HSOE13 - ENTREPRENEURSHIP DEVELOPMENT

Project Report on

“START-UP : CHARACTERISTICS & DEFINITION”

Group 9:

Ashish Saini- 110122019

Yuvraj Jat- 110122122

Ankit kumar- 103122012

INTRODUCTION:

What Is a Startup?
The term startup refers to a company in the first stages of operations. Startups are founded by
one or more entrepreneurs who want to develop a product or service for which they believe there
is demand.

These companies generally start with high costs and limited revenue, which is why they look for
capital from a variety of sources such as angel investors and venture capitalists. Startups
typically require several years to make a profit, so it requires significant, high-risk investments to
get one off the ground

KEY TAKEAWAYS :
• A startup is a company that's in the initial stages of business.
• Founders normally finance their startups and may attempt to attract outside investment before
they get off the ground.
• Funding sources include family and friends, venture capitalists, crowdfunding, and loans.
• Startups must also consider where they'll do business and their legal structure.
• Startups come with high risk as failure is very possible but they can also be very unique
places to work with great benefits, a focus on innovation, and great opportunities to learn.

Understanding Startups
Startups are companies or ventures that are focused on a single product or service that the
founders want to bring to market. These companies typically don't have a fully developed
business model and, more crucially, lack adequate capital to move on to the next phase of
business. Most of these companies are initially funded by their founders.
Many startups turn to others for more funding, including family, friends, and venture capitalists.
Silicon Valley is known for its strong venture capitalist community and is a popular destination
for startups, but is also widely considered the most demanding arena.

Startups can use seed capital to invest in research and to develop their business plans. Market
research helps determine the demand for a product or service, while a comprehensive business
plan outlines the company's mission statement, vision, and goals, as well as management and
marketing strategies.

Location
Location can make or break any business. And it's often one of the most important considerations
for anyone starting up in the business world. Startups must decide whether their business is
conducted online, in an office or home office, or in a store. The location depends on the product
or service being offered.

For example, a technology startup selling virtual reality hardware may need a physical storefront
to give customers a face-to-face demonstration of the product's complex features.

Legal Structure
Startups need to consider what legal structure best fits their entity. A sole proprietorship is suited
for a founder who is also the key employee of a business.

Partnerships are a viable legal structure for businesses that consist of several people who have
joint ownership, and they're also fairly straightforward to establish. Personal liability can be
reduced by registering a startup as a limited liability company (LLC).

Funding
Startups often raise funds by turning to family and friends or by using venture capitalists. This is
a group of professional investors that specialize in funding startups.

Crowdfunding has become a viable way for many people to get access to the cash they need to
move forward in the business process. The entrepreneur sets up a crowdfunding page online,
allowing people who believe in the company to donate money.
Startups may use credit to commence their operations. A perfect credit history may allow the
startup to use a line of credit as funding. This option carries the most risk, particularly if the
startup is unsuccessful.

Other companies choose small business loans to help fuel growth. Banks typically have several
specialized options available for small businesses—a microloan is a short-term, low-interest
product tailored for startups. A detailed business plan is often required in order to qualify.

The Stages of Building A start up:

Pre-Seed Stage
As in any project, the phase of analysis is crucial for the detection of a real problem in the niche
market in which the startup wants to act. The challenge it solves for the industry will be key in
determining the success or failure of the proposed solution afterwards.

However, it is not enough to notice this pain point; it´s necessary to assess the intensity or
severity to evaluate the cost of the opportunity, as well as to consider other alternatives and
competitors.

Seed Stage
What is primarily sought in the seed phase is to validate the business model. Important decisions
will be made, like determining the methodology that a startup will follow. This phase seeks the
first materializations of a startup. This can be done through developing prototypes, which are
small experiments carried out to validate the initial idea on which a startup is based.

Its objective is the validation of the initial value hypothesis. An early-stage prototype of a
development does not need to be functional, nor a viable product. It is not to be confused with an
MVP (Minimum Viable Product), which must be both functional and viable.
Early Stage
The early stage indicates the beginning of a phase in which the idea is left to evolve until it
becomes a product or service in the market. It´s now the time to launch a test. It will not be the
final version; it will now be tested to see it´s a Minimum Viable Product (MVP).

The minimum viable product is a model that does not have its full functions, making the test
less complex. It is released as a first version, with the results and information being collected.
After its release it should be analyzed to evaluate if it meets the needs of customers; if not,
improvements are made with new versions that try to satisfy the user.

Growth Stage
Strong market demand is met if a startup’s product or service reaches this stage. This means
that there will be upward figures in terms of new customers, recurring customers, and
billing. Profitability here is paramount. This is when the team starts to grow, and recruitment
begins.

This phase has the highest failure rate. It does not mean that the product or service stays fixed,
since you will probably have to adjust it to approach a new sector of your target audience, meet
new demands, or occupy new spaces that weren’t planned.

Expansion phase
Faced with a more widespread definition of the term startup, a scaleup demonstrates a proven
business model that allows it to consider more ambitious goals, for example, internationalization,
expansion to other sectors or hiring new professionals.

In this phase, companies that have already advanced in the execution of their business model
move forward, consolidating their growth in both revenue and employees.
Exit phase

This phase is not mandatory and does not always take part among startups. There are business
models whose goal is to become a high value and long-term company. However, it is very
common for the last step to be to perform an exit by selling the startup. Even so, not many arrive
at this stage and those who do are characterized by their strength, high potential, and
opportunities to continue to grow.

This output can occur in many ways, although three common options stand out: sale of the
founders’ shares to another company, acquisition by another company or an Initial Public
Offering (IPO), which means their entry into sale.

Advantages and Disadvantages of Startups

There are a variety of advantages to working for a startup. Two big benefits are having more
responsibility and opportunities to learn. As startups have fewer employees than large,
established companies, employees tend to wear many hats, working in a variety of roles, which
leads to more responsibility as well as opportunities to learn.

Startups tend to be more relaxed in nature, making the workplace more of a communal
experience, with flexible hours, increased employee interaction, and flexibility. In addition, since
startups tend to be cash-poor, they often provide a large amount of compensation in the form of
stock options, which can gain significant value if the company goes public.
The work at startups can also be more rewarding as innovation is welcomed and managers allow
talented employees to run with ideas with little supervision.
One of the primary disadvantages of a startup is increased risk. This primarily applies to the
success and longevity of a startup. New businesses need to prove themselves and raise capital
before they can start turning a profit.
Startup Characteristics

Scalability:
These are companies that seek to increase their size and income within a short period of time and
improve their production and sales without the need for a rise in their costs. SMEs, on the other
hand, have more traditional visions and are in the market with the aim of following a more linear
course.

Technology & Innovation:

Startups drive innovation by introducing new products or services that challenge established
market norms or create entirely new markets. They disrupt traditional industries by offering
innovative solutions that address unmet customer needs, often leveraging technology, novel
business models, or unique approaches.

Global Approach:
A global approach in a startup enables access to diverse markets, broadens customer bases, and
increases growth potential. It fosters innovation through cross-cultural collaboration, attracts
international talent, and mitigates risks by diversifying revenue streams. Global scalability
enhances competitiveness and long-term sustainability in a rapidly evolving marketplace.

Reduced Initial Costs:

Reduced initial costs are crucial for startups as they help preserve capital, enabling founders to
allocate resources to essential areas like product development and marketing. Lower expenses
also reduce financial risk, provide flexibility, and increase the likelihood of long-term
sustainability during the critical early growth phase.

Youth:
Youth bring fresh perspectives, energy, and adaptability to startups. Their tech-savviness and
innovative mindset drive creative problem-solving. With a high tolerance for risk, they embrace
new challenges, fueling growth and experimentation. Their passion and enthusiasm create a
dynamic culture, essential for the fast-paced, evolving nature of startups.
Founders vs Entrepreneurs

Differences Between Startup Founders and Entrepreneurship

Generally speaking, entrepreneurs engage in business to accumulate profits, whether for personal
gain, to grow a business, to benefit a non-profit organization or for philanthropic reasons.
Entrepreneurs can acquire profits in several different ways, such as creating products, starting or
investing in companies, purchasing resources, or facilitating an acquisition.

A founder is someone behind the creation of a startup company that begins with an idea of how
to fundamentally improve a product or service, or fill a need within an industry. A startup
founder takes the first steps towards turning the idea into a reality, building a company based on
the most efficient way to bring a product to the marketplace. Many startups are created with the
intention to one day be acquired by a larger company while others are able to leverage their
success and become a stable, singular entity.

Case Study

Mr. Dolly Chaiwala

Founder - Sunil Patil in 2007
Dolly started his own tea stall called ‘Dolly Ki Tapri.’ It was a small stall, but what made it
special was the way he served tea. He didn’t just make chai; he made it entertaining. People
loved watching him work and interact with everyone who came by.
• Sells a cup of tea for Rs. 7.
• Sells 350-500 cups , earns 2400-3500 Rs.
• 4.3 Million followers on Instagram
• Reports indicate that Dolly Chaiwala’s net worth surpasses Rs. 10 lakh.
• Charges 5 Lkhs for an international event.

Chai Sutta Bar (CSB)

Hailing from Madhya Pradesh, CSB is known for their quality and world-class service. Their
brand envisions to serve India’s most go-to-beverage ‘Chai’ in the most environment-friendly
way i.e., serving in kulhad.

• Founders-Abhinav Dube & Anand Nayak In 2016

• Chai sutta bar sells special tea in kulhad (earthen pots) which gives a unique flavour.
• It has a monthly sales of 2-5 Lacs depending upon the outlet.
• CSB has more than 550+ outlets in 320+ cities.
• Turnover of 150 cr.