What is a Startup?

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Podcast: It's a Small Digital World After All

The word “startup” seems to sound from everywhere, gaining more and more popularity over the last several years. Seems like every other student has one’s own small startup company in the basement and works day and night to reach success. But what is a startup, exactly? Everyone has one’s own vision: some people think that startups have something to do with IT companies, some consider startups to be inseparably connected with innovation, whereas some people use the word “startup” meaning small business. All these descriptions are somehow true, and at the same time they don’t fully define this notion.

Startup is a young developing company, designed to provide a new service or product, usually evolving in the conditions of uncertainty. Innovation is the key thing that distinguishes startup from any other developing enterprise. This fact explains why startup industry is often being associated with information technology: it is one of the few areas that have huge prospects for innovation.

What Makes a Startup Successful?

As startups are numerous and the stories of success are few and far between, it is quite interesting to take a closer look and highlight some features which can determine whether a startup is going to be prosperous or will become a failure:

  1. A practical idea. Surely, quite a lot of people can come up with innovative ideas, yet innovation without a practical application is doomed to be left without the attention of potential investors and customers.
  2. Flexibility. While big corporations and companies prefer using and making the most of the products that are already successful, and pay little attention to the fresh ideas of their workers, startups are notable for being able to adjust to the changing needs of the target audience.
  3. Youthful enthusiasm. Statistics show, that 25 is the average age of a startup entrepreneur. This explains the courage and the maximalist approach that is pushing enthusiasts to take risks, work long hours with passion and devotion that are beyond imagination.
  4. A well-organized team. Having an ambitious and promising idea, even if it is thoroughly represented in a business plan, is not enough. A good team, even a small one, has the tasks distributed among its members according to their professional and personal strengths. It is important for the members of a team to supplement each other.
  5. A decent investment. Money talks, and startup industry is not an exception: anyone who has a perspective startup idea should find proper financing.

Modern Gold Rush

While fledgling entrepreneurs are trying to impress potential investors with dazzling presentations of their projects, the investors are searching for ingenious ideas to support. The interest of the entrepreneurs is obvious: who wouldn’t want to see their project be brought to life, but what makes venture capitalists spend their, at times astonishing sums of money, on numerous risky endeavors? The thing is that profits from one successful startup can cover the expenditures for several other investments over and above.

However, venture capital funds are not the only sources of investment for startups. The initial capital can also be obtained from individual investments and crowdfunding. There are plenty of platforms for crowd financing and numerous individual investors, who are also called Angel investors. Angel investors provide initial capital and support during the early stages of the startups in order to get convertible debt or ownership equity.

Obviously, in order to get initial funding, the entrepreneur should properly introduce one’s project to the potential investors. It is quite possible that several people have come up with the same idea, thus it is crucial to ensure the investors, who, probably already know all about startups, and have seen hundreds, if not thousands, of presentations, that the suggested implementation of the idea is the most rational one. Thus, the presentation should be consistent and clear, without too much technical details, and at the same time without vague promises of fabulous and immediate wealth.

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Oliver Swanson, major in Project Management, enthusiast writer and editor at Pro-Papers, a writing service for any kind of educational papers, where you can even buy a business plan.