The growing number of startups across the globe has made every entrepreneur dream about their billion dollar company. The ‘Unicorn Club’ is a serious business and is valued high in recognition. Although every startup dreams of making it into the big club, it is a long and tedious process. It is difficult to enter, while many startups are launched each year, only a handful make it to the exclusive club.
Unicorn clubs create overnight millionaires from the founders and venture capitalists who take the risk of investing into them for good returns. These companies reach this stage for the value they create for the customers through their products and services. It is not easy for a company to start from scratch and make it to the billion dollar club. It requires huge capital, rapid growth, execution and constant innovation in products and services. In 2014, only 38 companies across the globe achieved a valuation of $1 billion or more. Two Indian startups made it to the list-Ola cabs and Snapdeal. All the 38 companies managed to raise venture capital.
How does one make the dream come true?
Billion dollar companies simply do not come into existence overnight. Entrepreneurs have to build them. Startups need to offer something unique and exceptional to their consumers through their products and services. Each company in the industry takes up an old problem and changes the paradigm of the existing business model through innovative solutions. Entrepreneurs need to have patience and maintain consistency in their operations. Companies that reached billion dollar valuation have taken anywhere between 1.5 years to 15 years.
Any company can reach the billion dollar stage only when it is solving the problem of a large market and if the opportunity in the market is growing. The positioning in the market has to be right and the market opportunity comes with a timing window, which makes it essential to create the right timing for the business to enter the market.
How to build a billion dollar startup?
There is no tried and tested formula for this. However, it is the choices that the startup makes in critical moments which enable it to make the most of the opportunity. Successful startups exhibit a capacity to innovate and meet the requirements of the changing market. Startups should be able to create investor confidence in order to innovate and expound more. With strong and efficient teams, they create a strong organization which is able to raise capital and rapidly execute.
Entrepreneurs should be aware about the capital they may need. Further, they should be able to raise the right investment from the right investors at the right time. Depending on the industry and the kind of business, different amount of funding will be required. When entrepreneurs approach investors for capital, they are aware about the amount and the type of investment they need. While majority investments in the country have been made in consumer facing companies, the scenario is different at a global level. The teams should be prepared for diligence, scrutiny and the communication requirement. A disciplined budget and operating plans are a minimal requirement. Every stage should be mapped properly in order to convince the investors to make an investment in your startup.
Avoid the standard business models
Do not simply follow the path of successful startups. The market, sector and the time will play a role in how your business grows. What works in the US might not even be accepted in India. It is important to keep in mind that every sector has different contingencies and the companies cannot be compared on the same parameters.
The founders should aim low and to build the company in the long term, they need to take risks and forego short term gains. The plans should be purposeful and well executed in order to achieve the long term goals. One should be clear about their aspirations and have a well laid out path to achieve them.
There are about 11 billion dollar companies in India and there could be a few additions in 2018. Funding is not the only ingredient for a billion dollar startup. Being the leader in the market makes a lot of difference which means investment and execution will play a crucial role. There is no absolute formula to achieve success and reach the billion dollar club, various factors play a crucial role in the same and the timing and innovation of the products is only one of them.