Starting a new business or startup is no mean feat. While there has been a spurt in the number of startups that have mushroomed in the last few years, it involves tremendous efforts, from conceptualization, to research, to recruitment, to funding, to sustaining a new business. While it all starts with an idea or a concept, this has to be backed by extensive research and data which delves into the viability of the business and its growth prospects. Once this has been finalized, there are other elements like external environment, funding, recruitment, marketing that need to be taken care of. While funding is most critical, there are various avenues available to the fledgling business today compared to a few years ago, where initial funding was limited to borrowings from friends and families. There are different kinds of investors who can help startups grow from stage one till it reaches to a point where it is open to public – IPO (Initial Public Offering) stage.
All three stages of startup life cycle are important for survival and need constant funding. Business Angels and Accelerators typically invest during the first stage of the life cycle Accelerators like Angelpad, Muckerlab, Techstars, Alchemist and Startx provide additional benefits which include mentorship, advice in exchange of a percentage of equity in the startup. During the scaling up of operations or the second stage of the startup life cycle, super angels and early stage venture capitalists come into play. Funding is primarily through reward based crowd funding and equity crowd funding, where the investors become the company shareholders, entitled to future returns of the company. There are online portals such as Kickstarter and Indiegogo, which provide a connecting platform for startup owners and potential investors (sources of funding). Then, there are investors who believe in Syndicate investment where they invest in collaboration with reputable bankers and multi-nationals. In the final stage of the startup life cycle, the company ownership is given to external investors in the form of stocks. It is more of an exit strategy for venture capitalists before the company goes in for an IPO. As per Your Story Research, there has been a 300% growth in the amount raised in the first half of 2016 with leading investors like DST Global, Alibaba, Foxcom, Steadview capital funding potential startups like Flipkart and Snapdeal.
The next important element is getting the right person to do the job. Talent acquisition and retention is critical as it has a direct bearing on the output of the company. While pre 2012, companies used to depend on external sources for their recruiting needs, this strategy no longer works. Today, the existing employee is a better fount of prospective hires and online networking platforms like Linkedin, GitHub, StackOverflow, open source contributions are also proving to be an excellent recruitment ground. Hence, emphasis on internal brand building cannot be over- emphasized. Startup infrastructure is yet another component that is propelling this growth. A good startup infrastructure comes with high speed internet, comfortable seating, robust Wi-Fi, flexible audio-visual systems, security to protect IP, sports room, conference rooms and lot of ventilation. With the growth in the number of startups, the way one works has also undergone a change. Co-working, collaborative working, more relaxed workspaces with recreational facilities is now a norm. Last and not the least, a conducive geo-political environment is important for the growth and sustenance of the startup ecosystem. World over, countries are supportive of this initiative and providing incentives, tax breaks and encouraging environment to support this growth. Swiss Government is providing federal loans to cantons that are willing to offer incentives to new businesses. StartUp Britain, has been providing inspiration and support to aspiring entrepreneurs. Start-up India movement was announced earlier this year, unveiling an action plan to encourage startups. NASSCOM’s 10,000 startups program to incubate, fund and provide ambient support to impact 10,000 technology startups in India, by 2023 has already set up a warehouse in Vishakhapatnam to encourage budding entrepreneurs and nurture their ideas. Our next post will cover some of these initiatives.