What is a startup

It is a word that everyone uses in the entrepreneurial world, but what does it mean?

Although the word Startup is a concept linked to business in the digital age, it is also a measure of time.

“Startup is a great company in its early stage; Unlike an SME, the Startup is based on a business that will be scalable more quickly and easily, making use of digital technologies ”, Morelos explains.

As the name implies, the term only applies when the project is at startup. Once you have scaled it will no longer be called Startup.

The main technological giants, such as Facebook, Google, Airbnb or Uber started as Startups; however, at this point they could no longer be considered in that area.

Scalability, which has to do with the potential growth of the company, is the second fundamental aspect of a Startup.

"To achieve this characteristic, technology must be integrated that allows the product to be distributed exponentially," Morelos explains.

And that's where the third quality of a Startup comes from: exponential growth.

"This type of business must have the ability to acquire users exponentially, with means of distribution that allow it to reach a greater number of users and customers, as well as a sale that is not linear. Revenues grow much faster than company expenses and this is normally achieved through technology ”, says the expert.

Temporality, scalability and exponential growth define, broadly speaking, this type of undertaking, which today occupies the greatest interest of investors.

Mexico, for example, has paid special attention to these projects, since the first accelerators and direct support for technology startups were created in 2011.

"The ecosystem has grown and consolidated," says the specialist. "On the other hand, private equity funds turned to businesses that fit this definition."

In 2016, the study “Startup Latin America 2016: Building an innovative future”, carried out by the OECD, determined that Mexico is the country that most supports these initiatives within the nations that make up the Pacific Alliance.

“The sector with the greatest activity within startups is Fintech –services or financial technologies–, in which we see that there is momentum from the various sectors involved,” says Morelos.

Financial companies, banks, insurers, payment companies and more institutions are increasingly aligned with the Fintech sector, seeking ways to collaborate, while regulators establish new rules for these new entities (read Fintech Law).

Beyond the type of entrepreneurship and the forms of investment that are sought for the Startup, the expert suggests not losing sight of these three elements so that the project works and does not remain in the sad statistics that says that 75% of the ventures in Mexico fail before the second year:

Identify the problem and marry him : the expert highlights that a Startup is called upon to solve a problem and understand the entire philosophy surrounding it. “Something that we see very often is that startups cling to the solution more than the problem. Having a focus on the problem allows us to be more flexible and adapt the product to the users and the market ”, he assures

Build your team: endeavors of this type require people who complement each other. There are effective personalities for business strategy, others for raising capital, and others for executing and making sales. You need all of them and others that your specific business requires.

Get out of the box: for the Startup to grow, but, above all, to recognize your target audience, frequent contact with potential customers is important, understanding what they are looking for and what the expectations are, and, mainly, knowing how they currently solve the type of problems your startup intends to attack.