4 Major Stages A Start-up Goes Through: What’s Your Spot?

June 23, 2022

A typical journey of a start-up begins with a simple decision of setting up a business. Whatever method an entrepreneur chooses to run their firm, the end goal is always the same: to take the company to the bigger level or to the final stage of maturity and exit. This, like any other difficult situation, does not happen overnight!

So, to begin with, Early-stage is where a person or team of likely brains has a million-dollar idea (what they say or consider) but the reality is far more challenging than this. Challenging enough is still a great idea not only take off the ground but find and fight to fit in the right set of audiences via these stages:

Early Stage

-Start-up Idea Research

-Pre-Seed

-Seed

Growth Stage

Late Stage

Exit Stage

Let’s understand in detail:

Early Stage

To make this fight for the fittest work, from carefully going through steps in the marketing research process to the potential market-product mix, troubleshooting to facing the competition further falls into different sub-categories such as:

Start-up Idea Research

The stage explains the meaning itself when most founders work over the particular idea, putting it into validation and pursue further to make it big. This is what calls a game-changer when the decision made will further construct the path for the idea toward a brighter future or a lost way out. To get your idea to the right spot in the startup ecosystem and build out its business plan, Incubators and Accelerators both stand just right to the motive.

Pre-Seed

This is the stage where your idea is already done identification and got a great clarity on the basic structure on how to work on it further. Now the financing part comes in role. It will be even more difficult to secure funding without a product in hand. If your idea is amazing, the investor may want you to build an MVP first based on the new product development strategy, and depending on how good it is, you may be able to secure funding. You’re confused at this point. What is an MVP, exactly? The MVP, or Minimum Viable Product, is a product that is only right for validating an idea and a business/revenue model, as well as attracting early adopters.

In any startup, the MVP stage is a critical aspect of a new product development strategy. It is frequently less expensive than creating a full-scale product with all of the features. This stage also aids the organization in minimizing potential risks and improving market analysis. Using a minimum viable product template will be a great help in collecting the maximum amount of validated learning about customers with the least effort done.

Once the basic elements are in place, they can be repeated as defects are discovered, and they can serve as the foundation for the product that will be created.

Seed

The seed stage is basically known as the traction stage when a start-up usually starts acquiring its very first customers and hopefully, the most loyal ones. Investors compete for a piece of the startup’s stock in this round. The cash obtained in this round will mostly be utilised for product launch, hiring, and marketing. The first stage of marketing for the startup would also begin here.

Friends and family, government subsidies, and/or angel investors are common sources of early-stage funding. The size of the investment is determined by the startup’s business plan which further sees Venture Capitalists’ interests as well as the growing market capture. Now, one must know how Angel Investor differs from Venture Capitalist before exiting the Seed stage and entering into Growth Stage.

Growth Stage

It’s time to mature. The startup has already been formed, established, and is more or less consolidated, with some predictable rewards. This is the point when the product or service starts to improve and become more competitive.

This is when the startup must concentrate its efforts on expanding its revenue and customer base. However, don’t overlook the importance of consistently developing the product in order to adapt to the startup’s growth. This is normally when more employees are hired.

External finance is crucial, but the company’s own cash flow meets many of the day-to-day requirements, therefore the cost structure must be kept under control.

Late Stage

After the company has been consolidated, it is time to expand into new markets and areas. It is a really delicate time, and a very clear and measured plan is required at this point.

This stage necessitates considerably more financial assistance. It could be done through investment or using business funds raised through startup funding rounds occurred in the growth phase. Furthermore, forming relationships with significant corporations already established in the many nations or industries to be reached could make this process go more smoothly.

IPO/ Exit Stage

After a startup’s long and tough journey from idea generation to new product development, there may come the stage of sale (or not) (exit).

We can’t just talk about a company that sees potential in it (it can be a merger or keeping both brands and firms in an independent way in the market). There’s also the IPO (Initial Public Offering), which is the process of becoming a publicly-traded company.

However, a startup does not necessarily adhere to the above-mentioned chronological order. In many circumstances, companies may see rapid growth or even an exit immediately after the development period. Every phase has its own set of problems, requiring the CEO to adapt to changing circumstances and make judgments.

This is the life cycle of startups. At EZ Innovation, we help startups grow . In which stage is your project now? Create and grow your startup at EZ Innovation.