How To Turn Your Idea Into Startup
The steps to build your startup
You are relaxing on the couch after a long day struggling with transportation, and you know that there are a lot of people who share the same struggle.
Looking at the ceiling, your hands are behind your head, shaking your legs, thinking of ways to make transportation easier.
Suddenly your eyes opened wider, your legs stopped shaking, you found an idea of an app that connects riders and drivers together.
Anyone who has a car can join the app as a driver, the rider can submit a trip request and the app locates the nearest driver for the rider.
great, you did the first step, you found an idea that solves an existing problem.
The market research
You are a mobile developer and was thinking what is the next step, should I start developing the app? which framework should I use?
A question came to your mind that changed your direction, how do I know that people will use my app?
You started to do a market research, defining your target market, customers and competitors.
You found that it is a great idea and there is no big competitors except a companies called Uber and Lyft, but let’s assume that these companies are not exist now.
It is important to make sure that there are no big competitors unless you’re a big company, and you are able to invest a lot of money on your idea.
You are thinking how can I guarantee the quality of the service? how to encourage the drivers to provide a better service for the riders?
You thought about a rating system to allow riders to give the drivers stars from 1 to 5 based on the quality of the service.
Divers who get high ratings can get some bonuses or rewards.
Everything is settled, you want to start to implement your idea but you’re a mobile developer and mobile apps need a back-end services.
Your friend is a back-end developer, you talked to him and offered him to join your company as a co-founder and he will own 40% of the company.
He found it a great idea, and signed the share holder agreement (SHA).
You and your friend (co-founder) built a proof of concept (POC) and start searching for a business incubator to incubate your idea and convert it to a working prototype.
Incubators are an organizations that help you build your idea, they provide a co-working space and mentors to help you define the lean canvas model.
They usually don’t own anything of your organization.
Now that you have your prototype working, you need to validate it.
You need to make sure that there is a real need for your app and there are paying customers.
You’ll start with the early adopters, those are your friends, relatives, and people around you, but you need to validate it on a larger scale, that means you need marketing.
To do marketing, you need money, the first choice is to take a loan from a bank. But this is not a good choice because your app might fail, and if it failed you have to pay back the money to the bank.
This will take us to the other choice.
The other and better choice is to find an investor, investors will share the success and failure with you.
You’ll start with an accelerator, they will give you money, but nothing is for free now, they will own 10% — 20% of the company, depends on how much money they will give you and the valuation of your company.
Let’s say they will invest $500k and this is 10% of your company, that means your company worth 5 million dollars.
Your business is growing and you start making revenues, congratulations!
The Round Of Investment
As your business grow, your users grow and you need a bigger team, servers and money.
You need a round of investment, you need a lot of money, you can take a seed round from an angel investor, if you don’t like the idea of individual investors, you can go to an angel group or venture capitalist.
Or you can take series A round of investment, you got a $3 million on the series A.
You want to scale more and more, you decided to go for series B and series C round of investment, you got $20 million.
Congratulations, your company now worth $200 million, you will get a lot of acquisitions from big companies, but you want to make your dream come true, you want your company to be a unicorn, you want the value of your company to be $1 billion.
“An idea that is developed and put into action is more important than an idea that exists only as an idea.” … Buddha.
This article is coined from an Egyptian YouTuber from his Arabic series EL Da7e7.