Quentin Guignard

@QuentinGuignard

Startup Lifecycle : 4 key steps

What are the key steps in the lifecycle of a startup? Initially published in French : https://thenextfrench.com/

The genesis

The adventure of a startup is much more than an idea. Often overestimated, having a great idea is not a goal in itself. The greatest entrepreneurs will tell you that the most important isn’t the idea but the execution.

To start building a project you need resources. Initially, human resources (co-founders, engineers, …) and financial resources are required.

Achieving the product market fit

MVP (minimum viable product) is the simplest possible solution of the product or service. It is the first viable product that can be tested and used. The MVP, by definition, does not satisfy all the expected functionalities but offers the flagship functionality of the product or service.

The market’s reaction to the MVP makes it possible to understand the strengths and weaknesses of the solution. The startup must then rework its offer to establish an MVP n°2. Thus, the offer is built step by step in order to limit costs and satisfy demand.

The Product market fit is the moment when the offer matches the demand. When the product market is achieved, efforts, hitherto concentrated on the product, turn to distribution and growth.

“As long as you do not reach the product market-fit, pivot!”

The growth

When an alchemy is created between the product and the market, the growth curve takes off. This solution must be scaled up. It is at this moment that the elements of the business models are structured in a sustainable way.

Within the startups, the new star profile is the growth hacker. As a growth specialist, he uses his technical skills to develop business. He exploits the existing tools and methods that it derives to satisfy the needs of growth.

Extremely successful growth allows successful startups to become centaurs, which means companies valued at more than $ 100 million. The world’s biggest successes reach a higher stage, the unicorns, valued at more than 1 billion dollars.

How is a startup valued? The valuation can be roughly determined on the basis of three years of turnover, weighted by a coefficient specific to the sector of activity. Thus a company Y which generated 3 million turnover in three years, whose activity is to develop a Saas (coefficient 10), could be valued about 30 million dollars.

Ex: Y = $ 3 million (turnover) x 10 (Saas coefficient) or Y = $ 30 million.

The exit

The exit marks the end of the “startup” period. There are two potential outflows: acquisition or IPO. When a company enters the public market, it is no longer considered a startup.

Are Facebook or Google still startups? Although age, size or industry are not critical factors, Facebook and Google are no longer startups. Indeed they are now listed on the stock exchange. The IPO, or the acquisition of a startup, means the end of its “search for a business model”, which excludes it from the denomination “startup”.

The life cycle of a startup

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