What are early-stage startups?
Early stage startups are companies that want to innovate, but haven’t yet found the market. They are typically making their first products and have very few resources. Most of the time, they’re receiving funding from friends, family members, or angel investors.
Early-stage startups consultants observe that they don’t usually fail, but often fail to make it big. There are many reasons for this: lack of a viable product idea and strong market research leading them astray, not understanding the concept of marketing and customer service, taking too much time developing a product that doesn’t have demand yet (or ever), etc.
The first venture capital firms began investing in startups in the 1960s and 1970s. Their objective was to cash out on the companies that had already established themselves and make a profit from them. This led them to invest in large companies regardless of whether or not they’d be able to compete with the larger corporations.
The second wave of venture capitalists began investing in startups between 2000 and 2004, expanding their horizons to include smaller companies that used innovative technology or had potential for growth. These investors were looking for opportunities that would help disrupt existing industries so they could cash out on their own startups instead of cashing out on others.
The third wave of venture capitalists, who started investing in startups between 2005 and today, are looking to provide money and resources to companies that have already gone through the business boot camp. They invest in companies that have already been established and are able to secure a large portion of the market share. This is how they make their money from investments – by cashing out on their own startups when they’ve become household names.
In the next ten years, it’s likely that the fourth wave of venture capital will be investing in artificial intelligence and robotics startups. Artificial intelligence is here – it’s being used in even the simplest applications like Google search results and self-driving cars. Robots are going to be a big part of our daily lives in the future – they will perform numerous tasks at brick-and-mortar businesses, and will also be used in manufacturing plants.
Large companies with market shares larger than the current market are still pursuing startups because they want to find new ways to expand their market share and keep up with competitors. They’re investing in startups because they believe that it’s what young entrepreneurs want to hear.
One of the best places to find early stage startups is in incubators. Incubators provide services such as business plans, mentors, networking opportunities, and a lot more. Startups often share an office with other startups they are working with.
Who are the most common investors that invest in early stage startups?
Angels and VCs (venture capitalists) are the most common groups that invest in startups. Some universities also have university-affiliated firms which help early stage companies get funding.
How do you decide which startup is good enough to get funding from?
It all depends on how well it can solve the problem it wants to aim for. Make sure that the startup has already developed a prototype if they want to get funding!
What is the difference between an early stage investor and a late stage investor?
Because of the different stages, early stage investors have a higher risk tolerance and are more lenient to startups than late stage investors.
What can you do if you want to become an early stage startup?
Think about your problem, research on similar problems that may have been solved by other people, and look for possible ways to solve it. Set short term goals that help you work towards solving the problem in the long run.