From the moment a business idea is born until it transforms into a consolidated company that achieves its objectives, entrepreneurial projects go through different phases that shape their life cycle. Evidently, in each one of these phases, the objectives and needs of the startup are different, so the actions taken must also be different. That's why it is important to be able to recognize at what point your project is to know how to act correctly. But what are these phases? We’ll tell you about them!
The phases of a startup
Pre-seed. This is the starting point, where the idea begins to take shape and a conceptualization and analysis process is initiated. During this phase, it is when the team is formed and the opportunity cost is evaluated. At this stage, significant investment is not required, and financing typically comes from the entrepreneur's own funds, their close circle, what is known as FFF (Family, Friends and Fools) or through crowdfunding. It is a fundamental phase to establish the groundwork.
Seed stage. During this phase, you already have a more defined idea, the team is established and the MVP has been developed. The MVP is then offered to potential customers to validate the idea or to the investors to secure capital. This is a trial-and-error phase, as the startup must adapt and adjust its product or services based on the received feedback.
To sum up, the objective of this phase is to validate with your target audience and secure further financing. In many cases, projects in this phase join accelerators such as La Lonja de la Innovación to enhance their development and growth
Early stage. In the early stage the startup has already been launched to the market, it begins to acquire its first clients and starts to see its initial revenue, achieving its first objectives. This provides the startup with the initial metrics that can be analyzed, allowing the identification of errors that must be resolved to continue evolving on the correct path.
During this stage, therefore, the product or service is refined and, if necessary, the project pivots. At this stage, funding comes through venture capital and business angels who are willing to invest in startups with potential.
Growth stage. If a startup makes it to this stage it is a signal that it has achieved the product-market fit or, in other words, its product or service has found its place in the market. At this phase, the company has recurring clients so the objective of the startup must be to continue growing in a sustainable way. This implies optimizing processes and consolidating its market presence.
Expansion phase. In this stage, funding is used to expand the product or service reaching new places and markets, potentially even internationalizing the company if it is feasible. This is a complex stage, but it can provide significant benefits, so it requires strategic planning and sufficient resources to carry it out.
Exit Stage. This is the only stage of all the phases that is not mandatory. It consists of selling the startup, whether through shares, an acquisition, or an Initial Public Offering (IPO).
The journey of a startup from the birth of an idea to a consolidated company, is difficult, but at the same time exciting. Understanding the needs of each of these stages is essential so that the entrepreneurs can adjust their strategies effectively.