Startups have become a popular topic (especially how to build a successful startup) and there have never been more companies in Asia then there are today.
Every day you and I use startup products when we go on vacation (Airbnb), rent an apartment (99.co), or book a table at a restaurant (Chope).
Building a business is often the best way to build significant wealth. So, what should one think about before going on the journey to creating the next unicorn (a startup worth more than $1 billion)?
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1.Ideation. Step one is to identify a problem to solve. Ideally, this is a problem you know intimately and that affects you personally. Uber was built because the founder was frustrated at the terrible service he received from San Francisco taxis. With new technologies, he was confident that he could build a platform that connected drivers to passengers, offering better pricing and service.
When coming up with an idea be sure to apply the “10x mindset” — will this solution create a 10x improvement to the current situation?
If the answer is yes, you are ready to build a team and create version 1 of your product.
Many startups begin with founders solving a problem they themselves have had. This was the case for me when I co-founded Zumata, a business to business (B2B) travel technology company in 2010.
We had originally built a business around hospitality and restaurant discounts and were trying to add an online hotel booking component, but found few comprehensive and easy to plug in options, so we built one for ourselves, realising that many others would probably be interested in such a solution as well!
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2.Team. An early-stage startup team usually consists of one to three founders who have the skill sets needed to build out the product, sell it to customers and be credible in front of investors.
Typically, this means that you have someone on the team who has technical “chops” and someone on the team who can pitch to potential customers and investors.
In rare cases (e.g. Facebook’s Mark Zuckerberg), this can be the same person. Still, usually it’s best to have a team that can balance each other out, add diversified thinking to the group, and act as a backup to each other when needed.
The team should have backgrounds relevant to the problem being solved, with industry experience a big plus. As an example, my co-founder at Accelerating Asia, Amra and I have very different backgrounds, skillsets and networks which means we complement each other well. I’m deep on scaling startups, fundraising and venture capital, she excels at operations, marketing and partnerships.
Together, we’re a well-rounded team. In previous startups I’ve had too much overlap with co-founders, which leads to deficits and potential conflict.
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3. MVP. Once you have your team in place, it’s time to build version 1.0 of your product or Minimum Viable Product. This product should be a fundamental version of your solution and act as a test to some early users to get feedback and ensure you are on the right track.
A big mistake many founders make is waiting too long to get their product in front of users. Without getting feedback from potential customers, you are taking significant and unnecessary risks.
Assuming your MVP gets good feedback you can build out the rest of the features and look/feel (also called UX/UI for “user experience” and “user interface”) and begin to sell to a broader audience.
One way to push out an MVP to early users is to make the front end fairly usable, but connect it to manual back-end processes that require little coding resources. This can be done quickly and cheaply and the user won’t notice.
Assuming testing goes well then you can invest more time and money into building automated systems. Almost every startup does this and even many “bots” are at least partially human.
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4. Fundraising. As you begin to get traction in the market, you may need to consider raising funds from outside investors to get the resources you need to grow the business.
Investors can be great allies in your startup journey, but like any relationship, they need to be built on a solid foundation. Do your research and ensure that your investors are a good fit for your business and that you align with each other on the vision for the company.
In the early days, you can probably get by with a few Angel investors, who are individuals with some extra money and a passion for startups. Ideally, your investors can offer value beyond the money — introductions to new customers, other investors, etc.
At Accelerating Asia we spend a lot of time on storytelling or effectively communicating the value your startup brings to its customers. I can’t overstate the importance of clear communication and practiced pitching when raising funds from investors.
You need to be ultra concise and to the point, avoiding jargon and clutter. Focus on two to three key points that you want the audience to remember and focus on those.
Keep your pitch deck to around 10 slides and avoid clutter!
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5. Accelerate. Joining a startup accelerator can speed up your learnings, derisk your business and connect you to top-tier mentors and investors.
Do you need to join an accelerator? Which accelerator is right for you? It depends on the details of your startup and the stage your business is at.
At Accelerating Asia many of our teams were able to raise funding in the first month of the program, which allowed them to focus more on scaling and growth with less stress on paying the bills. A good accelerator program will act as an extension of your founding team.
Besides fundraising, we help our startups content with new customers and partners, enter new markets and structure their business in a way that is attractive to institutional founders and ensures our teams come across as professional, organised and uber-competent to take their business to the next level.
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6. Scaling. Now that you have some money to fund your growth and traction with early customers, it’s time to scale! But be careful, estimates show that around 70% of startups fail because they scaled too early or quickly.
Ensure that you take a measured path towards growth and don’t count on anything. Prior to scaling, you will need to ensure that your startup has the foundations in place. In particular, you’ll want to ensure that your tech can handle many more customers and that your quality control is in place around areas like customer service, etc.
You’ll also want to take a good look at your security protocols at this point and be sure that you are in compliance with privacy rules like PDPA.
For some great learnings on how to scale in a focused way check out the book “Zero to One” by Peter Theil.
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7. Exit. Congratulations, you’ve built a successful business! You are generating positive cash flow and continue to grow. It’s time to think about how your business story will conclude.
Will you go for an Initial Public Offering (IPO)? Will you sell the business to another in a merger and acquisition (M&A)? Or perhaps you want to keep going and take over the world?
In any case, it’s been a long and tiring journey, but you have built something that solves a major problem for thousands of people and left a mark on the world. Time to do it again?
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