Ukraine has been experiencing a startup boom for some time now. Many new products are released independently or in business incubators, but only a few survive. In order for business ideas to start bringing in profit, they must be useful and understandable in terms of marketing. The project must be well organized, get normal financing, protect from competitors, and do not forget to take into account a number of risks.
What does this newfangled word mean? The name comes from the English start up – “to launch”. That is, a startup, in simple terms, is a rapidly growing and gaining momentum business. It has a business idea that should “take off” in the near future, and it needs investments. The undertaking can relate to almost any field of activity. Although, most often, this is the name for the creation of new products in the IT sphere.
The product must be new and in demand. It requires Greece Phone Number List teamwork and, most often, a fairly young age of the founder. To achieve success, an ambitious new player develops a steel character, knows how to take risks, quickly makes the right decisions and finds a common language with the right people, especially with investors. At one time, such successful companies as HP (Hewlett-Packard), YouTube, Google, Wikipedia , and many others were startups.
How to create a startup?
Innovative businesses are high-risk in terms of investment, they can start off well and bring in considerable profit. On the other hand, 3/4 of the projects that founders try to implement fail. There are a number of factors and reasons why a startup will either “take off” or not. The reason for failure may be that the market is not ready to accept the product, the negative experience of those who tried to do something similar earlier is not taken into account. Another reason is founder burnout.
Very often problems arise due to insufficient development of the project at the initial stage. For a company to become successful, it is not enough to simply come up with a brilliant idea . It is necessary to work out 5 points well:
- Decide on the direction of activity. Ideally, it should lie at the intersection of three components: the owner’s interest, his skills, and the ability to earn money.
- Find a problem that the project can solve quickly and without delay. Where there is a customer pain and problem, there are always opportunities.
- Analyze the market – understand whether the product will be in demand. The latter does not have to be grandiose, it must be necessary. Test the product on a carefully selected target audience (TA).
- Make a basic decision – think through the minimum set of functions for the product. You can start with it , and improve the design with functionality later.
- Build a business model, forecast profits and understand whether there are opportunities for development.
How does a startup work?
The development of a startup is closely related to investment. Therefore, we will consider the development of the project through the prism of finance. Investments together with development are divided into rounds. There are early rounds – pre-seed (initial, pre-seed), seed (seed), the so-called Round A – and late (Round B, C, others).
At the pre-seed stage, founders usually invest their own money, test the business idea and the possibility of turning it into a product. Then they make the first sales and, if they are successful, apply for seed investments. At this stage, you need to prove that this idea can become a fast-growing business. After that, Round A begins – investments in the development of a good product.
Venture capital firms support startups at specific stages, so there is no point in applying for seed funding if the investor specializes in later stages.
Searching for investments takes up to 70% of the time. Here you need to make lists of potential investors, prepare investment documents, conduct correspondence and meetings. At the same time, you need to develop so as not to waste time and not miss an idea. Cooperation with a thematic incubator or accelerator will significantly speed up the process of obtaining investments. Investors are frequent guests of such platforms, and many of them organize their own accelerators.
How to evaluate a startup
This may be necessary at several stages: to obtain vital investments or to sell a successfully launched idea. There are several methods for determining the value of a business, they involve the analysis of a number of indicators. Most often, such projects are assessed using the future profit method according to a hypothesis, which is partially confirmed by the first sales. To conduct an assessment, it is necessary to obtain data on revenue, risks, profitability, unprofitability, and other parameters – usually from another company in the same business area.
As a result, entrepreneurs and investors receive a visual tool on the basis of which a decision is made: is this the best startup for their purposes or not. Financial reports, tangible and intangible assets, company size, market conditions, competitive advantages are accepted as initial documents for evaluation.
For profitable startups, the following basic methods are used:
- Discounted cash flow. This is a calculation of future cash flows, often used for very young businesses.
- Valuation using multiples (coefficients) based on data on a comparable company.
- Calculation of net asset value.
It is still more difficult to evaluate unprofitable businesses. For this purpose, the Berkus method is usually used, which involves evaluating key parameters. Among them are the business idea, prototype, team, strategy and sales plan. The method of summing up risk factors, scoring, and venture capital is also used.
The team of our patent and legal company (PLC) SION, along with these methods, uses Due Diligence – a comprehensive audit that helps determine financial and legal solvency for obtaining investments. Due Diligence is just beginning to be used in Ukraine, but we have managed to gain good experience in its use. It is worth being prepared that different methods can show different figures.
How to Promote a Startup
In order for the project to “take off”, it will have to be constantly developed, prove the viability of the idea, promoted among the target audience. There are already proven and effective channels for marketing promotion. For example, among them:
- contextual advertising;
- search engine optimization (SEO);
- social networks, YouTube and your own blog;
- crowd marketing to increase awareness;
- publications in thematic media;
- placement on platforms and in directories (say, ProductHunt or dou.ua);
- thematic conferences, exhibitions and other specialized events.
There are special platforms on the Internet for investment industry database marketing promotion and attracting financial support. For example, the venture accelerator EX1P and others. At the same time, the choice of a startup promotion model directly depends on its industry and target audience. These factors must be taken into account when developing a marketing strategy.
How to register a startup
A startup is a set of intellectual property objects, the rights to which must be registered to protect against competitors. It is imperative to register patents for a technology or product. First, a patent search is done, which will protect against the violation of existing patents. Working out and registering an idea down to the smallest detail at the earliest stage will save you from collapse in the future, so a thorough patent search should not be neglected.
Patenting will allow financial donors to take a more serious look at the idea. It will also protect the project organizers from unfair actions of investors. Not to mention protecting the product from copying and reproduction by competitors. The registered rights can be sold or transferred. A unique technological idea is patented, and all parts of the project are registered:
- Technical (as an invention or utility model );
- Graphic (logo as a trademark or industrial sample; website layouts, photos, illustrations as objects of copyright);
- Text (the name, domain name is registered as a TM; text descriptions – as a literary work);
- Audiovisual (as objects of copyright).
Before launching , a startup must be legally registered, this is very important for legal activity and investment attractiveness. You can register bj lists as an individual entrepreneur/private entrepreneur (usually for the IT sphere) or LLC. Depending on the market in which the project is planned to be implemented, this can be done in Ukraine or abroad.
Choosing a Jurisdiction for Startup Registration
It is important to decide on the country: some jurisdictions are more attractive for registration than others. The choice of country and legal status will affect the taxation scheme and investment attraction. It should be noted that foreign investors reserve the choice of jurisdiction for registration of the invested business. For our part and from the point of view of experience, we suggest initially registering the business under the laws of Great Britain.
Our company deals with patenting, registration of TM, objects of copyright in Ukraine and other countries. In some cases, the process is not fast (patenting lasts up to several years) and always requires payment of fees. However, legal protection of rights begins from the moment of filing an application, and not after the issuance of a security document. Therefore, we advise you not to delay.
