Ideas are the backbone of any society, and they have the power to change the course of the future. What if you have an innovative business idea? What to do then?
Converting an idea into a startup is intimidating. We understand that market research, finding investors, marketing, and valuation are a lot of work. But a simple outline and streamlining of these tasks can help ease your startup journey. That’s what this blog is about.
We are 21BY72, an angel investor network working with many startups and investors to help them connect and contribute to startup growth. From our experience, we have listed the steps that have helped startups convert their idea into a successful business.
What are the Stages of a Startup Journey?
Like life, there are stages of a startup journey. From idea to establishment, there are a few stages that most startups go through. Each stage has opportunities and challenges that entrepreneurs must face to launch a successful startup. Understanding these stages can help you in the process of transforming an idea into a startup.
1. Pre-Seed Stage
The pre-seed stage is dependent solely on the entrepreneur. The entrepreneur might have an idea boiling in their head. They are trying to create a presentable structure to convert that idea into a feasible business plan. During this stage, the entrepreneurs work alone or with a partner who understands their vision.
2. Seed Stage
The idea needs to be feasible. Thus, entrepreneurs must conduct market research to understand if their startup idea is sound and accepted. They also need the initial funding to conduct market research and startup idea validation.
3. Early Stage
In the early stage, you need to lay the foundation for your startup. You’ll need to recruit a team, build your business model, develop your MVP, market that MVP for customer review, improvise your product, and attract investors for funds, making the early stage the most critical step for your startup.
4. Growth Stage
During the growth stage, you’ll see the results of all your early-stage efforts. Here, you’ll market your product, secure considerable funding, establish a strong market presence, and scale your production on a more significant level.
5. Expansion Stage
Now that your startup is well established in the market, you should focus on diversifying your offerings, exploring new markets, and scaling the operations with newer production units. You can raise funds when necessary.
6. Exit
If you think your startup has reached a sufficient valuation, you might want to exit it. You can opt for a merger, offering an acquisition, or raising public funds for the investors and yourself.
How do you turn an Idea into a Startup?
Now that we’ve covered the fundamentals of the startup process, we can get into the actual subject matter of the blog: the steps to take an idea to startup.
1. Clarify ideas in the pre-seed stage
The first step is to clarify your idea. It means you must ensure your idea is viable and not just a maze of thoughts. You need to create a valid concept of product/service and how to turn a startup idea into a business.
Here are a few questions you should ask that can help clear your thought process:
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Does the startup idea solve any social or economic problems?
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Who will benefit from your startup idea (aka your target audience)?
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Does a business with a similar product or service exist in the market?
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How will you stand out in the industry?
Just because you have a clear idea does not mean you can jump into building a startup. You should also focus on creating goals and vision for transitioning from idea to startup. You can use bootstrap funding to lay the foundation for your startups and primary market research.
2. Validate the concept in the seed stage
Having an idea is not enough; you need to validate the concept. But what does startup idea validation mean? It is determining whether your concept is practical and whether your target audience wants the product or service you are offering. As a result, you’ll know whether there will be enough demand to pay your future research expenditures. You’ll also need to focus on creating and selling a minimum-value product (MVP) to determine your product-market fit.
If the product-market fit is good, your startup is bound to succeed. However, if your product market is low, you need to explore other markets/target audiences or take the risk of startup failure. This is the most critical step because most startups fail in product-market fit and end up failing. Attending the Global Startup Summit by 21By72 allows you to interact with investors and business mentors to pitch your idea and get validation.
3. Build your business model in the early stages
Structuring your startup is the most critical part of your journey. You need to create a viable business model focused on all the aspects of a business: management, finances, marketing, and operations. The business model must include the details of market research, market trends, and how you plan on managing your startup.
It helps you streamline your operations, prepare a growth strategy, and secure funding from investors. The business model enables you to create your pitch to secure early-stage funding for research, product development, and more.
In this stage, you’ll focus on market traction to secure funding. Networking with angel networks, like 21BY72, business mentors, or attending networking events can help you build a reliable business model and secure funding for the same.
4. Secure funding in the growth stage
As the name suggests, you need to boost your startup in the growth stage with sufficient funding. The market research, product-market fit, and business model help you pitch your idea to angel and venture capital investors. By securing necessary funds, you can boost your operations and start targeting your market. Recruit a team to help you establish a strong market presence and grow your startup. After a few years, you can also raise funds for better production or operation management.
5. Grow your startup in the expansion stage
The final step is to grow your startup. At this stage, you may diversify your product offering, explore international markets, or acquire smaller companies to fuel growth. Expansion also means keeping an eye on profitability, ensuring your startup can sustain growth without sacrificing long-term financial stability.
Conclusion
A startup path is fraught with twists, flowers of success, and thorns of failure. Turning your idea into a startup is difficult. Understanding the many stages of a startup and what you need to accomplish in each step will help you effectively convert your idea into a startup.
A startup’s journey starts at the pre-seed stage, when you may develop your idea and turn it into a viable business concept. It is followed by the seed stage, during which you must confirm your idea through market research. During the early stages, you focus on gathering seed funding to create an MVP for market traction. During the growth stage, you sell your product and generate finances for operation management, which may benefit you in the expansion stage.
FAQs
1. What are the types of startup ideas?
The type of startup ideas can be defined based on three factors. They can target a new market for the product, the startup could introduce new technology in the industry, or the startup is providing a new benefit to the industry or society.
2. How do you validate a startup idea?
Startup idea validation can be done by conducting market research, developing a minimum viable product (MVP), and gathering feedback from potential customers, investors, and business mentors. Surveys, interviews, and early product testing are effective ways to ensure your idea solves a real problem and has demand in the market.
3. How do I secure funding for transforming an idea into a startup?
To secure funding, entrepreneurs can approach angel investors, venture capitalists, or crowdfunding platforms. In the early stages, many startups seek seed funding, which helps in building the product and validating the market potential. As the business grows, securing larger funding rounds becomes necessary to scale operations. You can secure funding or find potential investors by attending networking events like the Global Startup Summit.
