How Can You Start a Tech Startup: A Comprehensive Guide?
Entrepreneurs in the startup phase should enter into a structure that will be flexible against the difficulties they may encounter to survive in this ecosystem. It is important to establish a company type that takes into account factors such as capital amount, commercial risk, business volume, partnership structure, and most importantly, to achieve an advantageous position in the areas of taxation, share transfers, and partnership responsibilities to maximize the value of your enterprise.
Therefore, it is necessary to understand the conditions for establishment, management, growth, downsizing, partner acquisition, and exit from the partnership for each company type and to draw a roadmap accordingly.
In this journey, where the tech startup establishment process is one of the first and important steps; innovative ideas that can calculate benefits, costs, and risks accurately and holistically will turn into businesses that grow rapidly or steadily, create employment, and are sustainable.
What Do You Need to Know Before Starting a Tech Startup?
Tech startup companies play an important role in the growth of a country’s economy and the development of innovation with changing global dynamics. Tech startup companies achieve considerable success despite their small teams with the innovative product proposals they put at their center. The basis of their value propositions is to solve the problems of companies and individuals with new business models or disruptive technologies.
The current economic and digital trends and the change in business practices make innovation even more important. Many talented entrepreneurs on a global scale present innovative products in different areas from finance to health.
At this point, it is critical to be able to differentiate from hundreds of thousands of ideas and talented entrepreneurs. One of the key points of differentiation is to be able to market the idea effectively, that is, to create an effective value proposition.
An effective value proposition distinguishes your company from competitors and helps to create a positive perception. When designing your value proposition, it is critical to associate it with a benefit such as cost, sales increase, traceability, and ease of use.
After clearly determining the benefit relationship, the customer base must be analyzed in detail for an effective value proposition. Before creating a value proposition, it is important to examine the market and determine the demands and needs of target customers.
At this point, analyzing other companies in the market is also critical for the value proposition to be effective. At the same time, evaluating the benefits and costs of the product presented instead of writing the current sentence helps customers and investors form an idea about the initiative.
How Can You Validate Your Tech Startup Idea?
Startups are based on a growth model by receiving investment from investors. In the first stage, market data and a business plan are essential.
Investor expectations are that the startup company can present its targeted “company value” based on a business plan, feasibility, and cash flows. A valuation model that goes from “present value” to the targeted “potential value” is critical for startup success.
Your tech startup should have an effective brand strategy from the market entry stage to becoming a major player in the market. Creating a correct brand strategy is one of the top issues on the agenda from the moment the idea first emerges.
A corporate identity design is associated with the correct brand strategy, the professionalism of the company’s statements, and the messages it gives on social media are a whole. A strong brand management that includes these issues shapes how your customers will perceive your company. An effective branding process requires systematic planning and implementation.
How Do You Build a Business Plan For Your Tech Startup?
Every strong brand exists by blending its financial and non-financial goals. While your business’ purpose informs your reason for existence, your mission shapes the message you send to your stakeholders.
Your mission should resonate with your customers and align with your values. Make sure you spend enough time creating and internalizing an effective mission.
In the early stages of the enterprises, the accounting and reporting processes will be relatively easier to manage due to the lower volume of work. These processes can be managed within the enterprise or by using external resources.
The scale, needs, and strategic goals of the enterprise should be evaluated and a correct financial management structure and a healthy process design should be made. We observe that in companies that have passed the micro stage and are rapidly growing in line with their strategic goals, enterprises are trying to obtain their financial management processes by using “outsources” in the increasing competition and changing economic conjuncture.
Enterprises that “outsource” their financial processes through professional companies can focus on their primary fields of activity and make faster and more effective strategic decisions. One of the most important advantages that the outsourcing solution provides to enterprises that have reached the later stages is that it allows repetitive transactions to be carried out with a central method without allocating additional resources.
Thus, the continuity of the processes can be ensured without the need for new investment in enterprises that have grown rapidly and even started to operate in more than one geography.
Continuing the enterprise by using outsources throughout its entire life cycle or in all financial processes will not be an effective solution in every case. It is recommended to establish a strategic finance function by recruiting professionals in the roles of financial controller and finance director / CFO and establishing a financial planning and analysis team within the company.
An important step for the establishment of a strategic finance structure is the implementation of technological applications within the company that will provide effective reporting and analysis, which will play an important role in fast and agile decision-making.
How Can You Secure Funding For Your Tech Startup?
Tech startup support practices in the world are grouped under three headings, namely Education, Financing, and Firm Operational Support. The most important of the three supports is considered to be financial support. Financial problems are at the top of the list of factors that cause entrepreneurs to fail, and in some cases, they cause many valuable ideas to remain at the idea stage.
Many institutions and organizations support entrepreneurship in many countries, the most important of which are public institutions. Microcredit, venture capital, SME stock exchanges, credit guarantees, various tax exemptions, investment discounts, energy support, facilitated credit support and grant support stand out as financial supports. Many institutions and organizations support entrepreneurship in many countries, the most important of which are public institutions.
Financial investors invest in tech startups for profit. They keep their investments in their portfolios for 3 to 10 years, expecting their investments to gain value during this period and aiming to exit the investment at the right time.
Financial investors aim to exit the companies they have invested in in two different ways;
- Through the sale of the portfolio company to a different strategic or financial investor (M&A),
- Through the initial public offering (IPO) of the portfolio company.
The stages of the startups that financial investors invest in vary according to the investment strategy they have determined and they can invest in startups at each stage in line with their strategies. In addition, there may be investment strategies limited to different sectors and geographies.
Why Is Choosing The Right Team Important?
If your company is still very small; having the same shareholders, management, and/or directors will not be a problem. However, as your company starts to grow; having independent directors will ensure that company decisions are evaluated in a multi-faceted and impartial manner.
With the formation of your board of directors structure;
• Providing a broad perspective in the field of business models and financial management,
• Gaining expertise in issues such as mergers and acquisitions, developing technologies, international markets, and risk management,
• Taking the lead in establishing company culture and values.
For tech startups in the starting phase, it is sufficient to determine basic features such as how often meetings will be held, what information will be provided, how meeting minutes will be kept, and who will follow up on decisions.
Although the formation of a board of directors is not a priority for the company, addressing this issue in advance may be beneficial in attracting the attention of investors.
What Are The Legal Considerations For Tech Startups?
For tech startups, the priority is to raise capital, generate revenue, and scale the business. For many companies, audits and legal considerations are often necessary with an outside investment, such as a bank loan, venture capital involvement, or a private investment vehicle.
Other times, the turning point comes when the investor and his or her advisors are considering laying the groundwork for the next stage of the company’s development, such as a potential IPO or other exit strategy.
Having an independent audit of your financial records can strengthen your standing with potential investors and put you in a better position to negotiate with banks, suppliers, and customers. These are just a few reasons to consider having an audit done, even if you are not legally required to have one.
Your financial reporting needs and requirements will vary depending on the stage of your company’s growth. While there are benefits to delaying an external audit early on, it can be difficult to complete audits of earlier periods once the company is experiencing high growth.
How Can You Develop a Minimum Viable Product (MVP)?
Creating MVP (Minimum Viable Product) plays an important role in the new product development process. The MVP (Minimum Viable Product) methodology makes many things easier in terms of making decisions for the future.
MVP (Minimum Viable Product), which allows for finding the target audience of early customers of the product, reduces the cost of product development and facilitates the testing of hypotheses.
In addition, it provides a pivot opportunity in the early stage and facilitates investment in the product. Because it allows the technologies to be tested for the product.
A tech startup’s team may choose to develop and release a minimum viable product because they want to:
Release a product as quickly as possible.
Test an idea with real users before committing a large budget to full product development.
Learn what resonates and what doesn’t with the company’s target market.
Additional benefits of MVP include:
Minimizes development costs.
Provides an opportunity to get a product to market early.
Helps developers learn from their mistakes.
Builds a niche among customers who like the product.
MVP allows a company or startup to validate an idea for a product without having to build the entire product. It also helps minimize the time and resources that might otherwise be spent building a product that might not be successful.
What Are The Best Marketing Strategies For Tech Startups?
Your value proposition, which is critical in terms of increasing your tech startup’s market share and potential for investment, is essentially your investor presentation. It is important to remember that when you make a presentation, your time is limited for the perception you will create on the other side, so it is important to develop a striking value proposition.
If you can ensure that these elements differentiate you from other companies, you can better explain the value of your startup to investors. With an effective presentation and a good meeting, you can be an attractive candidate for investment.
Investors’ involvement in startups supports not only financial transformation but also the operational and institutional transformation of the company. In this context, it is critical for the parties to clearly state their expectations before investing to increase the company’s institutional competencies. In this way, company strategies are guided by the right investor and startup collaboration, and the company is targeted to reach the highest value in the market.
Visual brand identity or corporate identity is developed through the continuous use of visual expressions such as logos, advertisements, brochures and sales materials, web pages, business cards, and product packaging.
When building your brand’s visual identity, you should take care to ensure that the overall image and design match the brand’s values and identity. To achieve this, creating a corporate identity guideline with designers; and using visual elements such as logos, color schemes, and fonts singularly is a must for success.
How Can You Scale Your Tech Startup?
Scalability is the potential of a tech startup’s production/service system to grow to meet demand, provided that it continues to operate without interruption when the number of demands increases. The fact that the system does not experience a failure when the process is reversed is an indicator of scalability. We can explain scalability with a simple example.
For example, let’s consider a digital advertising agency as a tech startup. This digital advertising agency continues to acquire new customers while having a successful service process.
If the agency can meet the needs of the new customers it acquires with its existing team, it is a scalable tech startup. Being able to increase production volume without requiring additional resources is the most important indicator of scalability.
Of course, this does not mean doing huge jobs with a small team. Reinforcing the team in cases where the workforce is insufficient does not harm scalability. What is important at this point is that the profit obtained is much higher than the cost created. In a scalable tech startup, while the cost increases gradually, the profit increases exponentially.
What Are Some Case Studies of Successful Tech Startups And Their Journeys?
Although there are many successful tech startup stories, we can talk about Udemy. We can say that Udemy is a giant online education platform with more than 157 thousand trainings prepared by more than 57 thousand instructors in more than 200 countries, in more than 65 languages, 295 million topics, 33 million minutes of video recording time and more than 40 million registered students.
The Udemy Education Platform, which is popular in the United States and many other countries, is an initiative founded by Eren Bali. Born in Malatya and educated in Malatya, Eren Bali received his education under difficult conditions and later won a place at the Middle East Technical University (METU).
After graduating from METU, Eren Bali worked at several companies and started working on the Udemy Education Platform project with his partner Oktay Çağlar in 2008 to make education easier for future generations. The team, which failed in their attempts in Turkey, thought of moving their project to Silicon Valley.
Despite being rejected by 50 investors in Silicon Valley, Eren Bali, Oktay Çağlar and their team maintained their faith in their project without giving up. A few years later, the team, which received an investment of $ 12 million, started the success story of the Udemy Education Platform.
See you in the next post,
Anil UZUN