Startup Development Stages: [7] Steps to Become a Unicorn

Everything about startups

What is a Startup

Different sources didn’t agree on what a startup company is. We want to mention two definitions that complement each other from our point of view.

  • the company has lack capital to move onto the next phase of business, so founders have to look for capital from a variety of sources like venture capitalists
  • the company will probably fail with a probability exceeding 90%

Difference between startup and small business

A logical question that follows is: Why do we call a starting company “a startup” instead of “a small business”? However, a startup is not the same as a small business. Here is why:

The dream of a Startup is to become a Unicorn

A startup becomes a unicorn when it reaches a value of over $1 billion on paper. Becoming a unicorn is the cherished dream of founders and this is the point at which a company ceases to be considered a startup and moves into a new stage. There are more than 800 unicorn companies around the world, like SpaceX, ByteDance (TikTok), Revolut, etc.

Pillars of success for startups

7 Startup Stages to Become a Unicorn

#1 Stage: Everything starts from a Good or Great idea

In the very beginning, there is only an idea. That idea must be scalable, have an option to be embodied in a product or service, and solve some pain points of your potential customers.

  • A shared vision of the project
  • No existing product

#2 Stage: Analysis and Pre-Seed Funding

The stage is devoted to various analysis processes. The analysis comprises competitor analysis, target audience description, creation of buyer personas, identification of channels to promote a product, draft of a financial plan (including fixed and variable costs and revenue streams). There is still no official organization, only a team that makes research about the viability of the initial idea and sets some measurable and concrete goals.

  • Who is your audience, and how do you plan to reach them?
  • What are the profiles of your competitors? Is your product/service different from them? If yes, how?
  • Do you have a monetization plan? If yes, what is your main source of revenue?
  • Complete market and competitor analysis
  • No existing product

#3 Stage: Funding search or Seed Stage

Once the startup team is certain that there is market demand for the product/service, new options of raising some external money to boost the growth of the startup appear. It is called the “seed stage” because teams need money to grow as a seed needs the water.

  • Why should people invest in your project?
  • Can you demonstrate your product by developing a prototype?
  • No existing product
  • Business plan development
  • The first acquisition of external money

#4 Stage: Market entry and Series A funding

  • What are the options to improve the product and increase user satisfaction?
  • Does the startup need more money to grow?
  • Does the product have a comprehensive feedback and metrics system?
  • First customers
  • Real user feedback
  • MVP development
  • Comprehensive metric system
  • Series A funding

#5 Stage: Growth stage and Series B funding

The fact of reaching that stage speaks volumes. That means that the startup has successfully entered the market and filled a niche.

  • How to establish processes that maintain the company’s growth?
  • Is the company completely staffed?
  • Are sales processes effective enough to generate a stable flow of revenue?
  • How to make a business model more profitable?
  • Working product
  • The startup scales up
  • Processes

#6 Stage: Expansion stage

  • enter adjacent markets in the same geographical region by providing new products or services that are complementary to the original one.
  • Is the company ready to go international (processes, finance)?
  • The startup is not a highly risky venture anymore
  • New sources of funding thanks to the lower risk

#7 Stage: Exit phase

This phase is optional. It’s a very complicated stage that offers startups two options for the future:

  • A startup goes public with an IPO.

A Reliable Partner is the Best Way to Success

The software development process for startups differs from the ordinary process for big companies. Startups need experts with relevant technical skills and expertise for all startup stages as well as reliable partners who can help to make the right decisions. SumatoSoft has worked with startups for 10 years and managed to become a reliable technical partner for many of them. Startups can rely on us because of our principles of work: transparent processes and communication are of high value for us. We build long-term relationships with our clients from the very beginning of our cooperation: the business analysis phase. We want to become a reliable partner for you too.

Conclusion

If you run a startup there are 7 startup stages that you are about to go through before you succeed. Although a usual startup will likely fail with more than a 90% chance, it’s not an obstacle since even 1% of success chances would be enough to start an activity that can lead to something glorious — we truly believe that.

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