The Start of Start-ups

The founders of start-ups always begin from somewhere - a passionate individual with a brilliant idea. Meet Bennett and follow his journey into the world of start-ups!

Each year 1,200 students enrol to study Commerce at UNSW. One of these students is named Bennett. Let's meet him!

Bennett pictured looking lost because he does not know how to bring his idea to life 🙇‍♂️

Bennett is a second year UNSW student, loves a challenge and outside of a busy school schedule, enjoys spending time playing sport ⛹️‍♂️. An issue encountered during his hobby has fruited an interesting idea💡(it’s top secret!). Bennett hasn’t seen anything remotely like his idea and has a strong feeling that it’s a special one. There’s only one issue: he has zero idea how to put it to use 🤔. However, on a typical weekend when Bennett was scrolling online🖱️, an article published by BusinessOne opportunistically caught his eye 👀…

From An Idea Grows A Start-up: The Five Stages

Don't know what to do with your idea? Have you considered founding a start-up? The seemingly complex stages of a start-up can be summarised into these five simple stages.

Stage 1: Ideation ($0 – $50k) 💡

The initial stage of a start-up begins with a painful problem 😩 that has not been adequately addressed. This is your genius idea, your hypothesis, your starting point 💡. It is likely to change, so don’t get too attached. The experiences that you have gathered thus far will guide you. Your idea may seem unbelievably special, but if you wish to turn it into a reality, it’ll require true commitment 💯. So, we wish you the best of luck on this journey – it is both an arduous and rewarding one.

Fun fact: Mark Zuckerberg came up with Facebook in a Harvard dorm when he was only 19 years old. However, it all started controversially from a “hot or not” side-project called Facemash.

Stage 2: Validation ($50k – $1M) 🧪

The validation stage is where your idea gets tested against reality. Is it feasible? Can it make money💰? Does it excite your target customer 🤝? It’s imperative to get your idea in front of real customers and uncover the truth. If ideation is your hypothesis, then validation is your experiment 🧪. From customer interviews, and mock-ups to even a MVP (minimum viable product), your goal is to ultimately find out how painful the problem actually is 😩. For start-ups, customer pain equals customer desire. So, ideate and validate over and over until you have evidence to back your vision. You will be ready for the next steps if your customers are actively pulling for you to succeed 🙏.

Fun fact: Door Dash founder Tony Xu personally delivered food 🚗 back in 2013 as a form of validation. He met his customers first-hand and discovered what they really wanted - convenience in a time-poor society.

Stage 3: Fundraising ($1M +) 💰

Now, this is where your start-up gets evaluated and vetted by the big dogs 🐕 likely through a pitch. Venture capitalists and angel investors 😇 are all looking for a 10x return. You’re representing your start-up, so make your pitch count. Investors are looking for various things in addition to your numbers. Do you have the right team? Is your trajectory exciting 📈? Is the timing right ⏰? If you receive the funding, you’re now on a rocket ship 🚀. If you don’t, continue validating, start over, or bow out. Money is the lifeblood of any start-up. If you run out, it’s game over 💀.

Fun fact: Airbnb raised $20K from Y-Combinator, gaining an initial valuation of 2.5M 💰. Airbnb went through 33 rounds of funding in total, raising a cumulative $3B.

Stage 4: Scaling ($50M +) 📈

Now, you’re in the big leagues. This is where a great team, funding, and an excellent idea must meet with execution. At this stage, you likely have a few key competitors all vying for the top. So, hire, advertise & grow your way to the top ⛰️. Think of your start-up as a money machine 💰. The money you put into marketing, hiring, and growth must have a positive long-term return. Think of this stage as the upwards inflection in your exponential curve. More rounds of fundraising occur throughout this stage where necessary. As you scale, don’t forget the core problem. This will help guide you forwards.

Fun fact: Canva had 1.5M users in 2016, today they have 75M users. Customers actively want Canva to succeed because they are addressing a universal problem in design.

Stage 5: IPO ($1B +) 🤑

If you’ve made it to this stage, you are now part of a very exclusive club. Bill Gates, Mark Zuckerberg, and Elon Musk all made their money this way 💰. When start-ups undertake IPO’s, the public can now acquire shares of your company in exchange for real money. Your valuation has just become tangible, which means you can cash in and liquidate your stake. 90% of start-ups fail, and only 1% of the 1% ever reach an IPO, so congratulations, you’ve achieved the impossible 💯. But don’t forget the people that have supported and been by your side along the journey. No one can do it alone.

Fun fact: Elon Musk exited PayPal through an acquisition by eBay in 2002, walking away with $180M 💲. He went on to run Tesla 🚗 which was IPO’d in 2010. As of today, Tesla is worth over $686.5B.

After reading BusinessOne's article, the idea which was seeded into Bennett's mind began to sprout 🌱 – it’s now time to put it into action!

Stay tuned for next week's article to find out how being a UNSW student can help Bennett on his journey!

Bennett has now gained confidence and is ready to embark on his own start-up journey 💫

Authors: Jason Yu, Alison Tan, Alex Loke

Editor: Natarsha Wong