I have been active in the Indonesian digital community for almost 20 years. It is incredible how often people ask me the simple question: What is a startup?
I cannot blame them because the term became vague. It became a buzz word like blockchain, AI, IoT, and big data are these days.
Especially the combination with significant investments that startups get made it attractive for companies to call themselves this.
We all know the stories of HP and Amazon, starting from a garage box and growing out to become multinational companies that have a vast foodprint worldwide.
In Indonesia, we know successful startups like Tokopedia and Gojek.
So what does it mean?
In the early day’s it meant a small business that was founded by one founder or a small group of people that wanted to solve a problem. They usually offer a product or service to solve this problem that is easy to scale.
Nowadays, it is more a way of doing business. Larger companies are also launching companies they call startups because they are using lean company setups that build a solution in an agile way. They are looking for a scalable business model that can be executed in a fast startup way.
How to start your new company?
First thing you need is to find that fantastic idea that solves a problem a lot of people encounter. That means if you solve this problem, you will have a sustainable business.
A startup not always needs to be a tech startup even though most successful are. This is for the simple reason that technology enables you to scale fast, and that means a faster increase in company value.
As soon as you have found the problem you want to solve it is time to build your MVP. A Minimum Viable Product you use to confirm your assumptions. If the results are positive, it is time to scale.
Growing or scaling your company cost money. Even though you may have saved some money, you will need some additional money as you are probably not running a profit yet. And also if you are profitable, it could mean you need more money to grow even faster.
So where to raise money?
Sometimes you will be lucky and the investors will knock on your door. They see what you are doing and they like the results. But often you need to pitch your ideas to people to get them to invest in you.
There are many types of investors, let me try to list the most important types here for you:
- Angel Investors
- Seed Investors
- Venture Capitalists
- Strategic Investors
This can be family members, neighbors, and friends or anyone that is interested in your idea. Usually, these type of investments is of small size from a few to tens of thousands of dollars.
Seed investors are investors who are specialized in startups and offer Seed Funding in exchange for an equity stake in the company. For the investor, this stage is riskful so they will usually ask for a higher stake than later investors that come in.
The good thing about these investors is that they probably have a network all ready to help you raise the next investment needs you might have.
A venture capitalist (VC) is an investor that provides capital to firms exhibiting high growth potential in exchange for an equity stake. This could be funding startup ventures or supporting small companies that wish to expand but do not have access to equities markets.
Need help building your startup?
We are happy to help you because startups need to help each other, that is also the reason why there are a lot of startup communities.
Please drop us a line is you would like the know more about startups and how we could help you.