CHAPTER 4 – LIFE CYCLE

Life Cycle
 Stage 1: Opportunity Recognition
 Stage 2: Opportunity Focusing
 Stage 3: Preparation and Commitment of
Resources
 Stage 4: Market Entry
 Stage 5: Full Launch and Growth
 Stage 6: Maturity and Expansion
 Stage 7: Liquidity Event
 Stage 1: Opportunity
Recognition

Stage 2: Opportunity Focusing

start
 Silicon Valley’s legendary entrepreneur Steve Blank defined a startup as a temporary
organization designed to search for a repeatable and scalable business model.
 According to Statista, in 2021, there were 1,058 unicorns in the world. CB Insights
found that the chances for a startup to become a unicorn are less than 1%. The harsh
reality is that around 70% of tech startups fail — they manage to live about 20 months
on average after their first financing.
 That is why in our post, we will decode the life cycle that all startups have to undergo
and will try to highlight possible bottlenecks in all the stages of development.
 Stage 3:
Preparation and
Commitment of
Resources
Ideation- Discovering the Solution

The ideation phase is where the nascent idea of your startup is

generated. The core idea of your startup is decided during this
phase. You/your team decide on the principle of your prospective
startup and the core question ‘Why are you doing this?’
The ideation phase further develops into conceptualization phase
where the execution of your idea is decided. The concept defines
how your idea will be carried forward, and revolves around the
question ‘How are you doing this?’
Example :
To give a clearer picture, let’s take Facebook as our model.
The idea behind Facebook was to create a platform where people could connect with each other in the
virtual world.
 An idea is the root of every business. It can be born
from your needs or the requests of your relatives and
friends, for example. However, having a bright idea is
not enough for success. It would help if you studied it in
all aspects at the initial stage of every startup lifecycle.

you should define what
First,

specific problem your

product or service will solve.
It is also essential to estimate whether your solution is
the most effective for this particular problem. Also,
what you should understand is the reason for the market
to accept your startup idea. Several practical steps can
help you achieve that:
• Make sure that your solution is the best answer for the
problem, in your opinion.
• Identify the target audience for your product or service
and study it thoroughly.
• Ask people, your potential clients, what solutions for the
problem they have already been using. Ask for their opinions
about your solution.
• Mark the pain points of your target audience.
• Adapt your solution to the new needs and potential
customers' opinions.
• Determine the preliminary sketch of requirements for the
future prototype.
• Create landing pages to check the demand and generate leads.
 Search the internet— turn to Crunchbase, Angel
List, or Google to find entrepreneurs interested in
startups like yours and contact as many of them
as you can;
 Joinpitch competitions/events — present your
project at specialized events for startups;
 Getinto an incubator — they provide not only
funding, but also training courses, office space,
and other business services;
 Get into an accelerator — their main focus is fast
scaling, but some of them offer pre-seed capital.
MVP
MVP stands for Minimum Viable Product. As the name
suggests this is the phase where a startup essentially
creates the zeroth model of its core idea. It is the first
saleable version of your product designed with minimum
yet sufficient features to satisfy early adopters and to
validate the assumptions of usability and demand basis on
which the final product (or the beta) is developed.

An MVP isn’t supposed to be a detailed working model of

your startup. MVP concentrates on execution and is a
rough model that performs the basic idea of your startup.
MVP is to test the prototype with the target audience before proceeding to the next levels.
So, we recommend using all possible customer communication channels for maximum
feedback:
• Customer interviews — question your first customers about
their opinions on the products, all possible issues, and letdowns.
• A/B tests — introduce two or more test versions and analyze
your customers' interactions to choose the best MVP.
• Ad campaigns — start an advertising campaign in social
media, on television, and use other resources to test your
product idea and relevant customer reaction. You can use
special analytical tools on such platforms as Facebook or
Google.
• Crowdfunding campaigns — get honest feedback by
presenting your MVP on a crowdfunding platform like
GoFundMe, where your potential customers will vote for your
products with their money.
Validation
Startup validation is key before moving into the final phase of Introducing your
business model and the product into the market. In this phase, you, your investors, and
your co-founders work on finding the possible reasons your startup might fail in the
actual market.
It is advised to have internal validation team (your co-founders, investors and everyone
working in your team) as well as an external validation team (a trial network of people
you create to test out possible flaws in the system) to find out possible fatal flaws in
your startup or to find out where you can improve on your business model, your
revenue model and the products to speed past existing competitors.
The external validation process of the startup life cycle includes releasing of a
beta version of the product.
 Stage 4:
Market Entry
Beta
The Beta version of your product/service is the pre-release version you
give your target audience to test out the look and feel of your service.
This is the testing water for major/minor changes, and the final chance
to improve your final product before actually releasing into the market.
Beta testing is usually done for services provided typically online.
Beta is where branding plays a major role. The brand value is defined
here and since this phase, the brand image is to be maintained.
 Stage 5:
Full Launch and Growth
Introduction- Launch
During this phase, the product is actually introduced in the market. This
phase is majorly dominated by pioneers and early majority. These are
the testers who try out your product and the major marketing that works
here is word of mouth. Early testers provide great insights for hits and
misses of your product in the early phase.
Introduction phase should be planned such that the impact factor of your
product is maximum. Aggressive marketing is essential to get your
product out in the market for maximum reach.
Investment

Once you are satisfied with your MVP, you pitch your MVP to investors. This
phase can get tedious as only 2 out of 100 startups get funded. But if you have
researched well on the 4Ps of marketing: Product, Price, Promotion, Place it is
highly likely that investors will favour your startup since
investors usually want a product with an easy market.

Deciding on the basic sellable aspect of your product/service is key to

entice your investors into investing in your project.
Growth- Scale
During the growth phase, your product has set a firm foot in the market.
With the brand generating a loyal customer base, this is the phase where
a brand essentially moves out of the breakeven phase and
generates revenue. During the growth phase, expansion of the company
is a must as quantity will bring revenue and reach is increased by
moving out from your tested zone.
The growth phase is to be planned such that, the existing customer base
is hooked to your product and enough incentive is provided to new
users to try your product over existing market competition.
Stage 6: Maturity and
Expansion
Stage 7: Liquidity
Maturity and Exit
Maturity is an indication that your startup life has reached a saturation point.
Your idea is no more unique, many more competitors have evolved and you no
more have a big competitive advantage in the market.
Beyond this point, an entrepreneur has three major options:
1.To plan new strategies and work vigorously to maintain its position in the
market,
2.To create new products to set up a business ecosystem around your existing
product, and
3.To execute the exit strategy and start his entrepreneurial life again with a new
product.
Each option has its own consequences
Business Model explained
Problem Commerce model B/C, B/B

Solution Operational Model Online /

Traditional/
Hybrid/Partial
Hybrid
Money Revenue Model Retail ,
Commission ,
Franchise