Well, understanding a difference between a startup and other business entity is important these days as most of the startups are getting lot of external supports from the regional government, startups hubs, accelerators, business incubators and other investors & mentors. Why there is so much engagement and focus on Startups?
Startups – Growth and Success
“An entrepreneurial venture which is considered as new, fast-growing business, with scalable business model and that target specific markets by offering an innovative product, process or service” – a typical definition of a startup.
But we should be aware that a newly founded one does not in itself make a company a startup unless it is capable to grow fast and that is the most important aspect for a startup. There are some typical terms like Unicorn is a startup company valued at over $1 billion. A Decacorn is used for those companies over $10 billion, while Hectocorn for companies valued over $100 billion (An Unicorn Map of US from CBInsights).
The growth is not at all easy without a proper startup ecosystem, which consists of individual entrepreneurs, venture capitalists, angel investors, mentors, institutions and organizations, business incubators and business accelerators. Startups usually need to form partnerships with other firms to enable their business model to operate for sure.
A startup hub usually provides such platform for connections and collaboration and usually operates on regional basis. Recent startup hubs Europe‘s overview for startup ecosystem across Europe is shown below.
Take a look around some world’s best startup hubs to know more.
There are a lot of efforts and contributions from business incubators and business accelerators for the startups. Many entrepreneurs or startup founders often turn to a startup accelerator or startup incubator for helping other startups.
Accelerators programs usually start with an application process, but most of them are typically very selective and usually have a set of timeframe in which individual startup spend, anywhere from a few weeks to a few months working with a group of mentors and experts to build out their business. Startups are also given a small seed investment, and access to a large mentoring network in exchange for a small amount of equity.
Startup incubators begin with startups that may be earlier in the process and they do not operate on a set schedule. Some independent incubators also can be sponsored by VC firms, government entities, and major organizations.
Difference on Business Accelerators and Incubators shown above is taken from Help for ACCA and CIMA Studies.
Startups – Slowdown and Failure
We cannot ignore the facts and statistics on the startups, which is an important part of the economy and startup scale-ups definitely effect on the economy, society and innovation in the world. But, while 40-50 percent of startups are dying within first five years of their inception, it could be a wrong conclusion to make about the economy on the basis of the number of these startups. And yes, because of this there has been already a slowdown in economic growth as well, once such clear indication is from US where is the highest number of startup ecosystems.
Statistics also says that 80-90 % fails are ‘in genera’. In other word nine out of ten startups are failing on consistently.
There are numerous articles publishing regularly on the failure of startups, lessons learn from failures. Even one can get through many of the startup failure stories, after all failure is the path to success. Learn from your own the failure is definitely sounds rigid but learn from other’s failure is not so easy for sure. If we try to collate all the failures reasons, stories and analysis from post mortem, we can definitely capture some major and common concrete challenges, as shown below.
If one start considering the failure percentage, they could realize that, it’s overflowing and it is indeed necessary to find some real valuable solutions or barrier to bring down this failure in the future. But the story is still going on the different path…
In spite of so many potential entrepreneurs involved in startups, so much outside encouragement, efforts and helps, startups keep on failing. Business accelerators, incubators, grinds, the whole startup ecosystem is behind the supports, doing incredible efforts for their success; trying to help the startups, building them, nourishing them, mentoring team, teaching them but the results remain the same for last few years.
Why? We keep asking this for long time now. If we need to consider startups as a significant part of economy, this is the time we need to rethink.
Startups – Transformation
If we take a close look into the post mortems, reasons does not looks too complex; so what is stopping us currently? There are a lot of efforts from the startup ecosystem on education & learning, mentoring, networking, funding (one of the major constraints), investing, supporting in all major respects.
But there are limited or no such efforts in place to work together with those 90% startups, who are making magnificent effort in their journey but because of some trivial mistakes, (major reasons mentioned before) they get failed. Why not transforming those startups completely so that they keep on succeeding in their remaining journey?
For sure there is a necessity to have something or somebody who can helps transforming these startups not only through education, mentoring, networking and funding but also follow up with their experiences, working closely together with these startups in their businesses to face the challenges and crack them.
In this era of transformation where all the organizations are in the process of transforming their processes, business, people; there is also a need for a transformation for the startups, working together for getting the right strategic vision, focusing on customers, products, markets and other challenges. Also being able to anticipate what are the customer expectations and what is the best way to achieve it. For a complete successful journey, these startups need advisory in every aspect, in every part of their experiences.
Idea of introducing Startup Transformers during this stage could be a solution to some extend; for avoiding such circumstances which can lead to a failure. A startup transformer helps a startup to transform completely into a successful business unit; work closely with them, collaborate for them with partners, customers and other peers, helping them by resolving challenges and gradually reform them in achieving the success.
Typical activities of a startup transformer could be varied, but majorly need to be centralized on overcoming the challenges and there should be also a strong focus to provide a platform for networking, community, events and collaboration. Below shown such activities of a startup transformer.
Instead of only analyzing the failures; instead of only learning from the other successful startups; instead of only following successful business guidance and mentorship; it is also necessary to start working together with these startups in their journey to make them completely successful. And this can only be achieved when one can start engaging with them not only in their initial stages but in their entire journey, preparing them to avoid the mistakes, work together to overcome challenges, choose a right path for these startups and transform them to be a successful business unit.
A lot of collaboration is needed with different relevant partners, advisors, customers; a lot of efforts need to be put in understanding market & strategy, right business model with scalability, knowing competitors, to develop ideal product and services; making better relationship with customers, better managing team and funds.
Another important factor where some strong efforts need to be in place, is the lack of innovations; the benefits of being innovative in the journey of a startup, it’s growth and scalability of its business is solely depend on the original business model not on a cloned one. It is also crucial for us to keep innovation alive as it is essential for fostering economic growth.
Idea does not work by itself; the reality is only possible whenever one take some initiative from that.
Startup Transformation is no more an idea yet, HRTech Conscience, a venture project on Disrupt HR (majorly engage and focus with HR Technologies) has taken a step forward by applying these concepts and idea for meaningful and valuable results. Currently collaborating with several startups, partners and customers from a diversified portfolio and already become the first Startup Transformer. There could be a success or a failure, but gaining a great experience from this journey of unknown disrupt transformation is definitely valuable for the future. Let’s help changing the world into a new direction with contribution from all of us!
About the Author:
Soumyasanto Sen — Blogger, Speaker and Evangelist in HR Technology who try to think Out of the Box!
Professional Consultant, Manager, Advisor, Investor in HR Tech. Focusing on Strategies, Mobility, Cloud, Analytics, UX, Security, Data Protection, Developments and Integration in HR Technology & Digital HR.