How to make your startup successful? Secrets from IIDF
A representative of The Internet Initiatives Development Fund, Nikita Yuriev, made presentation at the Internet of Things conference on September 29. Expert's report was dedicated to reasons of startups failures.
According to the experts, nowadays 90% of new companies cannot succeed in promoting their product. Why is this happening? What mistakes do they make? All that he presented during his speech.
Standard stages of a startup development
What is a startup? It is a temporary company established to search for a profitable and scalable business model with limited resources, the purpose of which is the fastest growth.
Nikita Yuriev mentioned that almost all startups go through certain stages:
1. Building a set of hypotheses.
2. Checking technical feasibility of the project.
3. The development of a functional prototype that is similar to the final product.
4. Launching a small-scale production.
5. Arranging mass production and delivery, bringing the company to profit.
At each stage, except for the first one, startups are trying to sell their product.
The reasons of start-ups failure
At any stage of development and promotion, things can go wrong. Mainly, product developers make common mistakes:
- premature scaling;
- “hanging up” on one of the stages;
- negative customer’s experience;
- lack of attention for details.
There are few examples below.
ZANO proposed the idea of developing a self-learning smart drone. They raised $ 3.5 million on Kickstarter, but were unable to create a product, as they have not made sure, if it was even possible to implement the project.
LUMOS startup designed a backpack with solar panels and even attracted $ 0.4 million investments by angel angels. However, the company's founders could not find a client segment, as too many efforts were made on development while the market scales were overestimated.
COOLEST offered a thermal bag for picnics. The idea was excellent, that’s why Kickstarter raised $ 13.2 million. However, the cost of production turned out to be much higher than the sales revenues. This happened because the company skipped small-scale production stage and launched commercial batch right away.
BUCCANEER 3D PRINTER is an example of failure caused by the overestimation of its own production capacities. The company has created a home 3D printer that has collected $ 1,4 million of investments on Kickstarter, but could not provide delivery to all customers. Needless to say that the startup turned out to be a disaster.
How IIDF works with companies
IIDF representatives believe that any startup can fail if it is developed and promoted in a wrong way. This applies even to those companies that have developed useful and high-quality product.
A few steps to the successful development:
1. At the idea stage, the startup should involve in educational programs.
2. When creating a mockup, designers are to use fab labs, youth innovation creativity centers or hackspaces. At this point, startup is already in need of funding. Therefore, it should be involved in acceleration programs and encourage investments of business angels.
3. At the stage of prototype developing, founders of the young company should continue to use fab labs services and involve experienced industrial designers. Also, investments are to be actively attracted.
4. When you start a small-scale production, the company is to find manufacturing partners and attract seed investments.
5. At launching of the mass production, it is also important to find a partner organization with suitable production facilities and encourage venture capital in order to boost business growth and development.