Start-up - a temporary organization in the early stage of the life cycle, created in order to seek repeated and scalable business model.
Scalability means relatively proportional increase in market share, and hence multiplication of funs invested by VC or Business Angels.
Another generally accepted definition, adds extremely high uncertainty, which largely distinguishes the nature of start-ups from typical small and medium-sized businesses operating in well-established and mature markets.
Start-up functions based on a business model that defines the way in which the organization intends to create and deliver value to your target customers. In other words, it shows the methods and channels of distribution of the product, the cost structure of individual departments and the implementation of its objectives.
In order to develop an appropriate business model for start-up, Lean Startup method proposed in 2011 by Eric Ries could be used. Like the Agile methodology it relies on iterative approach to design, test and implementation of model assumptions, and constant adjustments of model in so called: feedback loops (Build-Measure-Learn).
Start-up works in conditions of technological and market uncertainty. To gather information, whether the product has a chance to sell to customers, managers create the so-called: MVP (Minimum Viable Product), which is a product with a minimum level of functionality, allowing to collect from customers maximum information with minimum cost. As a result of the next iteration of the product development process, company aims to create fully functional product which complies with the most requirements of the customer.
- Carter, N. M., Gartner, W. B., & Reynolds, P. D. (1996). Exploring start-up event sequences. Journal of business venturing, 11(3), 151-166.