

6. Promotion in the media after receiving a grant will last a long time

Yes, the distribution of grants is widely covered in the media. But we shouldn’t hope that we can now rest on our laurels. On the contrary, you need to do everything you can to ensure that those who write about the grant fund talk about you. In addition to this, of course, you need to share the news yourself: on your website, on your blog, on social networks. It would be good if it was a well-thought-out PR campaign with specific steps: today we talk about this, tomorrow about something else.

Please note: you need to tell not only that you received a grant, but also how you are spending it.

For example, you received a grant from the city government to care for. You can post in the entire six months (depending on how much the grant is calculated for). in social networks photos: “Look what cool dog cages we bought. And now a famous blogger has come to paint flowers on our booths. We also have a competition: who can paint our fence more creatively.” At each stage you can create a PR occasion.

If you have a limiter in the form of your own modesty, then let us quote the well-known phrase: “Modesty is the path into the unknown.” You won't be able to grow your business if you pave your way into the unknown. If serious people gave you money for a project, it means that in their opinion it is important and interesting, and worth talking about.

Andrey Grigoriev

1. Choose an individual to handle grants.

Submitting documents to receive a grant is not an easy task. We assigned this task to an individual who spent more than a month of painstaking work submitting applications for each grant. Based on this, calculate the deadlines so as not to put everything off until the last day, when you definitely won’t have time to complete a high-quality project.

2. Talk about your innovation in business language

Meetings of grant committees are usually attended by experienced people: investors, engineers, experts, top executives large corporations. However, despite their high level of knowledge, they may not be experts in your field. Therefore, your application and presentation should very clearly and intelligibly explain what problem you solve with your product, how you are going to monetize the technology, and provide an understanding of the competitive field.

Your words should be understandable to a wide range of people, but at the same time not turn into an artistic composition. Another common mistake startups make here, according to Yusuf Kaires, vice president of the Expo Live grant program, is submitting applications for grants with crude, unfinished projects that do not solve any specific problem. First of all, you must clearly understand what main value your project. And be able to describe it clearly and in detail, without water.

3. Set clear KPIs

They will be yours in the difficult navigation through the oceans of the market. And it is they who ultimately should determine the success of the project.

The term itself appeared not so long ago, and many of its explanations are difficult to understand, so this article will tell you what is a startup in simple words.

History of startups

The term itself originated in America in 1939, which was celebrated as a time of boom for new companies in the field of high technology. Translated from English, start-up means “to launch”. This is the name chosen by two Stanford students, David Packard and William Hewlett, for their company. As you can see, the students' surnames subsequently became worldwide famous brand Hewlett-Packard.

At the moment, startups are most often called new projects on the Internet, although even history shows that in fact this is not so - and in real life there are start-ups.

Examples of famous startups:

In addition, the interpretation of the concept of a startup in our country and in the homeland of its appearance is different. That's what it's called in our country new project. In the USA, this name is given to an already established company that meets a number of criteria and has already established the production of a new product or service.

What is the basis of a startup

1. The main advantage of a startup is its mobility and timeliness. He can immediately implement new solutions. Giant companies that are competitors are too clumsy and slow to quickly adapt to market changes. Often investors are not averse to paying for just one idea, and they take on the implementation of it themselves.
2. A friendly and purposeful team, ready to work for a common cause, is another component of a successful startup.
3. And finally, the most important issue is financing. startup ideas.

Financing mechanism

At first, investors were wary of startups, but now they have appreciated all the prospects associated with such projects.

Good ideas are selected by:

1. Business angels. They select a suitable startup to invest their own funds. These are the best places for budding startups to look. They do not manage the company’s activities or the processes occurring in it, but they are ready to invest in an idea if they understand that it is truly promising. The calculation is based on future profits.
2. Venture funds , which distribute cash invested in investment funds. Such funds most often analyze the state of affairs in an already operating company, when the risks are minimal and it is possible to trace the pattern of its activities.

How to find an investor

The most effective way is to search for an investor at conferences, exhibitions, and forums specially designed for this purpose. People who are already interested in investing gather here own funds. All that remains is to interest them in your idea. If the project is really worthwhile, there will certainly be an investor.

In addition, here you can:

• carry out an examination of the project,
• show it to a large audience,
• find future clients.

Platforms for investing in startups is also available on the Internet. Do not neglect the publication of relevant information on thematic portals.

Startup development process

Conventionally, three stages of development can be distinguished:

• Pre-startup, a stage that begins with the inception of an idea and ends with the release of the first sample to the market.

It, in turn, can also be divided into:

1. Pre-seed period - yes new idea, but there is no knowledge about further promotion of the product,
2. seed - the market situation is analyzed and an investor is selected.

• Compilation terms of reference, production of a prototype with basic functionality. Then an alpha version is released for testing. After the identified inaccuracies have been corrected, a beta version is created. Its performance characteristics are tested by a closed but wider circle of people. The product is adjusted again and after that, a public beta version is released for the first customers. Most often, the quantity of goods is very limited.
• Mass production of a product consisting of two stages.

1. Startup is the beginning and the first time of work. Usually during this period there is an increase in sales, coverage of the chosen niche, as well as consolidation of one’s position in it. Then the number of niches increases and sales volume increases.
2. Investor exit from business. Having received a pre-agreed profit, investors sell their own shares to startups or strategic investors. This is only an approximate development diagram. Investing in startups does not necessarily go through both of these stages.

Startup is a start-up company whose activities have just started. Like all newfangled words, startup comes from English and means starting.

Everything seems clear here. Created new company, it is still young and unknown to anyone, the services or products provided are still quite new. The number of employees of such a company can be from 1 or more. And in some cases, there may be no company at all. That is, it could be some kind of project done on the knee. Official registration of a company can be carried out after it becomes clear whether the business is profitable or not.

Why do you need a startup?

A startup, like any other business, must solve a specific customer problem. If there is no such problem, it will actually turn out that no one will use the product. Therefore, before starting to develop a product, you need to assess the need in the market and understand what problems the product solves.

Startup funds

Many startups start their work with their own funds. If there is no own funds, then, as a rule, startups try to raise funds from other companies and investors. If they think that the startup’s activities are profitable, they can allocate funds for the development of the startup.

Investments for a startup

Attracting external finance from investors has several stages:

Seed investments- this is the very first stage at which funds for a startup are raised by the founders or their acquaintances. These funds are able to cover the initial costs of employees, necessary equipment and so on. Sometimes, if the founders do not have finances, then various venture funds provide money for seeding.

Angel Investments- this is the stage at which the start-up is financed by investors - individuals and companies. They usually receive a stake in the business and the right to influence the startup's processes. Investor finance allows you to expand your staff, buy new equipment, expand production and, of course, speed up the acquisition of clients.

Round "A"- these are investments that are attracted from venture funds into a company with an already working product. Let's say you have created a product with your own funds that many customers are already using and making a profit. In order to increase profits and the number of clients many times over, funds are raised from various funds. This round is not final, but there may be similar ones, with their own characteristics, called letters of the alphabet.

In addition, various technological institutes, often foreign, are involved in the development and support of startups. Such institutes provide grants for startups, some of which are created by students and graduates of these very institutes.

Who are startupers

The startup has become a kind of culture in which every participant is able to contribute. These participants are now commonly called startupers. Just not to be confused with the old farts :)

Quick rise or instant fall

Perhaps the main feature of startups is its fast start, and in some cases, its quick end. Some products quickly take off and take root, others suddenly fall, sometimes without even having time to get off the ground. The bottom line is this.

New problem solving

A startup, like any business, solves a problem. This can be done in different ways. Some startups are good at solving problems, but doing it in a completely different way than existing companies using new approaches and tools. On the one hand, a startup does the same thing as other companies, but does it much better and with benefits for the client.

Flexible state

At the beginning of its journey, a startup can actively change if the currently assigned course seems incorrect.

Finance for growth and decline

To take off quickly, many startups are looking for a quick way to raise money from investors. In general, attracting investment will help a startup take off, but you need to understand that in this case the founders will have to share a piece of the pie. And you need to understand that investors are not Charitable organization. Their goal is to make money. Once your product fails to make a profit or becomes costly, investors will stop funding the product and may resell their shares.

Startup team

Alone in the field, as they say, is not a warrior. Therefore, many are in a hurry to assemble a team of specialists to work on the project, attracting shares in the project or agreeing on a certain amount.

Why do startups die?

Common causes of startup death are:

• the product does not solve any problem and is simply not needed by anyone
• ran out of money :)
• different views of the founders on the vision of the project

Perhaps this is all that needs to be said about startups. I hope this information will help those who are starting their own business.