After 3 years of doing the Acceleration Program, we understand that not every entrepreneur understands the concept of a startup’s life cycle. For each stage of the business, founders need to know what tasks they have to focus on, what challenges they will face and how to get to the next steps of the journey.
This lack of awareness of what stage your startup is in leads to various consequences. It can either be wrong focus or wrong approach in order to develop the business, especially when you decide to have someone coming on board with your business.
There are lots of articles about a startup’s journey on the Internet. And after many researches, combine with the ingenuity we gained throughout the time we work with startups’ community, let us share to you the step-by-step stages that all startups will go through. The journey starts by:
Every entrepreneur begins their journey with an idea. You have this great idea, it doesn’t have to be a unique one, all it has to do is to solve the problem that exists among you and your community. We are living in a world where every idea is taken, with 1,500 startups in the world founded daily (Forbes) and approximately 3,000 startups in Vietnam only (Vietnam’s Innovative Ecosystem). As an investment holding, VIISA has screened an average of 100 applications each batch, for 6 batches graduated. And what we can tell you is, the idea is not what matters the most, but problem/solution validation, product-market fit, business model, team and timing are the determinants making a startup successful.
However, at this stage, you haven’t known if your idea is going to work out or not. Therefore, the next step is to test if your idea is really what the market is in need of.
2. Market Validation
The very first step of this stage is to learn about your competitors and the market. You need to find out if there is any company that does the same thing as you with your product. The searching can be in your target market, or outside of the religion. If you find a successful product which is the same as yours, it will be your proven model and you can believe that there is a need for your solution. However, if there are so many competitors, you need to study the market. Has the market been too crowded? Is there a chance for you to bite that cake? What set you different from others? Are those differences your competitive advantages that you believe your product is going to scale?
Grab wasn’t the first ride-hailing in the world, however, Grab found this huge potential market in SEA, and then surpassed Uber and dominated the whole religion.
Goong, VIISA Acceleration Program Batch 2 startups, is a Vietnamese startup in location services for B2B map in Vietnam and confident enough to join Google, with their local know-how and market focus.
If you are sure you want to take this journey, decide who will be your customer segments. Try to gather advice and opinions from the target segments on whether they are going to use your product or not and does it help to solve their problems. Based on these insights you gained, you can decide to continue with your idea or to pivot. And then, register a company and the website domain if needed.
The success of your business depends on many factors. However, the need for the product is the key thing to prove that your idea is good enough for you to spend at least months or even years, and even fortune, for making it ready to launch
3. Build MVP
Once you are certain that your idea is possibly going to be something big, generate it to the viable one. Build prototypes, make it visible in order to get some of your first customers. The main purpose of developing an MVP, not an actual full-feature product, is to gain feedback from your customers. This early evaluation will help you learn far more about the insights of your customers, what they need and how your product should adjust in order to get ready to scale up.
At this stage, you may need some fundings from your friends, family or from angel investors. And at the same time, you should choose your co-founder(s) and gather the core team. Having a great team plays a big role in the success of the startup. With our expertise in fund-raising and having seen so many startups failed, we know that a startup with a fair idea and a team with the capabilities often becomes more successful, than a startup with a unique and “wow” idea, but without the right team to make that idea happen.
4. Get ready
Polishing your product and start to focus on how to scale your business. At this stage, you may consider joining incubators or accelerators in order to equip yourself with the essential skills and knowledge needed to get ready to enter the market.
Normally, an acceleration program lasts from 3-6 months, aims to train founders on various aspects of the business, from building vision, mission, set goal, leadership to accounting, financial modeling and deal structure. Some of the programs will give you small funding for your operation.
Joining these programs also get you some small fundings and also help you get in front of the potential investors who may get onboard your business. Scaling up is costly. You may need to raise funds in order to survive and be prepared for the next step of your journey.
5. Go to market and scale-up
Make a go-to-market strategy and launch your product. This is said to be the most challenging step of a startup. Whether a startup fails or succeeds, often falls into this stage. According to FATbit and MEREO, startups will face challenges related to these factors:
Customer segments: your product is creating value for whom, and who your target customers are. Customer segments are set based on similarities such as age, income, characteristics, etc. Focusing on wrong customers can cost you much in this very challenging stage of your business.
Channels to acquire customers: Different customer segments need different approaches. Lose focus on the right channels will cost you time, effort and money. In order to define which channel to use, you can compare each channel by the scale of the targeting customers you can reach, the cost you have to pay and the ability to evaluate data from those channels (Brianbalfour)
Competitors: You have to understand your competitors and find the market gap in order to set yourself apart from the rivals, learn what they are better at and try hit the right spot that your competitors are lacking to get more customers.
At this stage, you will start generating rapid revenue and cash flow from your customers. At first, the revenue may not be sufficient to cover your operation. This period can last for a few years before you reach that breakeven point. From then on, enjoy the profit, think of some new segments and hire more people to expand your business.
Often after witnessing dramatic development on the business for a certain period of time, and your business does not fail or go bankrupt, your business will step into the maturity stage, where the growth rate will slow down. Entrepreneurs will have to face 2 choices: whether to push for further expansion or exit the business by IPO or M&A.
And here begins, a whole new journey.
There is a must of understanding which stage your startup belongs to. At VIISA Acceleration Program, with our expertise and available resources, we are more than eager to help startups having MVP to get ready to scale up. Founded by Dragon Capital and FPT, we have a deep understanding of fund-raising and big investors and partners network. We put our trust in Vietnamese founders, and commit to giving our best to help the Vietnamese startup ecosystem.
Of course, not every entrepreneur becomes successful. Growing your own business is never an easy task. Entrepreneurship is no doubt a harsh and painful journey, yet grantee an enlightening and meaningful experience to all.