Top 5 Conditions Enabling The Creation Of A Start-Up / New Tech Company

The future of the U.S. economy is being built around entrepreneurship and innovation.  If an economy grows worse with jobs becoming scarcer, you’ll find more people willing to take the risk to try to start their own company.  In the U.S. this startup revolution is reinventing the economy and reshaping business as we know it, but more importantly, changing the quality of life around the entire world.

Why wouldn’t you want to build a Start-up / New Tech company when opportunity is knocking on your door?  Here are 5 conditions that make it more favorable to create a Start-up / New Tech company:

1. Reduced timeframe of product development: With today’s technological advances, you can take the first version of your product to customers much more quickly and in some cases in a matter of weeks.  Startups today focus on launching a minimum viable product with the most basic features and getting feedback from customers.  This saves time and money allowing you to test assumptions about customer needs and avoiding considerable effort developing unwanted features.

2.  Reduced cost to build a startup: The cost of getting the minimum viable tech product out to customers has been significantly reduced over the last decade thanks to technology advances.  While the internet can’t lessen the cost of manufacturing or shipping of a physical product, it has made it easier and more transparent to manage and expedite the process.  On the other hand software development, and open source software, has slashed the costs associated with developing new platforms that can be accessed by millions of consumers from across the world.

3. The rise of seed capital: A new class of investors has emerged called super angels or angel investors, which are generally smaller than the traditional multi-million dollar VC investors.  These angel investors make small investments necessary to help launch an internet startup.  In addition, incubators like Y Combinator have formalized seed-investing, paying startup expenses in a three-month program while a startup builds something impressive enough to raise money on a larger scale.  The emergence of incubators and angel investors has dramatically expanded the sources of seed capital.  There are also sites, such as AngelList, dedicated to making it easier for startups and investors to connect.

4. Entrepreneurship as a new management model: In today’s highly competitive world, it is imperative to always search for improvement opportunities and startups have developed their own management model that speeds identification of and time to target market while reducing the overall cost of development.  Startups now test their own assumptions with customers in the field and use an iterative and incremental development methodology to build their product.  When founders receive feedback from customers about what is working and what is not, the result is a learning event and an opportunity to change the business model.

5. Consumers are innovators: The proliferation of social media channels has provided consumers with the ability to offer more immediate feedback as to what does and doesn’t work in a product or service.  This quicker feedback allows startups to be more reactive and to work on those features that are most important to the consumer.  If you are thinking about creating a startup and have no idea whether your product will work, just launch and put it out there, your target market will definitely guide you in the creative and innovative process.

What other conditions can you think of that favor the creation of Startup companies?  Feel free to let us know.

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