What is a Startup? How to create your own project and successfully invest in others

How can you characterize a startup when almost everything is called this concept now - from the launch of a new technology to the opening of a small workshop for tailoring shoes? Is it a dream realized in a quick way, or is it a strategic plan that clearly follows the steps of creating a business?

The essence of a startup

Based on quantitative characteristics, a startup is a company that exists for 2-3 years and has made a profit of $ 1 million or a little less. Others call a start-up a registered company whose activities relate to the IT or Internet field. It has the potential for growth and development, staff expansion, conditions for providing quality services and building its own new market segment.

How is it different from "just business"

As you already understood, a startup is a rather specific concept that has no clear definitions, and it can be attributed to almost any new business. However, there are still special differences:

  1. New Product . A startup is always coming up with something new or innovative, making the old more practical and the current more convenient. Therefore, it is believed that in the current economy, a startup can compete with even the largest corporation. If a powerful company has been offering services for a long time, a startup can create a new direction based on it - the same thing, only better, relying on consumer requests like “now, if you offered me a reclining chair, it would be nice.” That is, you give a rooted idea in a new form, which existed before you under the name of a millionaire. It is always a leap into the unknown for many.
  2. Business idea as a basis . It is the uniqueness of the business idea and product that distinguishes a startup from a classic business. If you start a business, according to a business plan downloaded somewhere, or such a business plan, at least in theory, may already exist, you are by definition not a startup.
  3. Age of founders . Although this is not a determining factor, one cannot deny such a feature - startups in 99% of cases are very young. This is the segment of the population that wants to get "everything at once", without having the material capital to invest. According to statistics, the average age of startups is 25-27 years. Sometimes such cases are called "garage business", rejecting all attempts to be called a corporation. It is understandable, they have no office, no meeting place, no accountant and director, and the acquired fortune for this business also does not turn out to be.
  4. Put it all on the line . Startups always take risks. Everyone. The first thing they invest is their soul, thoughts and all their free time, they even neglect work for the sake of a goal. We can safely say about them: “Requiem for a Dream” is a film about you. Usually, startups don't care about the cost of winning, which can be too high, and in the end lead to collapse. There is another side of the coin - if a startup is still launched, its founder will do everything to achieve the goal. At any price.
  5. An idea is like a paycheck . All startups work for free at first, living dreams of a luxurious future that will feed them later for what they are doing now. Either that will be the case, or there will be disappointment. Of course, it's impossible to work alone - a startup team usually works for an "option" or minimum wage, expecting to receive large bonuses at the time of product launch. Such a team always consists of “functional” employees, without whom a launch is impossible (IT specialists). Separate positions for management and business support (accountants, secretaries and other employees not directly involved in the creation of the product) are usually neglected at first.
  6. Financing. As a rule, startups are created from scratch in order to make a very sharp rise in revenue in the shortest possible time. Therefore, almost all of them exist entirely on borrowed funds from investors.

VIDEO: top 10 student startups

Key features of a startup - term, profit, development

Back in 2010, Steve Blank gave the classic definition of a startup - "It is a temporary structure that is used to find a repeatable and scalable business model." The word “temporary” means that the purpose of the beginning is not only the process of involvement in creativity, but also the transition to another startup, a larger one. It will be big business.

Therefore, certain criteria and features of startups are distinguished:

  1. By deadline a start-up may be present long after the company has become a large independent business. Its beginning is determined, but the end is the start of the company's work or the slow fading of the spirit of rivalry.
  2. Profit will always be swift, but one-time. The business will quickly begin to generate income, but part of it will go to cover debts or investments. If the revenues are more than $1 million, the startup will become a businessman, not wanting to lose the opportunity to stream profits.
  3. Development- the prospect of moving into a large business model, or stopping after reaching the required income. If you open an innovative curtain shop, hire a team of cutters, sell 10,000 batches of goods, the idea will come true. There is income, the idea is “ended”. Then the startup develops - expanding production, investing, assortment. Otherwise, you can stop the activity and start something new.

According to Eric Rice, a startup has nothing to do with the company's shelf life, profit and development. The industry and the target audience can be so different that it is simply impossible to focus on it, as in business. In economics, demand creates supply, and in a startup, supply creates demand.

Types of startups


The sales market can clearly give an idea of ​​what types of startups exist in general. They may differ in scale, team, engagement and mobility. Startups are divided into the following categories based on product features and target audience:

Startups also differ in terms of science intensity:

  1. High tech. The case is based on the latest systems of scientific representation, technology market research. Not to be confused with the field of research work. It takes a lot of investment to get this idea going.
  2. Classic startups. An innovative idea is not about classics. Most often, founders use standard business schemes based on quick-to-implement ideas.

Often there are startups of the classical type in the form of "successful copies" or powerful competitors. True, the implementation of such ideas requires a minimum of perfect knowledge of the market, awareness of the work of "enemies".

Success stories

Perhaps the largest and most successful startup is the example of Apple. Once upon a time, the activity began with the development of a simple computer in the garage, after which mass production was launched. It was only PCs and software that gave way to a universal service strategy, which allowed Apple to become the largest technology corporation. The network is also known for buying up other startups that have helped bring "apple products" to a new world level.

Note that application development is not something innovative, unknown. This is a mass activity, but Apple had its own peculiarity - competing with Microsoft in such a way as to prevent the intersection of ideas. Both firms-competitors performed the same tasks for consumers, but each offered "their" vision of this in the form of different operating systems.

Other examples are many internet services such as Wikipedia, Instagram, Youtube. It is worth noting that each of them is associated with Internet technologies. For such startup ideas, there are separate service niches in the form of suppliers. For example, to create any website, hosting is required, which will store and process the data generated in the course of the business. If you decide to launch your Youtube analogue in Russia, the first thing you will need to find is reliable cloud storage servers.

Top 5 promising startups 2019

There are a lot of technological projects now, but not all of them are worthy of the attention of investors. There is no point in investing in the creation of a project that does not bring anything new - like another social network or an endless flash drive. We have selected for you 5 projects that are likely to change the world in 2019.

1. Auto


Product: AI DVR

Nauto is developing a camera for cars with artificial intelligence. It will help the driver to identify dangers on the road, suggest maneuvers, and at the end of the trip will rate the driver. In the event of an accident, such a camera will be able to analyze who was the culprit and will become a guarantee against false accusations.

2.Rigetti Computing


Product: quantum computer

Rigetti Computing is developing technology that will eventually help create super-powerful quantum computers. It is already clear that this industry will revolutionize information technology in the 21st century.

3.Pindrop


Pindrop helps call centers understand who is really calling and protect themselves from scammers. It analyzes the voice of the caller and, by intonation, reveals whether the caller is lying or telling the truth, his mood, and can even understand whether the voice is "human" or robotic. Voice technologies are growing at a tremendous speed and robots are becoming smarter - take at least Alexa from Amazon, or domestic Alice from Yandex. This entails new ways of fraud that stores need to guard against.

Product: 3D printed rockets

Relativity Space is an automated spacecraft factory that literally prints all the components on a printer! This allows you to repeatedly reduce costs, which means that the cost of transporting goods into orbit will also decrease.

5.Ripple


Product: decentralized payment system for banks

Ripple is a global network that uses blockchain technology to make fast and very cheap, compared to traditional methods, money transfers between financial institutions. Perhaps this startup has every chance to shake the long-established monopoly of the SWIFT system, as well as compete with VISA and MasterCard.

How to open your startup?

Consider, for example, the implementation of the idea of ​​​​tailoring model dresses from an innovative dirt-resistant fabric. There are showrooms, shops and high-end clothing boutiques on almost every corner. How to compete with them and occupy a niche in this market?


Step 1. Business plan, consumer analysis, demand

First you need a business plan, which will calculate to the smallest detail all the sources of profits for the future project and the cost structure. It is almost certain that after launching a business, it will turn out that the real state of affairs does not correspond to the preliminary plan, but a well-thought-out strategy greatly increases the chances of a startup to succeed.

It is also important to clearly understand who will be the consumer of the product that is supposed to be developed? The target audience must be clearly defined, and for this it is necessary to understand what specific problems the product or service being created solves.

By the way, most startups neglect the detailed study of this particular stage: 95% of them go bankrupt when it becomes clear that the product solves a non-existent problem, and the meager volume of the target audience, which could really need it, does not correlate with the costs that were spent for development.

Obviously, to create a business with high turnover, you need both a large infrastructure and a serious staff - and this is becoming another trap budding businessmen. It is most effective to expand production consistently and try to bring the business to self-sufficiency even before reaching the planned capacity - for example, one more marketer or secretary should be hired only with the proceeds from sales, without getting into new loans.

Step 2. Attracting investments

A startup is an attempt to capture a new market, which does not yet have competitors, with a completely new product. This means that you need to act quickly - after all, it is quite easy to steal an idea. Significant funds are needed to enter the market very quickly - and therefore, it is simply necessary to contact investors in almost all cases.

Investments can be raised at special meetings with potential investors and organizations that call themselves investment accelerators.


 Top 10 global investment accelerators

Step 3. Payback period

This is the most unpredictable moment in planning a new business strategy. Of course, if economic conditions were ideal, then the rate of success would be directly proportional to the money and effort spent. However, everything is different in life, and the time after which a startup becomes profitable depends not only on the very implementation of the idea and the quality of marketing, but also on a number of factors - such as the economic state of the region, the purchasing power of the population, and the actions of other market entities (such as state and competitors).


Step 4: Looking ahead

A startup is a bright idea that in the future can turn any aspect of life for the better, however, it often happens that not businessmen start working on startups, but specialists who are well versed in how to create a product, and not in how to create a successful business strategy. Therefore, even that small part of innovative companies that become profitable subsequently fades precisely because of the inability of its founders to competently manage big money. In general, it is possible to characterize the main paths that almost any innovative company will take after the product is launched on the market as follows:

  1. Bankruptcy .
  2. Absorption a large corporation - and the founders are likely to become wealthy enough to call this outcome a success as well. Often in this case, they even get the opportunity to stay in the company and work "on the payroll."
  3. suspension founders from managing / owning the company, reorganizing the form of ownership - often this option becomes simply necessary in order not to go bankrupt.
  4. transformation into a stable medium-sized company, fighting in an already competitive market.

What startup to launch in Russia?

Innovative business is actively supported by the state in Russia, there are many platforms for attracting investments (IIDF), exchanging experience and developing (Skolkovo, Innopolis) - there are indeed more opportunities for small tech businesses today than ever before.

If you still don’t know in which area to start developing, we suggest you pay attention to the industries that are traditionally the most in demand and promising for business in Russia:


  • Green technologies are ecological products.
  • Healthcare.
  • Social media.
  • Biopharmaceutics.
  • Financial services.
  • Semiconductors.
  • Telecom.

How to invest in startups

Everyone can do this today - there are many startup exchanges, here is a list of only the largest of them:

It is worth remembering that this type of investment is not called venture capital for nothing - we must not forget that the risks of investing in young technology companies are always much higher than with traditional investments in shares. Not every startup is worthwhile, many are just a sham and are aimed only at collecting money from investors.

Often, after the crowdfunding campaign is completed, "businessmen" go into the sunset with the money embezzled.

However, the profitability that can be obtained from funds successfully invested in technology makes us still consider this type of investment one of the most attractive! Therefore, in order not to let yourself be deceived and make good money from an investment, you need to know how to choose a startup to invest in :

  1. Explore essence of the project . The product produced must be worthwhile. It must solve real problems, be important, necessary and able to influence significant aspects of a person's life. It is not worth investing in a project that produces a specialized niche product that will be in little demand.
  2. Explore business plan. Carefully study the financial plan of the team and analyze: does the amount requested by the project team really allow the implementation of the plan or is it too small / large? Is the expected sales volume achievable or are there not so many potential buyers on the market who are interested in the product?
  3. Find out if there working prototype product. If the team applies for funding, they must be sure that they are able to produce such a product, that it is generally technically feasible. Never trust money to businessmen who show only dummies or beautiful pictures at a presentation to investors, without demonstrating the technology itself in action.
  4. Study the team project. Be sure to find out the reputation of both the CEO and individual team members: have they been involved in any dubious cases? Do their profession and experience really correspond to what is written on the project website?
  5. Make Sure that the interest that is supposed to be received from investing in the project satisfies your interest, but is not overly fantastic - no one will guarantee a return of more than 30% per annum, and if such guarantees are indicated, this is a reason to doubt the honesty of fundraising.

By following these rules, you greatly increase the chances of earning good money from investing in a fast-growing business, we hope good luck will accompany you!