Three key ingredients for a successful tech startup
Are you pondering on becoming an entrepreneur? I strongly recommend you to go for it! Working on a new initiative is fun, thrilling and rewarding. I have never come across a founder, even from failed startups, who regretted starting a business.
Nevertheless, a win is always the most desired outcome. So, to start on a strong foundation consider the following factors:
Focus on real needs with real solutions
It is all about bringing value to your investors, employees and customers. In the last few years, we have seen several successful startups transform the transportation sector around the world. Usually, their solutions are so simple that many exclaim: “why did I not think of that?”
Businesses fail when they cease to provide value. Juicero was the maker of wifi-connected luxury juicers. It raised $118.5 million but closed shop, once people realized that their juice packets could be squeezed by hand just as easily without the need for their expensive and seemingly obsolete juicer.
Ideally, the problem being addressed should be ones the founders have first-hand experience with.
Your business deserves the best people
A startup will use founders, employees, outsourced teams and freelancers to get work done. I encourage founders to look for a track record of delivering value while making hiring decisions.
Since my company offers outsourcing services, I regularly hear horror stories with previously outsourced work. Far too often, such stories begin with the wrong team hired at an inappropriately low budget.
It is also extremely important that at least some of the founders fully dedicate their time to the venture. Studies have shown that startup companies gain more value when their founders are part of the executive leadership.
Startups require cash
Formal funding for most startups usually becomes available once the business is able to show initial customers and some form of market acceptance. To reach this level requires investment in product development, marketing and operations.
Example of a model that I have seen work: five founders raise a total of $250,000. $100,000 is considered the higher risk investment which is spent on product launch and to gain initial market traction. If the response is according to expectations, the remaining $150,000 are spent while the company looks for formal funding.
The actual amounts required will depend on your specific business needs. Is $250,000 too big an amount for a new startup? I do not think so.
I would love to hear from you. Feel free to get in touch or leave a comment below.
This article was originally published in the Dawn Newspaper. Khurram Ali is the CEO of RIKSOF, an award-winning app development company.
