In recent years, the term "startup" is found in everyday life so often that many have begun to wonder what it is and how you can make money with it. Even a person who is not interested in investing in the Internet, at least once met with this word on forums or information portals. Nevertheless, not everyone has a complete understanding of what a startup is. Some people associate it with the way of earning money only on the Internet; others believe that this name can be used to describe any business project.
However, one thing is common - the startup phenomenon is associated with the modern market, which is characterized by variability and complexity. This requires businesses and entrepreneurs in various fields to constantly seek new opportunities and use new approaches to doing business. A startup combines the characteristics that allow it to function optimally in the complex conditions of today's market.
The word "startup" comes from the English concept of start up - "start" and means a newly created or not yet officially registered but planning to become official, a company that builds its business on innovation or innovative technologies, has limited resources (as human and financial) and plans to enter the market. In this case, innovative technologies can be global (i.e. this innovation will be an innovation for the whole world) or local (i.e. this technology and idea will be borrowed, but will be an innovation in a particular region or country).
It means that the newly created company has a business idea that needs development and promotion, but its creators are still busy researching the market and finding funds for its implementation.
Startups are sometimes companies that aim to offer consumers innovative products and services, but are still in the process of finding the best business technology and financial support. The future of such companies looks uncertain.
A startup can be considered any company, regardless of its field of activity, but if we narrow the scope of this concept to its core, it is logical to call startups only initiatives in the field of high technology, Internet business and related disciplines.
History of the startup
The concept of "startup" originated in the 30s of last century in America. It was then that two students - Hewlett and Packard - developed an idea and called it "start up". It turns out that the company has a great future - today it is known as Hewlett-Packard, or HP - a well-known brand that produces computers and other office equipment.
Initially, the newly created company meant the introduction of new ideas and new technologies that can increase the comfort of using the product. The first generator they released used an incandescent lamp instead of a resistor, which in the future made the performance of the generator more stable and cheaper in terms of manufacturing. This has made the product more competitive.
Therefore, with the example of HP, we can conclude that in simple words, a startup is a short-term project that implements a business idea that contains an innovative basis and meets the modern needs of society. That is, it is a project aimed at rapid development and profit at a given time. It is important to emphasize that this term means new technologies that have not been used anywhere before, but are taking place in the future.
The most striking examples of startups in the world are world-renowned IT corporations: Microsoft, Apple, and Google. The history of these giants really started small - with a small group of like-minded people who wanted to put their ideas into practice.
This is one of the special features of a startup. Only a new company that has just been born should develop projects. It is not known to anyone, it is not a well-known brand. This is a team of like-minded people working on one project. Each member of this team has responsibilities. They work to achieve their goal - to improve the quality of life in the future through their idea.
The main differences between a startup and the usual forms of business
Since a startup is a process of implementing a completely new business idea in a short time with a minimum amount of financial resources, several fundamental differences distinguish a startup from a regular business.
- Course on a new product, like waylight marketplace. Most often, the essence of a startup is to promote innovative ideas. As a result, it can compete with even the most powerful corporations, which in most cases do not burden themselves with innovation and continue to offer products and services that have long proven themselves. That is why any startup is a step into the unknown.
- The startup is based on an interesting business idea. It is no secret that without an idea there would be no business at all. However, in a startup, the idea has special value. If it promises prospects, it can be very, very expensive.
- Creators. In most cases, young people (potential carriers of innovative ideas) take part in the creation of a startup and its further activities.
- The initiative group works for the idea, not for profit. It is difficult to develop an endeavor alone. Therefore, a whole team led by an ideological leader takes part in creating a startup. Each member of this team performs certain functions. They are well aware that they will not be able to achieve everything at once. Nevertheless, they are interested in their work and believe in the possibility of making a profit.
- Problems with funding. Apparently, the lack of funds to implement the idea is the main feature of the startup. This is not surprising, because enthusiastic young people who have a lot of energy, but no money create startups. That is why thеy need investors - people who are interested in fresh ideas and help implement them by investing in these projects and expecting a profit.
Types of startups
Startups are usually classified on two grounds - by product characteristics and market. There are the following types:
"Successful copies". This group includes numerous domestic projects, which to some extent are clones of foreign ones. First, it is social networks. As it turned out, such copies are very promising.
"Aggressive aliens". This group brings together ideas focused on capturing a segment of the market and driving out competing companies. The introduction of the product on the market can be realized through its exceptional price advantage.
"Dark Horses". This is the name of startups whose prospects are not clear due to their innovations. On the one hand, their creators are at great risk, trying to promote them, and on the other hand - if successful, they are guaranteed a huge profit.
Stages of startup development
- Sowing stage, or Pre-Seed stage. At this stage, the search for an idea and the development of technical methods for its implementation. The initiative group analyzes the market, writes a business plan, and formulates terms of reference. Next are: prototyping the product, testing its versions, studying demand and finding sources of funding. If an investor cannot be found, the project "fades". Unfortunately, this is exactly what happens to most startups.
- Startup, or Startup Stage. So, the investor is found: the product can be released on the market. Being in market conditions, the product must prove its superiority over its counterparts. However, at this stage it is not so easy to beat competitors. Startup creators need to show perseverance, demonstrate creative thinking and business acumen. Right now, the project is at greatest risk. If the target audience remains indifferent, that is the end of the story.
- Growth, or Growth Stage. Suppose the project survived the competition. The product is in demand and is slowly capturing the market niche that its developers have focused on. It's time to break even and bring some profit to investors.
- Expansion, or Expansion Stage. The goals reflected in the business plan have finally been achieved. Nevertheless, the developer does not stop there - it continues to promote its offspring in new markets. Its position is no longer threatened: it is recognizable, its products are in stable demand, and incomes are gradually growing.
- Exit, or Exit Stage. When the company reaches the peak of its development, the investors who financed the project give up their share in the business and sell it to big players. This step brings them a good profit. We can say that for this moment they are investing in a promising business. However, some investors retain their share and use it as a source of permanent income.
In today's world, startups have become a real profitable industry and a new promising form of business. Observing the realities of modern life, it is safe to say that over the next few years the following areas will be actively developed: financial services, environmental technology, medical equipment, biopharmaceutical, media projects, social networks, telecommunications, semiconductors, health, consumer goods and services.