How is the industry changing

The industry is changing. Since the beginning of the crisis, there have been changes that began to appear even before the crisis.

What are these trends? But:

- since 2007, more and more investors began to demand that startups have a service station in a team and in equity ,

- since 2007, funds began to neglect small transactions, the average investment of the early stages increased from $ 800-900k to $ 1.3m, and then even higher,

- the cost of software development began to fall due to the availability of ready-made libraries and a large number of open source solutions,

- a media ecosystem has been formed in the industry, which allows you to get customers without resorting to large infusions in advertising, but simply by finding an interesting problem,

- with the development of social networks, it became possible to attract traffic from social networks , with a successful start of the project, it turns out to be very cheap,

- the solvency of the Internet population has grown and a large number of tools have appeared that allow you to collect money from customers,

- the presence of various advertising tools (from contextual advertising to traditional banner networks and affiliate programs) makes it easy to convert traffic into money. Entire industries appeared in the States in which “traffic = money” works,

- the trend of creating credit card funded startups is developing more and more.



What we have on the investor side of the field?

Investors, realizing that the value of capital for most startups in the early stages is very conditional (see above), began to go into the later rounds of investment, not associated with development, but with access to the market or increased sales. In this field, the number of startups that went through the early stages and showed the market demand for the product is traditionally an order of magnitude smaller. There was competition from capital, which explains the transcendental pre-money valuations for successful startups .

On the other hand, the cost of developing and launching products fell, and entrepreneurs began to realize that sharing part of the equity for money, when you can invest your little money, and the rest is not logical to close the founders' working time. Thus, the requirements for the angels sharply increased. Not so much, and not only money, began to be demanded from the angel, but something more - what we call advicing, coaching, mentoring. Something that can not be bought for money, but that can help a startup. The category of such angels is called superangles . They put down their philosophy, which can be described as “the investor is not able to evaluate the project - only the market can do it. Any project that meets the basic requirements is worth getting a small investment to try to enter the market. ” Such investors make many small investments in companies that are selected. One of them is Dave McClure , who has made his foundation of 500 startups with a size of only $ 30 million, which implies a small investment. The fund exists in the form of an incubator, with which 120 (!!!) mentors cooperate - the best entrepreneurs, experts and investors in the industry.

Most of these superangel are registered in the Algel List , through which they receive most of the projects.

According to this model, in one way or another, several structures operate on the market. In America, this is YCombinator , which began to lose its appeal in the face of competition with PlugAndPlay , Ron Conway and SV Angels are working according to this scheme. There are such structures in New York. An incubator that degenerated into The Founders Institute's training program, which went franchising around the world. In Europe, it is the famous SeedCamp . In Russia, this is Glavstart , which is trying to use the YCombinator model. In Ukraine, we launched GrowthUP , which does not make investments, but free of charge (we exist at the expense of investors) provides access to a training program and mentors (we have a large number of start-ups from Russia and Belarus). Here is an almost complete list of such programs around the world.



What conclusions can an entrepreneur draw from all that is written above?

1. Clearly understand what problem the user is solving. Go back to earth and soberly assess how sharp it is, have you sucked it out of your finger?

2. Build a team that can make and run a prototype, and get the first users to attract investments.

3. Communicate with investors at the earliest stages, but not to get money, but to get feedback - most of them easily share their thoughts and experiences. Then, when the project starts, it will be easier for you to go to them.

4. Try to use the Customer Development methodology, which proved to be one of the best for building a successful startup.

5. Ask for money from investors ONLY WHEN YOU WITHOUT THEM WITHOUT THEM

6. Take only Smart Money, which together with the money will give you something else.

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Translation into Russian (at the request of comments, lichku and soap):



The industry is changing. Since the beginning of the crisis, there have been changes that began to appear even before the crisis.

What are these trends in the direction of development ? But:

- since 2007, more and more investors began to require startups of young technology companies to have a HUNDRED service station for a person in charge of the engineering part of the project in a team and in equity in the statutory fund or a signed document on how he will participate in such a fund during company registration ,

- since 2007, funds began to neglect small transactions, the average investment of the early stages increased from $ 800-900k to $ 1.3m, and then even higher,

- the cost of software development has begun to fall due to the availability of ready-made libraries and a large number of open source free software solutions,

- An industry has formed an ecosystem of media sites that provide users of specialized resources with access to information through the publication of texts, sound and visual information , which allows them to get customers without resorting to large amounts of advertising, but simply to find an interesting problem,

- with the development of social networks, it became possible to attract traffic from social networks, with a successful start of the project, it turns out to be very cheap,

- the solvency of the Internet population has grown and a large number of tools have appeared that allow you to collect money from customers,

- the presence of various advertising tools (from contextual advertising to traditional banner networks and affiliate programs) makes it easy to convert traffic into money. Entire industries appeared in the States in which “traffic = money” works,

- the trend of creating credit card funded startups of young technology companies is growing more and more , which can be created with the help of a small amount of money available to the founder and long and hard work of the founders .



What we have on the investor side of the field?

Investors, realizing that the value of capital for most startups in the early stages is very conditional (see above), began to go into the later rounds of investment, not associated with development, but with access to the market or increased sales. In this field, the number of startups of young technology companies that have gone through the early stages and showed the market demand for a product is traditionally an order of magnitude smaller. There was competition from capital, which explains the transcendental pre-valuation valuations of the company's value before investing which was agreed by the founders with investors for successful startups of young technology companies .

On the other hand, the cost of developing and launching products fell, and entrepreneurs began to realize that sharing a part of the equity of a company's authorized fund or a part of share capital for money, when you can invest your little money, and the rest is not logical to close the founders' working time. Thus, the requirements for the angels sharply increased. From an angel of a private investor who is able to invest from $ 50k to $ 200k, they began to demand not so much and not just money, but something more - what we call advancing procedures related to tips on how to better build a business trading part of a company’s activities , coaching support of a company’s activities with tips on how best to perform this or that action , mentoring mentoring activities in relation to the first persons (co-owners or managers) of a young technology company . Something that can not be bought for money, but that can help a startup. The category of such angels for private investors who can invest from $ 50k to $ 200k is called super angels. Private investors who can invest from $ 50k to $ 200k . They put down their philosophy, which can be described as “the investor is not able to evaluate the project - only the market can do it. Any project that meets the basic requirements is worth getting a small investment to try to enter the market. ” Such investors make many small investments in companies that are selected. One of them is Dave McClure, which has made its foundation of 500 Startups of Small Start-Up Technology Companies of just $ 30 million, which means a small investment. The fund exists in the form of an incubator structure capable of assisting in the development of small start-up technology companies , with which 120 (!!!) mentors of individuals collaborate , whose previous experience allows us to provide consulting and mentoring activities to small start-up technology companies - the best entrepreneurs, experts and investors in the industry.

Most of these super private investors, who can invest from $ 50k to $ 200k, are registered in the Algel List of private investors who can invest from $ 50k to $ 200k , through which they receive most of the projects.

According to this model, in one way or another, several structures operate on the market. In America, this is Yombinator, which began to lose its appeal in the face of competition with PlugAndPlay, and Ron Conway and SV Angels are working according to this scheme. There are such structures in New York. An incubator is a structure capable of assisting the development of small start-up technology companies , which degenerated into a training program The Founders Institute, which went with a franchise model that allows local partners to use the trademark, set of procedures and rules of the parent company for the world. In Europe, it is the famous SeedCamp. In Russia, this is Glavstart, which is trying to use the YCombinator model. In Ukraine, we launched GrowthUP, which does not make investments, but free of charge (we exist at the expense of investors) provides access to a training program and mentors to individuals whose previous experience allows us to provide consulting and mentoring activities to small start-up technology companies (we have a large number of startups of small start- up technology companies from Russia and Belarus). Here is an almost complete list of such programs around the world.



What conclusions can an entrepreneur draw from all that is written above?

1. Clearly understand what problem the user is solving. Go back to earth and soberly assess how sharp it is, have you sucked it out of your finger?

2. Build a team that can make and run a prototype, and get the first users to attract investments.

3. Communicate with investors at the earliest stages, but not to get money, but to get feedback - most of them easily share their thoughts and experiences. Then, when the project starts, it will be easier for you to go to them.

4. Try to use the methodology Customer Development Customer Development , which proved to be one of the best for building a successful startup of small start -up technology companies .

5. Ask for money from investors ONLY WHEN YOU WITHOUT THEM WITHOUT THEM

6. Take only the Smart Money money to which the experience, knowledge, skills, connections of the investor who provided the money are attached , which together with the money will give you something else.



PS: I'm a little tired of trying different individuals to have sexual intercourse with my brain on the use of slang (words and expressions adopted in narrow communities), neologisms (not a very Russian word, but a standard linguistic term), borrowed words from other languages ​​and foreign words. Thanks for attention.