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Startup Stages to IPO

There are 4 stages to a startup, to IPO, as the venture capitalists see it.

Early Stage:
The initial founders come up with the idea and build up the minimal viable product. Get some investment money, or self-funded. Generate revenue, and proof of a reliable business model. Identify any intellectual property, IP. This is the stage where most of the creativity happens. The product is build from the ground up. There are many gaps to fill, whether technology or resources. The monthly burn rate is critical, to determine the cost of building up the business. As the business grows, so does the resources and revenue.

Middle Stage:
The product is already built. The team is set. Now it's time to go after signing up contracts and businesses. The venture capitalists want to see growth at this stage. It's important to consider globalization, because without it, the traffic will be limited and the growth will be local, addressing a smaller market. It's time to scale up the technology, make sure it can handle the load of the growth. Servers are added. Venture capitalists pour in money. Many resources are added and gaps are filled.

Late Stage:
The product and company is grown. The technology is deep. The customers are calling in, reporting bugs, and the engineering team is working hard on fixing them. There are hundreds, if not thousands of employees in the company. The sales team is working off the globe, signing up critical partners and looking for customers. The business model is adhering to the needs of the customers. There are many price points to accommodate the complexity. The venture capitalists are all in, and waiting eagerly for a pay off. The pressure is on. The venture capitalists want return on their investment, 10x or more.

The company has done all the fillings and now a publicly traded company. Much more investment is coming in, based on the market cap. The pressure is higher and demands are more to satisfy the public market. Companies usually get a 1-2 year grace period in the market, knowing it's a fresh new company so the risk is high, hence the rewards are higher as well. Investors are day trading the stock, so there is extreme volatility. The institutions are eager to jump in, when the price is right, only when the company starts to show some positivity in terms of growth and revenue. Extreme growth is required, and the company is hiring like crazy. Management becomes hard, because all the employees have to be justified into the growth of the company. The founders and the initial employees instantly become rich. The company is a success.


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