What is an early stage startup?
People love to categorise things, especially in business. If you’re running a startup, then you’re likely to find that investors, other founders, friends and even family will frequently ask what ‘stage’ you’re at. It’s not an easy question to answer, given that startups are all pretty individual and don’t necessarily fit neatly into pre-defined ‘stages’.
However, there are some broad categories for startups defining how far along you are in your development and growth, and it can help to know them (if only to answer those awkward questions!). The time you’re most likely to be quizzed on progress is the early stage, so here’s a brief rundown of what early stage really means:
Not quite there yet. If you’re in the early stage, you’re probably still working things out. You may not have a market-ready product, or a fully equipped team, so chances are that the founders are still doing the bulk of the work, perhaps with a couple of others. You’re still finding your feet. But you’ve progressed from the initial ideas stage, and things are starting to take shape.
Lacking in money. Money tends to be the defining factor in startup progress, unfortunately. With enough money, you can shoot through the early stages in no time. However, it’s not always such a bad thing if you’re forced by funds to stay early stage for a bit longer. This is the experimentation phase, during which you get to play around with your concept without fear of market consequences. This kind of time is valuable, so make the most of it.
It’s getting real. If you’ve got that ‘Oh gosh, this might actually happen’ feeling in your stomach, you’re probably running an early stage startup. You’ve started the process, and it’s got to the point where you can’t stop it. While you may not have officially launched into the market, you’ve progressed far enough with your product and service ideas that a launch is going to happen sooner or later.
You need funding. Building on the second point, early stage means you’re starting to build a clearer idea of where you’re headed but you need money to advance further. You’re likely therefore to be looking into seed funding, accelerators, or incubators.
Depending on who you talk to, the early stage is either preceded or followed by the seed stage on the startup timeline. Each startup is different, so staging is by no means set in stone. For example, if your product requires intensive manufacturing or a high level of research and development, it may well be necessary for you to acquire seed funding before your early stage. For less resource-hungry products, the early stage may come before the seed stage. Generally, however, the early stage is followed by the growth stage, during which you acquire funding, build your team, refine your product for the market, and prepare to launch.
In some senses, the early stage is a bit of a honeymoon period, without the pressure of external investors, or a large-scale customer base to worry about. But that’s not to say it’s easy, as this is where you have to demonstrate that your big idea has legs, with very little funding or support to help you. Having said that, it all gets pretty serious after the early stage, so we advise you to make the most of this experimental, creative time while you can.
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