Blog, Enterprise Creation, Entrepreneurship Theory

6 Stages of the Startup

When we work with start-ups its important to provide an assessment on their journey within the startup lifecycle. Understanding where a startup is in their lifecycle allows us to assess their progress, providing mentoring to the founders and also provide a vision. The startup lifecycle is made of 6 stages of development, where each stage is made up of levels of substages, allowing for more granular assessment which helps pinpoint the main drivers of progress at each stage.

1) Discovery (or Pre-Seed)

Goal: This phase is all about discovering and validating whether you are solving a meaningful problem and whether anybody would “hypothetically” be interested in their solution.
Milestones: Founding team is formed, many customer interviews are conducted, value proposition is found, minimally viable products are created, team joins an accelerator or incubator, Friends and Family financing round, first mentors & advisors come on board.
Management Team : Founder(s)
Funding Requirements : £500 – £5,000 (always depends on the business type and technology requirements)
Business Development Milestones : Validated Problem and potential solution
Typical Funding Resources : Cash
Average Valuation : Nil (Typical Technology Start-up)
Time: 3-6 months (average for all types)

 

2) Seed

Goal: Development of a minimum viable product which can be shown to potential customers, sponsors and customers.
Milestones: Founding team is formed, many customer interviews are conducted, value proposition is found, minimally viable products are created, team joins an accelerator or incubator, Friends and Family financing round, first mentors & advisors come on board.
Management Team : (Core team) Founders, co-Founders, Mentor,
Business Development Milestones : Letters of intent or some preliminary relationships
Funding Requirements : (Seed Capital) £10,000 – £50,000
Typical Funding Sources : Friends and Family financing round, first mentors & advisors come on board
Average Valuation : £10,000 – £100,000
Time: 5-12 months (average for all types)

3) Validation

Goal: The Startup is looking to get early validation that people are interested in purchasing their product through orders or pre-orders with deposits.
Milestones : refinement of core features, initial user growth, metrics and analytics implementation, start-up funding, first key hires, pivots (if necessary), first paying customers, product market fit.
Management Team : (Entrepreneurial Lieutenants) At least one real manager, Founders, Mentors and Advisors
Funding Requirements : (Startup Capital) £100,000 – £300,000
Typical Funding Resources : Business Angels, Grants,
Business Development Milestones : Paying Customers
Average Valuation : £1m
Time: 9 months – 1 year

4) Established / Efficiency

Goal: The company refines the business model and improves the efficiency of their customer acquisition process. The business should be able to efficiently acquire customers in order to avoid scaling with in-effective processes.
Milestones: value proposition refined, user experienced overhauled, conversion funnel optimized, viral growth achieved, repeatable sales process and/or scalable customer acquisition channels found.
Management Team : (Risk takers) At least three real managers, Founders, Mentors and Advisors
Funding Requirements : (Venture Capital) £300,000 – £500,000
Typical Funding Resources : Venture Capital
Business Development Milestones : Profitable customers, Strategic Partners
Average Valuation : £3m
Time: 1 – 3 years

5) Scale

Goal: Startups step on the marketing drive and drives global growth very aggressively.
Milestones: massive customer acquisition, back-end scalability improvements, experienced executive team formed, process implementation, establishment of departments.
Management Team : Executive Board, Management Board, External Advisors
Funding Requirements : £1.2m – £5m
Typical Funding Resources : (Bridge Funding)
Business Development Milestones : Historical results against plan, Focused Business Plan, Strong Processes and Controls,
Average Valuation : £3-15m
Time: 3-5 years (average for all types)

 

6) Sustain

Goal: Develop a portfolio of customers and products, either based on one technology or a set.
Milestones: diversification of customers and revenue streams, agile product teams, public and investor relations
Management Team : Executive Board, Management Board, External Advisors, Product Teams
Funding Requirements : (IPO) Large A Round
Typical Funding Resources : IPO
Business Development Milestones : Multiple Revenue Streams,
Average Valuation : £10-30m

Blog, Enterprise Education, Training

Entrepreneurs don’t like forms

When you work with so many universities, you get to see many aspects of Enterprise Education, some good some bad. But there is one aspect which staff and students have issues with and its ERDF funded projects. These projects are designed by someone who normally has long gone to another institution and therefore the narrative is long lost on why they embarked on this journey, however across the sector we see a series of common issues:

Timing – When a student joins a university and wants to start a business on graduation. They pop over to the enterprise department and see what support is available for graduates and notice its “part funded by the EU”. The one question they forget to ask is “Will this be available in three years when I graduate”. If they did ask, the answer would be “I am not sure as its a three year project that started last year” or something like this. How can the student plan to start a business at that university if the support is not going to be there?  The length of the project is not in line with the academic programme and the University has not committed to provide a portfolio of support for students with or without ERDF funding.

Journey – The journey through enterprise education and support to create a business is not a linear one. The education is needed at the point of most impact, i.e, just before they need to undergo that task. You need book keeping at the start and completing the business tax return at some point within the first year. Some students require a considerable amount of social media training within the execution of the marketing plan, while others need very very little. These rigid projects can not coup with this approach.

Support Blocks – The majority of ERDF project require support to be in six hours blocks, signed off by the student on paper (That’s the EU Eco credentials crashing and burning). This requires a fixed “we are going to tell you” how to run a business approach. This limits the support to providing six hours on each subject and forcng everyone to attend every session to build up a set of paper work which evidences the “learning”. Whereby setting the objective to get people to sign forms in person. The majority of staff are only concerned with getting students to sign forms. The use of mixed media and social peer development is important for any long term business development and yet does not fit into these six hour form signing blocks.

Scope – The requirements of the project requires the scope of the project to be limited, which is understandable. However, a students startup comes in all shapes and sizes, which may not fit within the scope. The money is set out in a way which 2 years ago made sense, but now the economy, technology and business trends have moved on makes little sense to conducts the project with this set scope. The projects need to be able to adapt to the needs to the customer while keeping the aim, to support students in starting a viable business.

Location – The majority of projects are based around a location, so within the region of the university. The funding for the project comes from two sources, the EU and the students fees. So if the student intends to develop their business back home in another region, then they are not eligible for support under the ERDF project. The university does not offer support in getting them on a project in their region and nor does the university offer to support the student with the part of the funding which they are matching with the EU. So this student loses out.

One Stop Solution – Students want to go to one person and get all the support available for starting a business. They don’t need several projects which work on different aspects of enterprise and are separate. The supermarkets know this, the government know this (www.gov.uk), so Universities need to understand this and develop the enterprise support personal to be a single team where students meet the first person and can get access to the portfolio of support available at this institution. The ERDF project can not be the only support available and there has to be more offered to ensure the needs of students is met.

I know these issues are not entirely placed by the EU, who need to understand why these projects are providing little long term benefits or culture change within the institutions. The majority of the problems lies with those that create the proposals, the managers of the project and their briefs. Basically it needs further development of a working relationship with people who understand enterprise education with those who understand how ERDF projects should and could be run.

Blog, Motivation Techniques

Besties : Steve Jobs and Bill Gates

I recently watched a few videos featuring Steve Jobs, the first one was his launch of the iPhone (1.0) (https://www.youtube.com/watch?v=9hUIxyE2Ns8) which is such a classic. In one hundred years it will be on every history curriculum, but today is a must for how to present a product launch. Then I saw a video “Steve Jobs and Bill Gates Together at D5 Conference 2007” (https://www.youtube.com/watch?v=wvhW8cp15tk )  which demonstrated the incredible long term relationship between the two tech entrepreneurs.

They needed each other and understood this from the very beginning. The symbiotic relationship starts with Mircosoft developing a competitor to Lotus Notes on the Mac and supporting Apple with their version of Basic. This allowed Mircosoft to create a well proves et of products which could then be translated to DOS and subsequently Windows. It follows through with Mircosoft providing $150m when Apple needed it the most and Steve Jobs makes the phone call, your dealing with me now.

They worked together throughout their careers and had direct access to each other. As two CEO’s they knew there was only one other person who could stamp on their legacy, so building a supportive relationship was the only way for their legacy to be timeless. You may not like Mircosoft but they moved our technology forward to such an extent, Bill became the rich man on the planet. There is only one technology company which you want to hold their products in your hand, and Steve created this timeless vision. A global army of open source technology geeks have still not stake Bill out of the park. Sony the only real contender hasn’t got close, while Samsung with multiple products is just missing it, the shame is I have tried their products and they work but, … its just not right, to the extent I had to spend £600 and buy a iPhone. In fact a Nokia/Microsoft phone is better.

Our double act understood the power of software. When they started out the world was running on hardware and they changed this to software (more importantly now called apps) running on any hardware. Software was the business model which was much more scaleable than hardware. You can sell someone several operating systems.

They both also understood the power of apps before the rest of the planet know what apps were. Mircosoft Office and Apple iMovie are just apps. You can sell someone several hundred apps which extends the sales cycle and more importantly builds a closer relationship with the customer.

This is a case of when great entrepreneurs understand that being alone in a global competitive field is not the ideal situation for continued market domination.

So what should we entrepreneurs learn from this?

You always need competitors, the stronger the better, local competitors are better that those the other side of the world, competitors whereby the sum our parts is greater that the whole and competitors who you can call by the first name and know if the credit hits the fan they will be there to bail you out. After all, we start businesses to work with people and supplying goods to people.

Blog, Motivation Techniques

2014 is the year to try your plans for failure

As we start 2014 everyone has a lot of optimism for what it brings. This is a great time of year to lay down plans and create ideas for activities and events for the up coming year. Each year we do this, knowing that not all of these will occur, however our understanding is that we could do these resolutions if we so wished.

The same is true for entrepreneurs, when we create busineses we know that not all of them will be sucessful and failure will provide us with the opportunity to learn. We know that this puts back into a new “year” enterprise start whereby we can move forward again. Each start-up is like a new year, we set down plans, work them through, knowing that not all of these plan are right, will happen and we will have the time to succeed.

Our traditions provide us with the stability of knowing something is right, having been done for many years. Businesses have been formed for hundreds of years, each year some have failed, so allow these failures to create better understanding of business, starting an enterprise and also your skills in entrepreneurship.

The holiday period is a time for reflection and this time is important in many ways. Its a chance to socialize with new and old friends, meet the family and grow as people. The important thing about failure is the learning it provides, without which we can not tune our skills and refine our plans and processes.

So as we start 2014, just remember its ok to fail as log as you can learn from it.

 

 

Blog, Resources

The European Single Market for Entrepreneurs

I had the privilege to meet a number of youth groups this week from around Europe and was amazed at the problems that they face in just starting a business.

In the UK, if you want to start a business, you have a number of options. The first and easiest is to be self employed by just registering with HMRC (government revenue, http://www.hmrc.gov.uk) which takes about 10 minutes online. Then you just keep them updated using the same online portal.

The second way is by starting a business, which again takes 10 minutes but you have to pay to register the company, this is through Companies House, http://www.companieshouse.gov.uk/ and costs around £15. Again you keep up to date online using the interface provided.

In both cases you provide final year accounts using a PDF submission process.

Across the EU, the average time to start a business is 13.3 days (2012 Figures). However, when you look at countries like Spain the average time in 2003 was 114 days and has now come down to 28 days. So things are changing fast. Poland currently takes 32 days, but it’s not about the time taken but the bureaucracy involved. (Take a look at this amazing comparison website http://www.doingbusiness.org/data/exploretopics/starting-a-business ) For young Entrepreneurs this is a major issue as a mistake at this stage may lead to major costs later on.

So what is the best practice?

Singapore has one of the best business setup environments in the world and its provides “A modernized business registration system should have all procedures online, requiring that permits applications should be online and transparent, allowing for general collateral when getting credit, requiring detailed disclosure for investors, taking all tax management and payments online, creating a single window for trade across borders, and creating a specialized court division to enforce contracts.”

Given that Entrepreneurs within Europe can move where they want to start, maintain or grow their business, we should be creating a system which allows clustering to occur to build these businesses. If you see that its best to be in Romania for bio-tech then “go and be part of this”, should be the moto.

Also given that the high growth high technology business can transfer assets within minutes from one business to another, most of which are virtual, the only thing stopping them moving to the best location is the bureaucracy involved in closing that business. Living in a global economy means we can move around, its better that way for large and small businesses. I must give credit to Francesco Maurelli for this.

So maybe we need a way to allow businesses to move around Europe just like our people, as we all know business is about people.

Talking About Entrepreneurship