Whether they want to change the world or simply make their business vision a reality, startup founders dream of giving society something it needs but hasn’t created yet—and doing it at scale. For the less industrious, startups also have another appeal—eye-popping valuations that hopefully lead to an initial public offering (IPO) with an astronomical return on investment.
After our last mobility in Portugal, it is clear to know what is a Start-up and what is a Start-Up Incubator and accelerator. The workshop with MADE-IN made in Famalicao, a big important industrial area within the district of Porto, help us. Moreover, we can use this Locals Issue nr.7, to assess the situation about Start-up and Incubator.
Startup: What Is It?
Startups are young companies founded to develop a unique product or service, bring it to market and make it irresistible and irreplaceable for customers. Startups are rooted in innovation, addressing the deficiencies of existing products or creating entirely new categories of goods and services, thereby disrupting entrenched ways of thinking and doing business for entire industries. That’s why many startups are known within their respective industries as “disruptors.”
You may be most familiar with startups in Big Tech—think Facebook, Amazon, Apple, Netflix, Google, collectively known as FAANG stocks—but even companies like WeWork, Peloton and Beyond Meat are considered startups.
How Does a Startup Work?
On a high level, a startup works like any other company. A group of employees work together to create a product that customers will buy. What distinguishes a startup from other businesses, though, is the way a startup goes about doing that. Regular companies duplicate what’s been done before. A prospective restaurant owner may franchise an existing restaurant. That is, they work from an existing template of how a business should work. A startup, on the other hand, aims to create an entirely new template. In the food industry, that may mean offering meal kits, like Blue Apron or Dinnerly, to provide the same thing as restaurants—a meal prepared by a chef—but with convenience and choice that sit-down places can’t match. In turn, this delivers a scale individual restaurants can’t touch: tens of millions of potential customers, instead of thousands.
This also points to another key factor that distinguishes startups from other companies: speed and growth. Startups aim to build on ideas very quickly. They often do this through a process called iteration in which they continuously improve products through feedback and usage data. Oftentimes, a startup will begin with a basic skeleton of a product called a minimal viable product (MVP) that it will test and revise until it’s ready to go to market. While they’re enhancing their products, startups are also generally looking to rapidly expand their customer bases. This helps them establish increasingly larger market shares, which in turn lets them raise more money that then lets them grow their products and audience even more. All of this rapid growth and innovation is typically, implicitly or explicitly, in the service of an ultimate goal: going public. When a company opens itself up to public investment, it creates an opportunity for early investors to cash out and reap their rewards, a concept in startup parlance that is known as an “exit.”
Startups generally raise money via several rounds of funding: There’s a preliminary round known as bootstrapping, when the founders, their friends and family invest in the business. After that comes seed funding from so-called “angel investors,” high-net-worth individuals who invest in early stage companies. Next, there are Series A, B, C and D funding rounds, primarily led by venture capital firms, which invest tens to hundreds of millions of dollars into companies. Finally, a startup may decide to become a public company and open itself up to outside money via an IPO, an acquisition by a special purpose acquisition company (SPAC) or a direct listing on a stock exchange. Anyone can invest in a public company, and the startup founders and early backers can sell their stakes to realize a big return on investment. It’s worth noting that the initial stages of startup funding are limited to those with especially large pockets, people called accredited investors, because the Securities Exchange Commission (SEC) believes that their high incomes and net worths help shield them from potential loss. While everyone wants the more than 200,000% return Peter Thiel saw on his investment into a little startup called Facebook, the vast majority—about 90%—of startups fail, according to a report authored by UC Berkeley and Stanford researchers. This means early-stage investors have a very real possibility of seeing 0% returns on their investment.
A startup incubator is a collaborative program designed to help new startups succeed. Incubators help entrepreneurs solve some of the problems commonly associated with running a startup by providing workspace, seed funding, mentoring and training (see list below for a more extensive list of common incubator services). The sole purpose of a startup incubator is to help entrepreneurs grow their businesses. Startup incubators are usually non-profit organizations, which are usually run by both public and private entities. Incubators are often associated with universities, and some business schools allow their students and alumni to take part in these programs. There are several other incubators, however, that are formed by governments, civic groups, startup organizations or successful entrepreneurs.
While most of the media emphasis focuses on tech startups, incubators aren't just limited to one industry. In fact, the focus of incubators varies by region. North Carolina, for example, is home to five incubator farms. Given the strength of its restaurant and fashion industries, NYC is home to several incubators for both food and fashion. There are also all-purpose incubators that consider all kinds of startups, regardless of industry. While many people associate business incubators with the tech boom, this is not a new concept. In fact, the first startup incubator -- the Batavia Industrial Center -- was formed in 1959. The Batavia Industrial Center was founded in response to Batavia, NY's high unemployment rate and as a way to repurpose a vacant industrial building. Given the origins of the business incubator, it makes sense that the concept is making a huge comeback during the time of the Great Recession.
Incubators, accelerators and R&D clusters from Germany, France, UK, Spain, Italy, Portugal, Netherlands, Denmark, Sweden, Poland, and Belgium, are engaging in the EIT Health programme to offer European start-ups with individualised support in expanding beyond their home markets: “The programme is a great opportunity for start-ups with international expansion in mind – we truly provide a bridge to European markets. And this year’s engagement from leading incubators from all over Europe in the Bridgehead programme has been impressive”, says Christos Vaitsis and Zara Pons-Vila, the Scandinavian EIT Health Business Creation team.”
Within our partnership, we can list the following incubators and accelerators: 1) Centre for Innovation and Technolgy Transfer Medical University of Lodz, Poland; 2) Lifescience Krakow Klaster, Poland; 3) BGI, Portugal; 4) Teclabs, Portugal; 5) Biocant, Portugal; 6) PACT, Portugal; 7) IPN Incubadora, Portugal; 8) IBV, Spain; 9) IESE Entrepreneurship and Innovation Center (EIC) Incubator, Spain; 10) UPF Ventures, Spain; 11) Fundacion Parque Cientifico Madrid, Spain; 12) BioCAT, Spain; 13) Innovation labs, Romania; 14) Carbon, Romania; 15) Step FWD, Romania; 16) 70v, Lithuania; 17) Baltic sandbox, Lithuania; 18) Luis Enlab, Italy; 19) PoliHub, Italy; 20) BOX, Italy; 21) WhyLab, Italy.
- Y Combinator, USA
- Techstars, USA
- 500 Startups
- Venture Catalysts
- StartupBootCamp
- Ignite
- Melbourne Accelerator Program
- Startup Reykjavik
- Metavallon
- Axel Springer Plug and Play Accelerator
- Startup Wise Guys
- Buildit Accelerator
- Startup Yard
- Chinaccelerator
- Highline Beta
1. Business-to-Business (B2B) Software and Services
Startups that operate in the B2B Software and Services space made up 30 and 40 percent of the Summer 2018 and Winter 2019 Y Combinator groups. This sector creates services for companies to better manage their business or interact with their customer base. Examples include Slack, the messaging platform, and Asana, the project management software.
2. Healthcare
Startups that operate in the Healthcare space made up 28 and 14 percent of the Summer 2018 and Winter 2019 Y Combinator groups. Startups in this sector typically offer new and more convenient ways for people to manage and track their well-being. Examples include Flo Health, which helps women track their menstrual cycles, ovulation and fertility days, and Keeps, which offers a simplified prescription and delivery process for hair-loss medication.
3. Consumer Goods and Services
Startups that operate in the Consumer Goods and Services space made up 9 and 13 percent of the Summer 2018 and Winter 2019 Y Combinator groups. Startups in the Consumer Goods and Services sector provide fresh spins on existing goods and services, or bring entirely new ones to consumers. Examples include food delivery services, like DoorDash, and home-sharing services, like Airbnb.
4. Financial Technology (FinTech)
Startups that operate in the FinTech space made up 6 and 8 percent of the Summer 2018 and Winter 2019 Y Combinator groups. FinTech startups leverage technology to make financial services more accessible and convenient. Examples include Venmo, the mobile payment service, and Robinhood, the financial services company that makes investing in stocks more accessible.
5. Consumer Media
Startups that operate in the Consumer Media space made up 7 and 6 percent of the Summer 2018 and Winter 2019 Y Combinator groups. Consumer Media startups provide new ways for people to interact with and enjoy media. Examples include live-streaming platforms, like Twitch, and online communities and forums, like Reddit.
If you are at the beginning of your career as an entrepreneur, first of all – listen and learn. Bill Gates is one of the people who understand the world of technology and can predict its development.
Credits:
Creato con immagini di StartupStockPhotos - "startup whiteboard room" • StartupStockPhotos - "student typing keyboard" • Tumisu - "startup entrepreneur entrepreneurship" • geralt - "startup wall painter" • viarami - "mockup typewriter word" • ArtisticOperations - "houston texas business" • geralt - "company startup business people"