FAQs for startups

Definitions vary. However, a startup can be thought of as an entrepreneurial venture in the early stages of business development working to create a unique product or service and bring it to market.

Definitions tend to focus on startups youth and targeting of a specific gap or market opportunity. It is also generally assumed that a startup is a tech company.

Reasons vary. Arguably the biggest is creating a product with no market. You can create a fantastic product but if nobody wants it then you won’t make money.

Another major reason is premature scaling. Invest in validating your core offer before growing your team.

Sustainable growth based on a validated business model.

Successful startups go from discovery (confirming they solve a real problem) to validation (checking the market), to building out a full sales funnel, and only after the business model and fundamentals are in place, beginning to scale.

Reasons vary. Arguably the biggest is creating a product with no market. You can create a fantastic product but if nobody wants it then you won’t make money.

Another major reason is premature scaling. Invest in validating your core offer before growing your team.

Sustainable growth based on a validated business model.

Successful startups go from discovery (confirming they solve a real problem) to validation (checking the market), to building out a full sales funnel, and only after the business model and fundamentals are in place, beginning to scale.

Ideas for a product or service to meet the needs of a poorly or unserved market.

Alternatively, a successful startup may make a unique offer against a problem for which there are already numerous competing solutions, changing the dynamics in that market. Startups are often associated with this disruptive approach, which is why they are often referred to as ‘disruptors.’

Ultimately, the only way to know the quality of a startup idea is to test it.

Simply calling a company a startup says something about its position in the business development cycle. Startups are assumed to be relatively young businesses.

The two main ways to divide the ‘startup stage’ further refer either to the current funding achieved/aimed for, or the current business focus of the company.

When discussing funding, there are five main stages to consider:

• Seed capital
• Angel investor fundingVenture capital funding
• Venture capital funding
• Mezzanine financing and bridge loans
• IPO (Initial Public Offering)

Note that the majority of startups will skip one or more of these stages.

When considering business activity to decide the stage a startup is in, there are seven potential categories:

• Discovery
• Validation
• Efficiency
• Scale
• Sustain
• Maintain
• Decline (best avoided)

Early stage investment usually refers to the ‘seed capital’ stage of funding required for startups to begin their first projects requiring significant financial support.

Early stage investors generally provide funding that can be used for activities such as market research and validation in exchange for equity.

Usually, these arise when a city, local government, or municipality will designate some or all of its jurisdiction as a startup hub. The intention is to provide a supportive environment for founders and entrepreneurs during the relatively risky startup stage of their businesses.

A startup hub may offer direct or indirect access to financial support, resources, and regulatory support, as well as an environment filled with like-minded people and potentially useful connections.

An area may be informally considered a startup hub. Gdańsk is widely considered a rising hub for startups owing to its location, impressive range of companies, and depth of tech talent.