How long does a startup acquisition take
Startup Life is a Rollercoaster: The Startup Life Cycle
A startup goes through various development phases. So do their founders. The comparison with a roller coaster ride is not so wrong: Startup life is characterized by many ups and downs. A high is followed by a low and then another high - maybe in a single day. Wild loops are not uncommon in the growth of a startup, they are even more the rule. In this blog post, we would like to go into how a startup develops over the course of a business cycle and what things need to be considered.
Things are often turbulent in startup life.
Basically, a successful start-up company goes through different development phases: From orientation in the market to growth development to the (possible) IPO and exit. These do not have to look the same for every startup and do not have to take the same length of time, but they follow a similar pattern. Usually one speaks of six phases. The transitions between the phases are fluid:
Why is it actually important to divide the startup development into phases? To put it simply: Each of these phases is associated with different goals, risks and opportunities, tasks and challenges. The question of the status quo can only be adequately answered if you know where your startup is currently in development.
The corporate phases of a startup are also very much determined by the individual financing phases. We would like to focus on the financing factor in upcoming blog post more specifically. What phases does a founder go through with their own startup?
The orientation phase (pre-seed)
1st to 3rd month
The will to found a foundation is there. You already have an idea in your head - at least they are there Brainstorming and the Feasibility of the idea at the center of the considerations. This time in which you carry your entrepreneurial flash of inspiration with you like a baby and want to get the idea off the ground is known as the orientation phase. In financing jargon, one speaks of the so-called pre-seed phase.
Does the idea even have market potential? Which target group do I want to address? The potential of the idea can already be tested in closer proximity and put through its paces. The experience of numerous founders proves: the earlier you start talking to a lot of people about your business idea, the better. This will give you valuable feedback on your concept. So: let's have fun advertising!
These first fundamental considerations serve in the first (three) months to draw up a rough concept for your own business idea. The innovative spirit and the new approaches to solutions that develop in this orientation phase are also what will turn your founding into a startup.
The planning phase (seed)
4th to 12th month
You take the first euphoria from the pre-seed into the planning phase. The seed phase, as it is also called, includes all the preparatory work that is necessary to set up a company. Among other things, these are the Creation of a business plan, a first prototype, the Proof of Concepts as well as variousMarket analysis and studies. After all, it is important to assess whether the product can even be implemented on the market.
Well is one detailed foundation planning asked. This goes far beyond the decision of the startup name or the business card design. As a result of precise planning, the goals, strategies, milestones and the USP of the start-up are clearly defined. The company is also faced with several other decisions, namely:
- the choice of legal form
- the choice of location
- the choice of the form of bookkeeping
- the choice of pricing policy (calculation and research)
- the choice of the first financial partner
Not only that is the first big challenge for the young company. Since one could already stumble financially in the seed phase, one should keep an eye on the funding opportunities of public and private bodies. Therefore: plan your liquidity, budget and financing well in advance! Networking is also a good keyword. It is true that you cannot dance at all weddings at the same time, but attending individual, well-chosen business events is advisable. In this way, a good network can be built up for the future.
The founding phase (startup)
End of 1st year
In the start-up phase, the company really picks up speed on the startup rollercoaster. The company will finally founded. The product is largely finished, now everything is on the Launch prepared. The business plan is being perfected in detail and the organization is being built up intensively. This phase also includes production planning and preparation and the (possible) development of your own sales network. Does it fit Product market fit, the first paying customers can be attracted here.
After (hopefully) many high points, the first low blows occur in this phase. On the one hand you have to deal with a lot of legal and laborious things when founding a company (articles of association, establishment declaration, insurance, opening an account at the house bank, paying in the share capital, registration in the commercial register, business registration, SVA registration, reporting to the tax office), on the other hand, the company figures are often in the deep red area firmly. TheSolvency must therefore be planned and checked on an ongoing basis.
Once you have crossed this valley bottom, the roller coaster will pick up momentum again. But external donors are necessary for this. So that they can be satisfied, customer acquisition and press work become really relevant in the startup phase.
The development phase (1st stage)
1st to 3rd year
It takes a good year on average to get to that Start of production or the processing of the service can be started. A lot of work has already gone into the startup up to this point. The startup joins the operational business activity a. And first Sales are achieved - even if these are perhaps still low. Now it is important to implement goals set earlier and to consolidate the startup in the market.
Now things are really looking up! If you know how to handle the situation, the startup really takes off. However, this is a prerequisite professional processes and structureswho constantly monitor changes in the market, in the customer base or in the corporate environment. And if you come to the realization that the workload can no longer be managed alone or in a team, it will be time for the first employee. After all, you can use it to bring missing skills to the startup team.
The growth phase (2nd stage)
4th to 6th year
The startup starts a aggressive expansion strategy and thus mostly reaches the Profit zone. This expansion strategy does not remain without consequences for the allocation of positions in the company: Changed strategic orientations mean that former founding members leave the startup in this phase and devote themselves to new ideas. Aggressive growth requires professional management, which the founding team, which is often not economically stable, cannot be managed. Therefore also can Reorganization and restructuring measures be useful at this point.
Therefore: Employee management and acquisition put at the center of the considerations. And (unfortunately) not to forget: The regular contribution regulations of the SVA. There is also the risk of high back payments. A high equity ratio is therefore the key.
The maturity phase (3rd or later stage)
From the 6th year
Congratulations, you have come a long way with your startup! Many companies orientate themselves in this phase Future markets and pursue sustainable instead of aggressive growth. That and the competitiveness, Acquisitionsand alliances come into focus.
Company growth slows and stabilizes. The swing phase is over, the roller coaster slows down. A good time to come across a new corporate culturethinking about new technologies or optimized processes, novel financing options and product ranges. However, never without a meaningful market and environment analysis!
These were the six basic development phases that a startup goes through. We will deal with the financing of startups in the corporate life cycle in an upcoming blog entry.
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