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'Startup' redirects here. For other uses, see.A startup or start-up is a company or project initiated by an to seek, a scalable. While refers to all new businesses, including self-employment and businesses that never intend to become registered, startups refer to the new businesses that intend to grow large beyond the solo founder. Startups face high uncertainty and have high rates of failure, but a minority of them do go on to be successful and influential. Some startups become, i.e. Privately held startup companies valued at over US$1 billion.
Contents.Startup actions Startups typically begin by a founder (solo-founder) or co-founders who have a way to solve a problem. The founder of a startup will begin market validation by problem interview, solution interview, and building a (MVP), i.e. A, to develop and validate their business models. The startup process can take a long period of time (by some estimates, three years or longer), and hence sustaining effort is required. Sustaining effort over the long term is especially challenging, because of the high failure rates and uncertain outcomes. Design principles Models behind startups presenting as ventures are usually associated with design science.
Design science uses design principles considered to be a coherent set of normative ideas and propositions to design and construct the company backbone. For example, one of the initial design principles in effectuate is 'affordable loss'.It's better to first make a must-have for a small number of users than a nice-to-have for a large number of users.
It is much easier to get more users than to go from nice-to-have to must-have.Heuristics and biases in startup actions Because of the lack of information, high uncertainty, the need to make decisions quickly, founders of startups use lots of and exhibit in their startup actions. Biases and heuristics are parts of our cognitive toolboxes in the decision making process, and they help us to take a decision as quick as possible under uncertainty, but sometimes become erroneous and fallacious.Entrepreneurs often become not only about their startups but also about their personal influence on an outcome (case of the illusion of control). Entrepreneurs tend to believe they have more degree of control over events, discounting the role of luck.
See also:Startups need to learn at a huge speed before running out of resources. Proactive actions (experimentation, searching, etc.) enhance a founder's learning to start a company.
To learn effectively, founders often formulate, build a (MVP), and conduct.Business Model Design With the key learnings from market validation, design thinking, and lean startup, founders can design a. However it's important not to dive into business models too early before there is sufficient learning on market validation. Paul Graham said 'What I tell founders is not to sweat the business model too much at first. The most important task at first is to build something people want. If you don’t do that, it won’t matter how clever your business model is.' Founders/entrepreneurs. Main article:Founders or co-founders are people involved in the initial launch of startup companies.
Anyone can be a co-founder, and an existing company can also be a co-founder, but the most common co-founders are founder-CEOs, and others involved in the ground level of a new, often. The founder that is responsible for the overall strategy of the startup plays the role of, much like in established firms.The language of considers co-founders to be 'promoters' under. The definition of 'Promoter' includes: (i) Any person who, acting alone or in conjunction with one or more other persons, directly or indirectly takes initiative in founding and organizing the business or enterprise of an issuer; However, not every promoter is a co-founder. In fact, there is no formal, legal definition of what makes somebody a co-founder. The right to call oneself a co-founder can be established through an agreement with one's fellow co-founders or with permission of the board of directors, investors, or shareholders of a startup company. When there is no definitive agreement (like ), disputes about who the co-founders are can arise.Self-efficacy refers to the confidence an individual has to create a new business or startup. It has a strong relation with startup actions.
Entrepreneurs' sense of self-efficacy can play a major role in how they approach goals, tasks, and challenges. Entrepreneurs with high self-efficacy—that is, those who believe they can perform well—are more likely to view difficult tasks as something to be mastered rather than something to be avoided.Stress. Startups are pressure cookers. Don’t let the casual dress and playful office environment fool you. New enterprises operate under do-or-die conditions.
If you do not roll out a useable product or service in a timely fashion, the company will fail. Bye-bye paycheck, hello eviction.Iman Jalali, chief of staff at ContextMedia Entrepreneurs often feel stressed. They have internal and external pressures. Internally, they need to meet deadlines to develop the prototypes and get the product or service ready for market.
Externally they are expected to meet milestones of investors and other stakeholders to ensure continued resources from them on the startups. Coping with stress is critical to entrepreneurs because of the stressful nature of start up a new firm under uncertainty. Coping with stress unsuccessfully could lead to emotional exhaustion, and the founders may close or exit the startups.Emotional exhaustion Sustaining effort is required as the startup process can take a long period of time, by one estimate, three years or longer (Carter et al., 1996; Reynolds & Miller, 1992). Sustaining effort over the long term is especially challenging because of the high failure rates and uncertain outcomes. Founder identity and culture Some startup founders have a more casual or offbeat attitude in their dress, office space and, as compared to executives in established corporations.
For example, startup founders in the 2010s may wear, and other casual clothes to business meetings. Their offices may have recreational facilities in them, such as, tables, football tables and, which are used to create a fun work environment, stimulate team development and team spirit, and encourage creativity. Some of the casual approaches, such as the use of 'flat' organizational structures, in which regular employees can talk with the founders and chief executive officers informally, are done to promote efficiency in the workplace, which is needed to get their business off the ground. In a 1960 study, stressed that punishments and rewards for uniformity in the workplace are not necessary because some people are born with the motivation to work without incentives. Some startups do not use a strict hierarchical structure, with executives, managers, supervisors and employees. Some startups offer employees incentives such as, to increase their 'buy in' from the start up (as these employees stand to gain if the company does well).
This removal of stressors allows the workers and researchers in the startup to focus less on the work environment around them, and more on achieving the task at hand, giving them the potential to achieve something great for both themselves and their company.Failure The failure rate of startup companies is very high. A 2014 article in estimated that 90% of startups ultimately fail. In a sample of 101 unsuccessful start ups, the top five factors in failure were lack of consumer interest in the product or service (42% of failures); funding or cash problems (29%); personnel or staffing problems (23%); competition from rival companies (19%); and problems with pricing of the product or service (18%); more than one factor can be cited as a cause for failure so these numbers add up to more than 100%. In cases of funding problems it can leave employees without paychecks.
Sometimes these companies are purchased by other companies if they are deemed to be viable, but oftentimes they leave employees with very little recourse to recoup lost income for worked time. Re-starters Failed entrepreneurs, or restarters, who after some time restart in the same sector with more or less the same activities, have an increased chance of becoming a better entrepreneur. However, some studies indicate that restarters are more heavily discouraged in Europe than in the US.
Startup training. See also:Many institutions and universities provide on startups. In the context of universities, some of the courses are entrepreneurship courses that also deal with the topic of startups, while other courses are specifically dedicated to startups. Startup courses are found both in traditional economic or business disciplines as well as the side of information technology disciplines. As startups are often focused on software, they are also occasionally taught while focusing on software development alongside the business aspects of a startup.“The best way of learning about anything is by doing.” – Richard BransonFounders go through a lot to set up a startup. A startup requires patience and resilience, and training programs need to have both the business components and the psychological components. Entrepreneurship education is effective in increasing the entrepreneurial attitudes and perceived behavioral control, helping people and their businesses grow.
Most of startup training falls into the mode of experiential learning (Cooper et al., 2004; Pittaway and Cope, 2007), in which students are exposed to a large extent to a real-life entrepreneurship context as new venture teams (Wu et al., 2009). An example of group-based experiential startup training is the Lean LaunchPad initiative that applies the principles of customer development (Blank and Dorf, 2012) and Lean Startup (Ries, 2011) to technology-based startup projects.As startups are typically thought to operate under a notable lack of resources, have little or no operating history, and to consist of individuals with little practical experience, it is possible to simulate startups in a classroom setting with reasonable accuracy.
In fact, it is not uncommon for students to actually participate in real startups during and after their studies. Similarly, university courses teaching software startup themes often have students found mock-up startups during the courses and encourage them to make them into real startups should they wish to do so. Such mock-up startups, however, may not be enough to accurately simulate real-world startup practice if the challenges typically faced by startups (e.g. Lack of funding to keep operating) are not present in the course setting.To date, much of the entrepreneurship training is yet personalized to match the participants and the training.Startup ecosystem. A can contribute to local entrepreneurial culture.The size and maturity of the is where a startup is launched and where it grows to have an effect on the volume and success of the startups. The startup ecosystem consists of the individuals (, advisors); institutions and organizations (top research universities and institutes, business schools and entrepreneurship programs and centres operated by universities and colleges, non-profit entrepreneurship support organizations, government entrepreneurship programs and services, ) and and top-performing firms and startups.
A region with all of these elements is considered to be a 'strong'. One of the most famous startup ecosystems is in California, where major computer and internet firms and top universities such as create a stimulating startup environment, (where is located) and, home of (a top research area), numerous, leading entrepreneurs and startup firms.Although there are startups created in all types of businesses, and all over the world, some locations and business sectors are particularly associated with startup companies. The of the late 1990s was associated with huge numbers of internet startup companies, some selling the technology to provide internet access, others using the internet to provide services.
Most of this startup activity was located in the most well-known startup ecosystem -, an area of northern California renowned for the high level of startup company activity:The spark that set off the explosive boom of 'Silicon startups' in Stanford Industrial Park was a personal dispute in 1957 between employees of and the company’s namesake and founder, Nobel laureate and co-inventor of the. (His employees) formed Fairchild Semiconductor immediately following their departure.After several years, Fairchild gained its footing, becoming a formidable presence in this sector. Its founders began leaving to start companies based on their own latest ideas and were followed on this path by their own former leading employees.
The process gained momentum and what had once begun in a Stanford’s research park became a veritable startup avalanche. Thus, over the course of just 20 years, a mere eight of Shockley’s former employees gave forth 65 new enterprises, which then went on to do the same.Startup advocates are also trying to build a community of tech startups in with organizations like NY Tech Meet Up and Built in NYC. In the early 2000s, the patent assets of failed startup companies were being purchased by people known as, who assert those patents against companies that might be infringing the technology covered by the patents. Startup investing. Diagram of the typical financing cycle for a startup companyStartup investing is the action of making an investment in an early-stage company.
Beyond founders' own contributions, some startups raise additional investment at some or several stages of their growth. Not all startups trying to raise investments are successful in their fundraising.In the United States, the solicitation of funds became easier for startups as result of the. Prior to the advent of, a form of online investing that has been legalized in several nations, startups did not advertise themselves to the general public as investment opportunities until and unless they first obtained approval from regulators for an (IPO) that typically involved a listing of the startup's securities on a. See also:Some startups become big and they become unicorns, i.e. Privately held startup companies at over US$1 billion.
The term was coined in 2013 by venture capitalist, choosing the mythical animal to represent the statistical rarity of such successful ventures. According to, there were 279 unicorns as of March 2018, and most of the unicorns are in China, followed by the USA. The unicorns are concentrated in a few countries: China (131), US (76), India (14), UK (7), Indonesia (4), Argentina (4), Singapore (3), Switzerland (2), South Korea (2), Hong Kong (2), and 13 countries (1 each). The largest unicorns included, ByteDance, and.See also.References Wikiversity has learning resources about.