Startups using technology to succeed in business

By @AtanuShaw on
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Technology To Succeed In Business https://pixabay.com/photo-654585/

Today’s world of business is no longer governed by old-school, brick-and-mortar companies. Startups, especially technological startups, prevail in the current trend of business and entrepreneurship all over the world. Startups usually revolve around an innovative idea developed into a product or service and backed by a viable business model.

Startup entrepreneurs, like regular business owners or founders, need to be backed by investors so their business takes off the ground. Unlike before, when one needed a large amount of patience and contacts to find investors, entrepreneurs these days rely on technology to help them raise funds.

Technology and fundraising: Startups show the way

Successful startups show the way to go when using technology for fundraising. TechCrunch reports that 82Labs, a company that manufactures a drink that helps deal with hangovers, has raised around US$8 million for the endeavour. While most of its new capital comes from venture capitalists, the company had begun with an Indiegogo crowdfunding campaign that raised US$250,000.

Angel investors are here to help

With the rise of startups that lean towards responsible social entrepreneurship came the rise of angel investors. Angel investors are people with capital willing to invest in businesses that help achieve a common good. Although a return on investment is important to them, social impact is equally valuable.

Angel investors like Astia in Silicon Valley have been investing in women-led startups since 2013. According to the Robb Report, these investors are putting their money in companies led by women to answer an important need in society.

These investors are making their mark worldwide. World Business Angel Investment Forum reports that in 2015, around 300,000 angel investors invested about US$25 billion in startups in the United States. In Europe, about 310,000 angel investors invested more than £6 billion in Europe. The estimated total global market size of angel investment is over US$50 billion every year.

Before an entrepreneur seeks out these angel investors,  having a good plan to knowing the details of profit margins, expenses, gross profits and sales forecasts. One needs to demonstrate an excellent knowledge of the industry and show a good track record of success. Finally, an entrepreneur must show a passion for one’s work.

Crowdfunding to get support and test the market

Small businesses that are only establishing themselves in the industry likely do not have many contacts or access to angel investors. In this case, crowdfunding becomes a more viable option. Online platforms such as Kickstarter, Indiegogo and GoFundMe allow individuals or small groups to share innovative ideas. Donations are centralised on the platform – people who like the idea can easily donate.

With so many platforms available, the first step before starting crowdfunding campaigns is to figure out which platform best suits the idea, product or service that one wants to promote. Entrepreneurs can determine this by doing research on each one and compare them according to their features.

Once the campaign is up, entrepreneurs should not sit down and wait. One must post on social networking sites, looking for people with like minds who are willing to chip in. One must actively engage supporters and potential supporters when they ask questions about the product or service.

Importance of foresight

A successful startup that desires to become a successful business needs to have a viable business exit plan as well. The term business exit usually has a negative connotation, but that should not be the case.

A business exit plan demonstrates good business foresight, as it shows how an entrepreneur prepares for both good and bad situations. Business owners must prepare a list of possible acquirers and become host to asset managers. Other options to consider involve going through an Initial Public Offering (IPO), selling a majority stake, merging or acquiring, or liquidating assets. The business exit plan needs to outline all these possibilities.

Technology and its advances have made it easier for entrepreneurs to implement business exit plans. Making use of crowdfunding platforms and Initial Coin Offerings (ICO) present new solutions for entrepreneurs when it comes to taking their businesses to the next step.

ICOs have raised about US$1.5 billion worldwide since their appearance. Since 2013, ICOs have delivered virtual currency to investors and helped raise funds for startups.