Know How Startups Thrive More on Ideas & Strategies Than Seed Funding
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.There is no dearth of creative minds which are capable of ensuring the most innovative and successful entrepreneurial ventures. But yes, there is definitely a dearth of the investors who can fund the growth of the budding business ventures. The lack of seed funding or startup capital, required to fanning the substantial growth of the newly founded businesses, leads to the faltering of countless young entrepreneurs. Starting a company is never too easy; the journey is full of hardships.
Convincing the investors that the big idea would yield results has always been a tough row to hoe, because “No” is not a new word for startup founders to hear. But, then around $3.6 billion has been made across 411 startup deals during the first half year 2018 (Source: Economic Times). This investment accounts only quality startups that were able to stand out at the seed stage and now making commendable progress in the market ecosystem. Getting linked to one of the leading investors, it’s another type of promotion and advertising for the startup. The big question here is— is funding the only success story or a failure nightmare for a startup?
The Big Idea turns tiny into Behemoth
The business idea is the very first thing that foresees the future of a startup venture. What service or product will the startup company deliver to the customers? How value-adding will it be when compared to hundreds of competitors? Where does the innovation come into the picture? What sector is going to be the beneficiary of the new offerings? All these things count for something big—bigger than the initial random series of ideas.
Innovative Business Model if not Unique
With every startup launched, there might have been hundreds of predecessors and successors may come swarming around. How unique is the business model of a startup makes it distinct and accompanies it to the success? As per the survey report of IBM Institute for Business Value which was done in collaboration with Oxford Economics 2017, the failure of 90% of startups incorporated is guaranteed and lack of innovation is one of the main reasons why. One, two or more—the similar business ideas come to many people across the globe. But, one unique business model never comes to one and all, and Google is a living example of this. When Google was launched in 1998, many were scratching their heads to design an advanced web search engine. But, nobody seemed to have done it like Google Search Technology. Initially business of Google was to create such algorithms that help online users find the best answer to his query from the ever-growing pool of online content. Today, Google obtains 95% of its revenue through search engine advertising and Adsense.
Right Time should be awaited for
In the year 2015, Bill T. Gross who is the founder of American startup studio Idealab revealed in one of the TED Talks that the timing of startup is very important because only it makes startups succeed. It had been 3 years since then, but his concept is still valid today. Last year, the Delhi-based Fintech startup—Cardback miserably failed because Indian consumer market, as well as the investors, were not prepared enough to facilitate its swift growth. Founded in the year 2012, Cardback was an online platform which could make recommendations for the best credit card to pay for services and products. But, it was quite ahead of its competition and ran out of demand. In India, only 27 million credit cards are being used in comparison to 740 million debit cards. As Cardback died a slow death, its co-founder Nidhi Gurnani said, “The market we were targeting was not mature enough in India as most people in the country do not have multiple credit cards.” (Source: Moneycontrol.com).Therefore, it is very important for the startups to design their business model as per the timings, market trends and demands.
Brand Awareness & Marketing rise to the occasion
Where Brand awareness & Marketing is important for every MNC and SME, it holds tectonic significance for startups. Startups enter into the market with a name never heard and an identity never recognized—they should heavily invest in their brand awareness efforts and marketing strategies. Six years ago, Dollar Shave Club uploads a video where the director of the company tells the viewers why their razors are great in industry. Picking up the boring topic, they created a hilarious and most entertaining product commercial ever which has been viewed over 22 million times until now. It grabbed a worldwide attention and made the organization a huge success. After this groundbreaking video marketing success, the company welcomed 45 new employees, became the worth of $615 million in 2015 and had been acquired by Unilever for $1 Billion in all cash. Startups need to learn from this video marketing strategy and need to sell the customers what they need.
Overfunding dies a slow death
Though research studies have enumerated the lack of funding and finance as one of the common reasons why startups die a slow death, the overfunding of startups is another. In June 2017, Jawbone, the American tech company which produced Bluetooth headsets, speakers, and wearable fitness trackers, witnessed a pathetic demise becoming the second largest startup failure. In the year 2014, it gained valuation of around $3.2 billion the time when top venture capitalists including Andreessen Horowitz, Khosla Ventures, Kleiner Perkins Caufield & Buyers, and Sequoia heavily funded the firm with millions of dollars. One of the reasons presumed about this dramatic failure is the inability of Jawbone’s fitness tracker products to remain in the league.Startups should focus on improving their products, services, and operations while doubling up their marketing efforts. Surely, funding is one of the crucial pre-requisites that wheel down the steady progress of the startups, but it is not the only one.