Bloomberg Línea — The last months of 2022 were decisive for venture capital, as high interest rates and forecasts of recession in 2023 slowed the injection of funds into startups, while large companies in Latin America and the world began a wave of mass layoffs.
Despite this scenario, and the fact that cash is not flowing at the same pace as in 2021 and the earlier part of 2022, there is a long list of emerging startups looking to attract investors in the region.
But first, the founders or co-founders of these startups should ask some questions that will help them to evaluate their ideas for fledgling companies.
What are the key questions for a good startup?
Much of this roadmap has been defied by US-based startup accelerator Y Combinator, which has helped to boost the trajectories of more than 3,000 companies such as Airbnb, Coinbase, Cruise, DoorDash and Dropbox, among others.
Although in its various blogs and forums the company points out that “no one, not even YC, knows for sure which ideas will succeed,” they have provided starting points for startup founders and co-founders to take into consideration.
These are some of the main questions or that a startup founder should ask themselves when building a business idea, following a compilation of texts and videos from the YC Startup School:
- Describe the company in 50 characters or less.
- What will the company do?
- Why choose this idea? Do you have experience in this industry? Do you know if people need the services you will offer?
- What is new about what the company will do? How do people compensate for the fact that it doesn’t exist yet?
- Who are the competitors, and who might be your direct competitor? Who are you most ‘afraid’ of?
- How will you make money? How much money could you make?
- How will you get customers or users?
The biggest mistakes when launching a startup
Along with these questions, Jared Friedman, a partner at YC, wrote in one of the startup accelerator’s blogs two of the main mistakes often made by those looking to launch a startup.
The first mistake, and the most common, is believing that you need an amazing idea to get started, he stated.
“What it often looks like is that someone believes that the key to having a successful startup is to start with a brilliant idea. And so they’re waiting to have a brilliant idea before they start something.”
The YC partner pointed out that a successful idea only looks like that in hindsight, during an online session entitled ‘How to source and evaluate startup ideas’. He pointed to the examples of Google and Facebook, which went to market when there were already Internet search engines and other social networks, but combined their ideas with great execution.
“The next big mistake is the exact opposite: jumping at the first idea that comes to mind without stopping to think critically about whether it’s a good idea. And it’s amazing how common this is. Here’s the thing. If your startup is successful, you’re going to spend years of your life working on it. And if you’re going to spend years of your life working on something, wouldn’t it make sense to spend, say, at least a couple of weeks first, deciding what to work on?” Friedman said.
Bonus track
Peter Thiel, a co-founder of Paypal, published the book ‘Zero To One’ with Blake Masters, in which he delves into some questions that should be asked before founding a startup, and which were compiled by Marcelo Berenstein. These are the four main ones:
- Can you create innovative technologies instead of incremental improvements?
- Is this the right time to start your particular business?
- Do you have the right team?
- Do you have a way to not only create, but to deliver your product?