Updated: Mar 6
In the previous post, we discussed the process of team building and finding the right team for your start-up to achieve your business goals and objective and highlighted the importance of a good team. This time we are discussing the life cycles of a startup and the challenges faced by it, knowing what is to come in the weeks, months and years ahead will be a big help to you. There are several startup lifecycle phases to be mindful of, each with its own opportunities and drawbacks
FOCUS OF THE DISCUSSION
startups by elaborating their lifecycle, which includes three main stages: bootstrapping stage, seed stage, and creation stage.
Challenge commonly faced by startups
Start-ups are like newborn baby’s for their owners. They are mostly great ideas who want to be the next Google in established or the first Microsoft in the newly founded industries. If you’re reading this you might be part of any startup or maybe a founder of a start-up but somehow if you are connected to a startup you must know, There’s a lot of work ahead of you as you plan, launch and manage your brand new business, but the process will ultimately be a rewarding one.
However, startups are diversified and complex in nature, they have their own lifecycle. Hopefully, research on startups’ lifecycle is well-developed in the last few years Since the sequence of activities and stages might vary among different startups, a holistic perspective considers here to offer a better understanding of the lifecycle of startups. These stages are as follows :
1 . Bootstrapping stages :
In this very early stage, the entrepreneur himself/herself initiates a set of activities to turn his/her idea into a profitable business.
considers a higher risk or even uncertainty level, continues working on the new venture idea, makes a team, uses personal funds, and asks family members and friends for their investment in the idea.
The purpose of this stage is to position the venture for growth by demonstrating product feasibility,
cash management capability,
team building and management,
Moreover, angel investors are more likely to invest in this stage.
2. Seed stage :
This stage is characterized by
entry into the market,
valuation of the venture, seeking support mechanisms such as accelerators and incubators, and average investments to grow the startup.
most startups the seed stage is a mess and is construed as highly uncertain
A great number of startups fail in this stage, since they could not find one support mechanism.
In the best case, they would turn to a low-profit company with a low rate of success. On the other hand, those who succeed in receiving support would have a higher chance of becoming profitable companies.
It goes without saying that valuation is normally done at the end of this stage.
At this stage, a company selling its products enters into market, and hires its first employee
entrepreneurship stop when the creation stage is ended
At the end of this stage, an organization/firm is formed and corporate finance is considered the main choice for financing the firm.
Venture capitals could facilitate the creation stage, by funding the venture.
We here address a number of common challenges among different startups. However, there are some common challenges, most of the challenges are unique, and the extent to which they affect startups differs.
(i) Financial challenges:
finance is an integral part of the startup process. Any startup would face financial issues and problems for several reasons and in different stages.
For instance, while bootstrapping the founder negotiates with family members and friends to convince them to invest in his/her idea. He/she invests in the business, and since the idea is in its early stages, he/she might need more money to expand it. Afterward the seed stage, a founder should look for angel investors and convince him/her with reasonable valuation plans. Next, in the creation stage, the founder should prepare a plan along with support documents to take advantage of venture capital.
(ii) Human resources:
Startups normally start with one founder and/or some cofounders. As time goes by, a founder needs more experts to develop the prototype, MVP, etc. Then, he/she has to negotiate with people, make a team and finally hire employees. In our previous blog, we explain everything about how important is for a startup to find the right team.
(iii) Support mechanisms:
There are a number of support mechanisms that play a significant role in the lifecycle of startups. These support mechanisms include,
a) angel investors,
d)science and technology parks, accelerators
e)small business development centers, venture capitals, etc.
Lack of access to such support mechanisms increase the risk of failure.
(iv) Environmental elements:
Last but not least is the effect of environmental elements. Many startups fail due to
lack of attention to environmental elements, such as the existing trends, limitations in the markets, legal issues, etc. While a supportive environment facilitates the success of startups, a maleficent one could result in failure. The amount of attention given to the environment for a startup is even more critical than for an established firm.
Are you ready to take the next step in your startup life cycle journey?
If you are facing similar challenges related to financing. We at Flyboat closely work with pre-seeded and series-a funding, provides nascent services which focused on empowering entrepreneurs to encounter these financial challenges fearlessly
The firm currently offers collateral needed for capital syndication, institutionalization, financial advisory and management consulting. The later includes building sophisticated financial models and robust pitch decks for entrepreneurs looking to raise funds in the near term.
so, don't wait too long for the miracle to save you !! if you want to take your business to next level and facing a problem related to finance, get in touch with us today, let's work together to take your business to next level. And also share your feedback related to this discussion in the comment box.