In recent years, the term "startup" appears more and more. Even the person who is not interested in investing in the Internet, at least once came across this name in forums or information portals. In everyday life, this term began to occur so often that many began to wonder what it is and how you can earn it.
Only not everyone understands to the end what he is. Some people call it the only way to make money on the Internet, others believe that this name can be used to designate any business project at all.
What is a startup
This buzzword appeared back in the distant 1939 year in the USA. Then two guys David Packard and William Hewlett developed one idea and called it startup, which translated from English means "start, start".
Since then, their company has evolved, and now it is known to absolutely everyone - HP. It has become a brand that produces computer and other office equipment.
Since the beginning of 90, many financiers and analysts have begun to argue about what exactly is meant by this term: the project is still at the development stage or a company that has all the chances for rapid growth and enormous development prospects in the future.
In simple words, a Startup is a short-term project that implements a business idea according to the current needs of society. That is, this is a project whose goal is the rapid development and profit at a given point in time.
But if you only rest on this definition, then it turns out that any company at the stage of its inception can already be called a startup!
As for the first mention of this term, as soon as HP was born, it meant the introduction of new ideas and new technologies that can increase the comfort in using the product. The incandescent lamp was used instead of a resistor in their first generator, which in the future made the generator performance more stable and cheaper in terms of manufacturing.
Thanks to this product has become more competitive. It turns out that a startup means exactly new technologies that have never been used anywhere before. But they have a place in the future.
Consider an example for clarity. There is a usual cafe where waiters serve. But if you decide to open such an institution, where the submission of orders will be fully robotized, then this can already be considered a startup. Since this business idea already contains an innovative basis.
That is, this has never been on the market before.
Another significant difference between a startup and any other business is that investors invest their money at the inception stage, and not when the business has been successfully flourishing for several years. In fact, investors invest their money in the idea. In the hope that it will "shoot out" and become very promising and in demand in the future.
Many people still mistakenly believe that a startup is generally any project that exists on the Internet. Although the truth is there. After all, the modern network is developing so fast that almost every second innovation is connected with the Internet.
Distinctive features of startups
The development of all such projects should be dealt with only by a new company, which was just born. It is not known to anyone, it is not a recognized brand. This is a team of like-minded people working on one project. Each member of this team has its own responsibilities. They work to achieve their goals and improve the quality of life in the future thanks to their idea and its realization.
Not all ideas can be realized, so most startups are doomed to failure. And all because they did not work out their concept. Or did not offer something really original and necessary to the modern market.
Such projects always need investments. After all, their staff mainly consists of a small team of young students who do not have the money to implement their ideas. And the task they have is completely different - to engage in the implementation of their tasks. Therefore, at first, all startupers are persistently looking for objects for funding. After all, without money, they will not be able to move on and realize their ideas written on paper so far.
In Russia, this area is not yet as strongly developed as in the West. And if abroad it has already become the norm, then in the Russian Federation start-ups may face three common problems.
The first is the money problem. It arises at the very first stages of the start-up project. In our country, at times, those entrepreneurs who have already established themselves in terms of excellent reputation cannot even find investors. What to say about the very novice students.
If you take money from a bank, then Russia does not have such attractive interest rates on loans as in the United States. Therefore, it becomes unprofitable to take large sums of money. Crowdfunding is another way to get investment, but it is still not as developed in our country as abroad. Venture funds put forward too tough conditions for young students who want to implement their startup. Well, hoping for financial assistance from close friends, relatives or family is also not worth it. In addition, you can later spoil the relationship.
The second problem of the Russian sphere is a long-term implementation. In the US, such a project will develop a maximum of six months. If he never began to make a profit, then it is closed. In Russia, this period can drag on for years. As a result, all investors' money is lost, and the project becomes completely unprofitable and completely hopeless.
Stages of development startups
Any business has several stages of development. But these divisions are not clear delimiters, they are approximate. Depend on goals, scope and many other factors.
At this stage, the idea only appears in the minds of people who want in the future with its help to make life even better and more comfortable than before. Right now, a team of people is starting to gather, who will go together to achieve this goal.
A detailed action plan is being developed, options are proposed for finding investors and other ways to get money. Further, a future company logo must be invented.
Even this requires investments, but at the inception stage they will be minimal. For the most part, this is the personal money of a team of like-minded people who so strongly believe in their idea that they are ready to invest their own savings in it.
You can try to find a large investor at this stage, but it is almost impossible. After all, few people can take a word without any clear evidence.
In another way it is also called the sowing stage. At this point, there is already a team, each member of which clearly knows all their duties and tasks, and is also ready to begin their implementation as soon as possible. There is a plan of action, investors, and the first steps have already been taken in advertising the future project.
The most important task at this stage is to search for additional sources of financing and improve the system.
This stage is the most difficult. After all, if on the first team for the most part lived with dreams, now the brutal reality of their implementation has begun.
It is especially difficult to find additional investors. We have to make a lot of calls (mostly useless), persuade to invest, convince that the project is really promising, and so on. Nobody will just give money, weighty arguments are necessary.
It can even take a month or two to negotiate. Therefore, it is important to try to ensure that during this time the team has achieved some tangible results and has demonstrated even a small profit. This may have a positive effect on the decision of investors.
In the meantime, as time goes on, you need to pay for the work of employees, rental of premises, consumables and so on. Often, startups work at a loss. It would be ideal to find a Business Angel who would believe in the idea and invest an impressive amount of money in the project.
Crowdfunding would help, but only abroad. Yet in Russia, few people from the people will be thrown off into the development of a foreign company.
Early project development
A startup at this stage is also called the Alpha version. At this stage there is already a full-fledged company. It consistently makes a profit, occupies its specific niche in the market. People use its products and even regular customers have appeared.
The main task for the company is the final formation of services and products, the identification of inaccuracies, errors and their complete elimination in the next releases of goods. In general, bringing the process to perfection.
At the same time, active advertising continues, which will further introduce the product to the market.
At this stage, the search continues for new sources of funding. But this is much easier to do than in the first two stages. Nevertheless, investors see results and can already assess the prospects. The costs of promotion and advertising are becoming even greater. And not always the profits cover them. In most cases, startups at this stage are not yet able to go to breakeven.
Another name for this stage is the Beta version. The company is already making its net profit. The advertising program has been worked out in detail, everything is coordinated and ready for the next stage - the expansion of the volume of products released to the market.
Right now, new stores are opening to introduce products into mass production, new contracts are being signed for the sale and delivery of goods, and so on.
As for investments, at this stage it is time to limit venture funds, and more to enter into contracts with future partners.
If the owner wants to sell the company, then at this stage, the search begins for an investor who acquires a controlling stake. At the same time, the start-up continues to work on other projects, implementing new business ideas.
Well, now the startup is already turning into a ready and wide business that brings great profit. It is no longer a company with a few young students, but a full-fledged corporation, which has almost a leading position in the market in a particular industry.
All work is perfectly organized, the staff is a highly qualified specialists with higher education and extensive experience in this field.
At this stage, the issue of own shares begins, which in the future will bring profit to their owners. But there is a second option - to sell a ready-made business for a very large amount of money.
Sources of financing startups
Life is not an easy thing. And often there are such situations when a unique idea appeared, and there is no money at all for its implementation. This is a common problem for startups, who have a fresh and modern outlook on life, but they don’t have enough money not only to translate ideas, start-ups, and sometimes even to life.
But in our world everything is interconnected. And often there are reverse situations when, on the contrary, there is free money, but there are no ideas for their realization. But I don’t want to invest them in the first project that I’ve got that is unlikely to make a profit. Well, you already understood that we are talking about investors.
In this section of the article I will tell you about the seven most effective ways to get money for your start-up projects.
- Personal money.
Often, these tools are used at the earliest stages of the birth of a startup, when only one idea appeared, the business plan has not yet been developed (or only at the initial stage of development).
Talking about attracting major investors is stupid so far, since the company still doesn’t represent anything to attract people.
Therefore, project participants invest their own savings. They believe that their project will be embodied, and will be a success. Therefore, we are ready to make such sacrifices.
- Friends and relatives.
Startups resort to such material assistance at the next stage. The costs are already much higher, but the first profit has not yet been seen. It’s too early to turn to outsiders for help, so the only way out is close friends and relatives. By the way, they can be the first consumers of your products.
According to statistics, this source of investment in Russia is one of the most common.
This word is called national funding. That is, some events are organized where voluntary fundraising and charity take place. People optionally give a certain amount for the development of the project, while not demanding anything in return.
The most common form of crowdfunding is fundraising via the Internet. A certain site or forum is created, the number of an electronic wallet or a bank card is prescribed, the goals and what the money collected is spent on are clearly stated.
This method is very popular abroad. In Russia, it only began to develop from the 2007 year, and is not yet very popular.
The most famous portals are kickstarter in Europe and the USA, boomstarter and planeta in the Russian part of the Internet.
Participants who donated money can count on rewards in the form of small memorable thematic gifts, receiving a small fraction or percentage of future profits in the company, and so on.
For example, the famous Barack Obama has collected money for his first stage of the election campaign thanks to crowdfunding. And the amount at that time exceeded 250 000 dollars!
- Bank loan.
This is the last thing you better count on. In Russia, not the most favorable conditions for lending. At first, startups already have large expenses; they should not be increased by high interest on bank deposits.
Remember that such projects have high risks. And not the fact that all ideas come to life, become promising and popular, and all costs will pay off. And if the project goes bankrupt, then you will remain in even greater debt than at the start of your startup.
If you take money on credit, it is better to do it at the later stages of development, when the business is already flourishing and brings its first, albeit small, but still profit.
- Business angel
These are independent investors and investors who agree to contribute funds at the very early stages of project development. Sometimes they are even allowed to participate in business development.
Absolutely all startups without exception dream of finding such a business angel. Indeed, in addition to the impressive amount of money, which is so necessary at the initial stage of project development, such people often possess useful skills and experience. They are interested in the development of the project, so they are ready to provide completely free professional assistance.
But for this in the future you still have to pay. As business angels can request an impressive stake in business management.
If the final goal of a startup is to sell a ready-made business, then this will be an ideal option, as the business angel will buy the remaining share of the company. Well, if not, then it is better to formalize the relationship in advance from a legal point of view and secure with treaties. Otherwise, there may be serious disagreements in the future.
Most of all startups are designed for quick implementation without continuing serious business. Often such projects are created for the development of a mobile application. For example, Apple constantly buys such startups each year with 1 sums worth a billion dollars.
In the US, the concept of a startup is treated more professionally. It is always a team of like-minded people from several people, each of whom is engaged in a specific task. So it is possible to achieve success much faster and more quickly. In Russia, the entire startup can pull one person.
In general, startups for investors are the most risky business. But it is they who are able to bring the highest income in a short time. Therefore, investors constantly agree to take such risks.
- The state.
Sometimes in business development you can count on the support of the state. Although lately it has not been particularly willing to favor funds for the development of small business.
In Russia, every citizen has the right to receive a grant subsidy for the creation and development of their own business. For this, though, you will need to collect a bunch of documents.
Also, each region of the country creates its own unique plans in support of small business. Particularly welcome projects that in the future will contribute to the improvement of the living conditions of the country.
- Venture fund.
This phrase was formed from the English word venture, which in translation means a risky business. These are specialized funds that were originally created for investing in risky projects. Well, startups are particularly risky.
In order to somehow compensate for their risks, venture funds sometimes set conditions that may not be entirely beneficial for projects.
Ideas for startups with minimal investment
So, now you know where to get money for opening your own project and making even the most daring ideas come to life. Now let's move on to some ideas for starting your own business.
YouTube's own channel
If you are a creative person, you have a rich imagination, and you are able to shoot high-quality videos, then you can try to become a popular video blogger. It is no secret that they can earn huge money on advertising and viewing their videos.
Themes can be very diverse. Most importantly, it should be interesting, exciting or useful. To the audience wanted to watch your video to the end, subscribe to your channel.
An additional program after income can be an affiliate program, which brings a very good income to many people who have their own popular website or video channel.
Here you do not need to open your own online store. You can resell products from other manufacturers. Especially popular is the idea of resale of goods from China with a high mark-up.
It stands for environmentally friendly products. Many people in modern society prefer to buy exactly those products that do not have in the composition of various GMO additives or other flavor enhancers. They want to take care of their health, so they are ready to overpay for useful products.
For this reason, there is a great demand for companies that will take responsibility for the supply of products from environmentally friendly areas. The basic principle of this project is quite simple. You find a manufacturer, enter into an agreement with him, and then you think over delivery options. Overall, not so difficult. But on the other hand, it’s not so easy to organize everything for beginners.
Here you can sell anything you want: shoe covers, contact lenses, disposable umbrellas, drinks, food and much more, for which you have enough imagination. The main thing that it was claimed.
Often such vending machines are placed in shopping centers.
To bring such ideas to life, you need to have certain programming skills. But if there are any, then it will not be difficult to create a product. It remains only to come up with an idea and begin to implement it.
Many such startups are bought up by such big giants as Apple or Google for huge sums. But remember that your idea should be unique and interesting!
If you have certain skills in jurisdiction, accounting, understand psychology or are an expert in any other popular field, you can consult on Skype. It will be convenient not only for you, but also for your clients. Since there is no need to go by transport to the other end of the city.
Such projects are engaged in the creation of websites from scratch and subsequent resale to other interested buyers. You can also buy a ready-made site, do its promotion and SEO optimization, and then resell at a more expensive cost.
If you know perfectly any languages (especially specialists in knowledge of Chinese or Japanese are required), then you can open a company to translate texts from customers online.
How to quickly find an investor for a startup
First of all, you should determine for yourself the type of investor you need:
- one that will help with money;
- or one that will also provide professional assistance in its consultation and take an active part in managing your startup.
To do this, simply present the final result of your business, how you see it at the final stage of development: the sale of a ready-made business or the continuation of work on it.
The second point will be the creation of such an original idea that will interest a potential investor with its prospects. If it is banal, then you will never find an investor.
It is also important to make a clear and detailed business plan. The investor should see that his investment will pay off and after what period it will happen. Blur in the business plan will cause a lot of doubts.
Excellent help and beautiful presentation with infographics. You should also have some charisma to infect an investor with your idea.
Well, in order to find an investor, use the following recommendations:
- If your startup has more social and social ideas, then use crowdfunding. For such projects, this method of finding money can be very effective.
- in the case of scientific, technological or industrial orientation of your future project, it makes sense to actively visit specialized sites and forums. On such portals, apart from advice and communication with colleagues, you can find investors who are also in search of new promising ideas for profitable investment.
In the modern world, startups have become a real profitable industry. Interest in such projects will never be lost, because they carry something innovative and modern. Perhaps an idea from any group of students will be able to change the whole world in the future!
But it is also important to remember the statistics. About 70% of all projects is doomed to failure in the first year of its activity. The rest, in the second year or longer. And only 5-10% will be able to become successful and give investors a huge profit, for which they agreed to take such huge risks.
The Russian start-up market has just started to develop, it will have to catch up with the American and European levels for a long time. Therefore, it may be worth paying attention to investors specifically for American projects. They will be able to bring you more tangible profit than on the Russian market.
We hope that in Russia the sphere of startups will actively develop, which will open up new opportunities for investors in terms of receiving passive income!