Here are the key mistakes that founders make at different stages of building startups
Stage 1
Growth stage
IDEATION
Idea is fleshed out; market need & viability checked; market research done; target audience fixed; competition scoped out; business model decided; costs and expenses are estimated.
Funding stage
PRE-SEED
Source of funding: Bootstrapping, family & friends.
Mistakes
- Poor product-market fit; product may have no market or need, or wrong customer segment.
- Business plan not detailed, lacking clarity, strategy or budget estimation.
- Insufficient market research.
Stage 2
Growth stage
VALIDATION
Idea takes tangible shape; prototype/minimum viable product (MVP) created, tested; business strategy formed; corporate structure decided; employees hired; regulations & compliances carried out.
Funding stage
SEED
Mistakes
- Underestimating time and cost.
- Insufficient MVP testing; failure to get customer feedback and improvise.
- Not incorporating the right company structure.
- No co-founder agreements.
- Ignoring regulations & compliances
- (permits, licences, legal and tax issues).
Stage 3
Growth stage
EARLY STAGE
First funding sourced; customer base formed; revenue generated; idea refined for customer retention; marketing strategy decided; growth strategy and profit plan decided to attract investors.
Funding stage
SERIES A
Source of funding: Venture capital and debt funds, bank loans.
Mistakes
- No cash-flow discipline.
- Skewed fund distribution for branding, marketing or hiring.
- Wrong marketing strategy.
- Poor corporate governance.
- Lack of funding and investors due to improper growth
