IncFine

Scan the QR code

for quick communication in telegram

Startup

Launching a startup is a process that requires an understanding of some of the features of the life cycle of this type of company. If you are interested in registering a startup abroad, today's material will be relevant. Next, we will consider the features of start-up projects, the process of their establishment, obtaining funding and other aspects that are also important to consider.

What is a startup?

It is important to understand that a startup and a regular newly created company have a number of differences. Some of the most comprehensive definitions of a company and a startup that clearly differentiate between these business models are as follows:

A startup is a “temporary” organization that was created for innovative search of a solution to a problem or search of a promising repeatable and scalable business model;
The company is considered a "permanent" organization that is created to directly implement the above solutions and business models.

One can say that the main purpose of registering a startup is the process of finding an innovative approach to certain business processes, meanwhile the companies use and implement a ready-made approach.

Consequently, a startup is a new enterprise that is created by one entrepreneur or a group of individuals / legal entities interested in developing a unique product or technology, as well as bringing these products to common markets for scaling. As practice shows, in the early stages, typical startups are based on funding from the founders. Therefore, such organizations are taking a number of actions in order to interest investors, venture capitalists and thus to obtain funding for a startup and for the implementation of their project.

Startup launching in Europe, USA or Asia: Project Life Cycle

While the idea and implementation of each startup can vary significantly, most businesses go through the same phases as they grow and develop. This process is also known as startup lifecycle. It is important to understand that the stages of the cycle of individual organizations, which we describe below, can differ in time and intensity. However, as practice shows, any business ultimately goes through all these key stages facing the same issues.

Understanding the typical startup lifecycle can be very helpful as it helps you create your own business plan and prepare for the potential risks of registering a startup in Asia, the United States or Europe.

Usually, the following 5 key stages of a startup are identified:

PROBLEM DEFINITION AND SEARCH FOR ITS SOLUTION

The main characteristic of startups is that, in fact, each project is a solution to a specific problem. Therefore, the first step in setting a startup project is to evaluate the idea and find a suitable solution. During this time, it is essential to expand your idea and test the market to see how potential customers will perceive your product. You can address the professionals in your area of interest and conduct focus groups that are relevant to the problem and its solution. In addition, a company registered for a start-up can seek help of subject matter experts and consultants. This has several benefits since these experts know the industry, market trends, and can help assess the relevance and prospects of a startup idea.

MVP DEVELOPMENT AND IMPLEMENTATION

The next step is to test the innovation. To do this, a startup needs to create a prototype or minimum viable product (MVP). Moreover, such a model is usually formed by using the least investment of time and capital. MVPs are also used to demonstrate the effectiveness of a project. This is necessary to attract lenders, investors, business angels and venture capital for the further development of the startup.

The amount of time, money and people it will take to launch a fintech startup and create an MVP will vary greatly depending on the nature of the product or service. As mentioned above, if the business requires significant resources, funding may be required at this stage.

Among the most popular methods of attracting investment for a start-up are:

Crowdfunding

It's an effective way for early-stage startups to get funding while promoting their products. Crowdfunding allows companies to receive cash assets from a large number of people through online platforms. It is an innovative way to find sources of funding for new projects, businesses or ideas.

Crowdfunding platforms are websites that provide an opportunity for interaction between startups and other investment projects and the public.

There are several types of crowdfunding:

peer-to-peer lending, which has some similarities to traditional loan from a bank, except that the loan is taken from a large number of investors;
equity crowdfunding is the sale of a stake in a business to several investors in exchange for an investment. The idea is similar to how ordinary shares are bought or sold on stock exchanges;
reward-based crowdfunding implies that individuals donate to a project with the expectation of receiving a non-financial reward (goods or services) in return at a later stage;
debt-securities crowdfunding - individuals invest in debt securities issued by the company, such as a bond.

Each of these types of financing has its own pecularities. Therefore, if you are interested in the possibility of registering a crowdfunding for a startup , please contact our experts for detailed information on this matter.

“Incubators”

The so-called incubators are organizations that are often associated with business schools and universities. They assist in launching a startup project by providing premises, primary funding, training programs, mentoring, etc.

The list of services provided by incubators usually includes:

Provision of offices and work space;
Help with promotion and marketing;
Legal advice on start-up registration;
Support in registering a company;
Financial and accounting services;
Access to credit and funds;
Help in finding suitable government programs on starting a startup;
Providing connections with various partners, mentors;
Access to venture capital and business angels;
Provision of the required technology or equipment;
Assistance in registering intellectual property;
Consulting on legal regulation of startups.

Syndicated financing

This business model allows business angels to settle deals with each other. Thus, some angel investors can invest in startups at an early stage and encourage other angel investors to contribute. By creating a syndicate, members can pool their resources and share both the risks and the potential for attractive returns. In turn, startups can receive larger amounts of investment.

P2P lending platforms

The use of P2P lending platforms has skyrocketed across Europe, providing loans to small and medium-sized companies at lower interest rates than most banks.

Venture Capital Firms

Due to the fast growth of entrepreneurial activity, an increase in the number of investment fund registrations and venture capital firms aimed at financing start-ups in various emerging markets is viewed. Venture capital funds are pooled investment funds that manage the assets of investors looking for private equity stakes in startups and small and medium-sized enterprises with strong growth potential. These investments are usually characterized by very high risk and high returns.

Local grants and various start-up competitions

This is one of the ways of fundraising for startups, aspiring founders who are ready to receive government money, want to raise funding for their project, increase brand awareness and get useful feedback from experts and potential clients.

ENTERING THE MARKET

After developing an MVP and attracting investments for a startup project, it is necessary to enter the market. The company must work to ensure product compliance with the market requirements. This basically means product adjustment to satisfy the requirements of the target market and potential users or customers.

Achieving maximum product-market fit is a continuous process that includes mandatory market research, testing, and feedback. If you intend to register a startup, you must also work out a unique selling proposition (USP) to attract and retain customers. Marketing, reach, financing and business model development are the key characteristics of entering the market.

SCALING AND GROWTH

At this stage, the startup turns into a company that has regular customers and a certain market position. Such an organization is usually focused on improvement and performance. To compete in established markets, startups will need better business practices, as well as outsourcing and automation to improve their productivity.For entrepreneurs interested in launching a startup in the US, Asia or the EU, it is important to consider that this life cycle is characterized by a period of entering new markets and distribution channels. This stage is often chosen by the startup owner to gain more market share and find new revenue and profit streams. This will likely mean seeking more funding, building a full-fledged team and corporate structure, and seeking outside partners to help in specialized areas.

MATURITY

At this stage, the company is characterized by:

good reputation and recommendations;
high level of customer retention;
stability;
impact on the industry;
making a profit.

Founders can take action to:

exit and complete the activities; or
enter the international market.

You can create an international company, but it is important to consider the regulatory and legal requirements.

Conclusion

Starting a FinTech startup and other innovative projects requires strict adherence to laws. If you are in the process of choosing the most suitable jurisdiction for registering a startup abroad, it is important to take into account that the sphere of innovation and financial technology is currently characterized by varying degrees of regulation. You can create a startup company in:

developed countries, where, for example, regulation of fintech companies is established by the regulatory framework in place; or
in developing countries that are in the process of developing legislation in relation to various start-up projects.

If you are interested in developed countries, it is worth considering:

registering a startup in the USA;
starting a startup in the UK;
registering a startup in Australia;
creating a startup project in Switzerland;
launching a startup company in Estonia;
registering a company for a startup in Canada.

It is important to understand that the regulatory authorities in these jurisdictions strictly enforce regulatory compliance. Therefore, if you intend to start a startup in the above states, it is worth enlisting the support of subject matter experts who will advise on regulation issues and provide support at all stages of setting up a business.

Among the most promising developing countries are:

registration of a startup in South Africa;
starting a startup project in Chile;
company registration for a startup in Namibia;
creation of a fintech startup in Mexico;
starting a startup in Zambia, etc.

As practice shows, many developing states only assess the possibilities of the sphere of innovation, crypto activity and financial technologies, therefore, their legislative frameworks in these spheres are under development or characterized by rather liberal requirements. However, taking into account the global trend of increasing the degree of regulation of business activities, it can be expected that many states will soon implement more stringent statutory provisions. To understand the peculiarities and nuances of regulation in a particular jurisdiction, as a rule, the help of qualified specialists is also needed.

IncFine employees monitor current changes in the legislation of many countries, so they are ready to provide you with a range of consulting services and support in the process of starting a startup in Europe, the USA, Asia or Africa. If you want to know more on this topic, contact us in any way convenient for you.