Connecting to the startup ecosystem day in, day out has been an amazing experience so far. Learning new things, great ideas and to be surrounded by the brightest minds is always wonderful. Discussing new business opportunities, new plans everyday, interacting with people with great vision provides me with the energy to keep going. This is something an individual with a 9-5 stream would be void of.
Having said all this, I can majorly categorize 5 varieties of startups:
“Lifestyle, small business, scalable, salable, social “
Lifestyle Startups: Work to Live Their Passion: On the Tarkarli beach in Konkan, one of my friend is a startup. They can be called lifestyle entrepreneurs: like Scuba Divers, teaching diving lessons to pay the bills so they can Scuba Dive some more. Lifestyle entrepreneurs live the life they love, work for no one but themselves and pursue their personal passion.
Small-Business Startups: Work to Feed the Family: The overwhelming number of entrepreneurs and startups in the India today are still small businesses. This category consists of grocery stores, hairdressers, consultants, travel agents, Internet commerce storefronts, carpenters, plumbers, electricians, etc. They are anyone who runs his or her own business. Most small businesses are not designed for scale — the owners want to own their business and feed the family.
Scalable Startups: Born to Be Big: Scalable startups are what Silicon Valley entrepreneurs and their venture investors aspire to build. Google, Skype, Facebook and Twitter are just the latest examples. From day one, the founders believe that their vision can change the world. Unlike small-business entrepreneurs, their interest is not in earning a living but rather in creating equity in a company that eventually will become publicly traded or acquired, generating a multi-million-dollar payoff.
Salable Startups: Acquisition Targets: Many of these startups bypass traditional VCs by using crowd or angel funding. This class of startup is likely to be sold to a larger company for $5 million to $50 million. The founders and investors walk away with millions but not billions.
Social Startups: Driven to Make a Difference: Social entrepreneurs are no less ambitious, passionate or driven to make an impact than any other type of founder. But unlike scalable startups, their goal is to make the world a better place, not to take market share or to create to wealth for the founders. They may be organized as a nonprofit, for-profit or hybrid.
Each of these five very different startup types has different financial goals, requires different teams and uses different financing strategies.
Yet what they all have in common – every one of them – is that in the last few years we’ve come to see that we had been building startups inefficiently.
Investors treated startups as smaller versions of large companies. We now understand that’s just not true. While large companies execute known business models, startups are temporary organizations designed to search for a scalable and repeatable business model.
Looking at the current scenario, there is a need to change the way we look upon entrepreneurship, incubate startups and fund them.