Start-up Trends Entrepreneurs Should Know

There are a lot of things that start-up founders can do to get their business going and taking current trends into account is one of them. Studying patterns and adapting to them is a useful way of making sure a company is well-positioned to deliver and gain credence with clients. This is understood by business experts such as Henner Diekmann, a partner at law firm Diekmann Associates. The firm specialises in international trade and foreign direct investment in Southern Africa, offering guidance and advice to investors on corporate structures and setups.

The following are some of the trends that entrepreneurs can follow to ensure the success of their ventures.

Increased Competition

With increased internet access and usage, the stakes are higher in establishing start-ups. It's easier for competitors, sometimes far away geographically, to break into a firm's local marketplace and get clients interested. If your business is local, don't ignore the importance of digital marketing and keeping an eye out for good partnerships that help to grow the market share.

More Attention From Larger Companies

As corporations and multinationals see start-ups disrupting the norm, they realise there's more to gain by partnering with entrepreneurs. As a result, larger companies are willing to become investors and mentors to these ventures, leveraging their pool of resources (money and expertise) to bring start-ups into the fold. The benefits derived by the more prominent company include a diversified product portfolio and the chance to add useful solutions and technology it might not otherwise develop.

Adoption of Blockchain Technology

Blockchain technology, an emerging interest area for the financial services industry, can also be used by start-ups seeking to ride the technology wave. Blockchain technology can be adopted for internal databases and, when tied to cryptocurrency such as Bitcoin, as a payment mechanism. The latter use can potentially introduce lower transaction costs to businesses, which may already be looking for means to reduce operating expenses while remaining profitable.

Smarter Offices

The Internet of Things (IoT) is steadily providing solutions that make life at home and work easier. These solutions, when properly adopted, can contribute to a smart office environment for a start-up venture. These advancements can increase efficiency in the workplace, while also ensuring the business can meet client needs.

Smarter offices play into the increased desire by start-ups to be lean spenders; they want to accomplish as much as possible while committing the least amount of finances. Investors place more emphasis on efficiency, and part of achieving that is using the available tools, solutions and platforms.

Additionally, more ventures are running their operations without the classic office setup. Mobile devices make it easier to work from dispersed locations, while digital workspace solutions offer opportunities for team members to collaborate.

Emergence of Niche Technologies

Apart from IoT, start-ups are making use of other niche technologies, including augmented reality and virtual reality (AR/VR), artificial intelligence (AI) and machine learning to boost their service offerings and engage customers. The onus is on start-ups to learn all they can about these technologies and how they can be integrated into the business.

Other trends within the technology sector include cloud solutions, big data and analytics, and chatbots.

An Increased Focus on Cybersecurity

Many start-ups have focused on solutions that can be delivered via web and mobile applications for use on smartphones, tablets and wearables. With these devices capable of storing data, there's a need to secure them from the increasing risk of cybercriminal elements. For business owners, this means an increased focus on ramping up security.

China's Efforts in Boosting Start-up Businesses on the Rise

Entrepreneurs and business founders in China are finding life sweet, thanks to an increased level of investment through venture capital (VC) firms. The fear of being left out has given life to new ideas, as evidenced by the growth of businesses such as Kala Bike, a bike-sharing service that has inspired competitors. In fact, China is giving the United States a run for its money as the top venture capital industry in the world.

Just to put things in perspective, the bike-sharing business attracted so much attention (and investment) that market leaders Ofo and Mobike attained billion-dollar valuations in a matter of months. By the end of 2017, more than ten million shared bikes will have hit Chinese streets. In a country where successful business ideas are replicated almost instantaneously, at least 20 bike-sharing companies are competing for the market, each with its unique appeal to clients.

And it's not just bicycles that triggered an investment craze. The electric car business attracted more than 200 companies, while more than 2,000 mobile apps were created to deliver health advice, with a handful valued at more than $1 billion. A similar rush for beauty apps saw the rise of Meitu, which was estimated in late 2016 to be worth more than $4 billion.

In 2016, VC-backed investments reached a record US$31 billion, with many venture capital firms seeking to get a presence in the increasing number of businesses. This figure came from more than 300 investment rounds and represented a significant rise from the US$26 billion invested through 513 rounds the previous year. Sectors of interest for many investors included big data, artificial intelligence, robotics, fintech, and health care start-ups. Beijing venture capitalists invested more than $18 billion.

According to Silicon Valley Bank, venture capital fundraising has increased tremendously in the recent past compared to a decade ago. Back then, a quarter of all venture capital came from domestic sources. Local funding now accounts for more than 70 percent, attributed in part to China's shift of focus from manufacturing and extractive sectors. This development has opened doors for investors, both locally and abroad, in turn creating wealthy entrepreneurs. To investors such as Henner Diekmann, a partner at Diekmann Associates – which specialises in international trade and foreign direct investment in Southern Africa – the situation in China is an appealing and potentially rewarding one.

The Chinese government has contributed to venture capital growth by creating substantial funds that were estimated to be more than $300 billion in 2016. This abundance of financial resources has been boosted by a favourable business environment that is built on speed. In 2016 alone, 1,900 kilometres of high-speed rail came into service. Internet uptake, which was slow at the beginning, has made China an online shopper’s destination, with more online local spending than the US. Cash is being speedily replaced, and the willingness to embrace the digital economy has opened up work and business opportunities for millions of people.

China's rise in the venture capital industry is helped by a booming middle class that has the spending power to invest in local innovation, something that helps businesses scale faster. Additionally, Chinese companies adopt a different strategy to marketing and advertising. Rather than invest heavily in these aspects, businesses have tapped into cultural differences to create a give-and-take nature of customer relationships. Venture capital firms see themselves as mediators between the government and entrepreneurs who remove barriers to progress.

It's not just locally where venture capital investment is booming. Outbound investment is expected to remain stable, according to KPMG, with many investors seeking to acquire solutions that can be integrated into the Chinese market.

News UK Opens Incubator Lab for Start-Ups

News UK is a British newspaper publisher that is a subsidiary of the American media company News Corp. It publishes various newspapers in the UK, including The Sunday Times, The Times and The Sun. Between the late 1980s and 1995, News UK owned the first national newspaper printed in colour. In the years since, the company has strived to maintain a steady presence with readers and boost its revenues.

In 2017, News UK decided to venture into the start-up market by launching an accelerator programme aimed at helping start-ups improve their revenue streams. In a first for the newspaper publisher, the programme will be undertaken in partnership with Unruly, a video advertising firm, and Fluxx, a product innovation company. Unruly will host the programme, while Flux will run and staff it.

The venture is open to businesses from any sector that can use News UK's data, expertise and journalism to come up with new products and revenue streams for the publisher. The focus for the selected start-ups will be to work with News UK to generate more value for the start-up, the publisher and its audience. Furthermore, News UK will provide the mentoring and insights needed to get the start-ups working. When the month-long incubator programme ends, the publisher has yet to reveal concrete plans to invest or acquire the start-ups, instead choosing to support them and become champions of innovation.

Start-ups selected for the programme will spend four weeks at Unruly working on their proposition. To motivate them, they will receive £5,000 in cash, mentorship from other entrepreneurs, the use of News UK's image and written content, and product testing opportunities with the publisher's vast audience.

Incubator programmes have been around for a few decades, with their presence helping boost growth and innovation in the UK. Many investment experts such as Henner Diekmann – a partner at Diekmann Associates – appreciate their importance in speeding up the development of small businesses and guiding them to success. Entrepreneurs stand to benefit a lot by choosing to sign up for incubator programmes.

A Focus On Development

Incubators play an essential role in offering businesses the guidance and resources needed in their infancy. Many provide tangible benefits such as office space, legal advice and accounting guidance to start-ups. Having this infrastructure in place allows the start-up team to focus on the important matters – the core business of developing products and services.

Access To Business Networks

Many incubator programmes are run by a network of business partners, something the participating start-ups can use to their advantage. Having access to a reliable business network is beneficial in various ways. From a business perspective, it allows the entrepreneurs to cultivate meaningful relationships that can come in handy in the future. From a public relations angle, this network can help a small start-up gain the credibility and traction needed to position itself in the business market.

Worthy Support

Many of the mentors who guide start-ups through incubator programmes have learned through experience, making them the best sources of knowledge and guidance. These mentors are better placed to help young companies define their strategy and vision.

In the UK, it is estimated there are more than 300 business incubator programmes that have collectively supported thousands of businesses. Many of these ventures have been early-stage businesses that have reaped the benefits of access to funding, mentorship, business networks and infrastructure to achieve success, both domestically and internationally.

For entrepreneurs looking to establish their ventures, considering an incubator programme is increasingly becoming a more attractive option. 

What Is the Key to Startup Success?

Many people try to start their own business. It’s an attractive dream. You get to be your own boss, do what you love and you might even make a lot of money. The passion, enthusiasm and excitement are all there at the beginning. People work hard and pour hours into their own fledgling businesses. But in the end, most fail. According to a FastCompany article in 2012, 75% of startups fail. After 5 years, 50% have failed. Over 70% fail after 10 years. These are gloomy numbers, especially if you’re one of those people who dreams of beginning their own business. 

So what’s the trick? How can you make the top 25%? 

Fortunately, there is some advice to follow and, after many years of guiding and advising startup companies, Henner Diekmann of Diekmann Associates has learned many tricks of the trade. 

First, let’s take a look at what you should try to avoid if you’re starting up a new business. 

Management is a key element of any new business. There are plenty of mistakes to be made here. But the three most common mistakes are:

1.    Poor Focus – Perhaps there are too many projects or there are too many things going on at once. These prevent the business from focusing its energies on a main objective and achieving it, resulting in failure.

2.    Lack of Motivation – Yes, most people start a business precisely because they’re motivated. However, not everyone is ready for the great amount of commitment a business requires. So, what started out as great motivation can easily turn into low commitment and little passion.

3.    Being Too Proud – Some people are so proud of their business and their efforts that they fail to see a storm brewing. Whether it is financial or otherwise, failing to see or listen to others who try to warn of impending disaster can result in the business’s demise.

On a more general level, businesses fail because of major problems in the company. Obviously, management is also responsible for these problems, but it’s more difficult to pinpoint a precise error. A series of errors may produce these issues that result in company failure. What are the top 3 most common issues?

1.    No Market – No one will buy the product or service because there’s no need for it.

2.    Ran out of Money – When funding comes to a dead-end, so does the company.

3.    Wrong Team – People are the key players in any business. Without the right combination of skills, knowledge and chemistry on your team, the company won’t take flight.

Now, we’ll address the brighter side. Some companies do make it past these failures and soar on to success. What do these startups do differently? Successful companies also follow some patterns that you can learn from. Here are a few main points:

Commitment

Startups that succeed create a plan for their business and strive to make it happen. Rather than constantly changing the plan, they are committed to their goals and work passionately towards achieving them.

Flexibility

Commitment is important, but so is flexibility, to a degree. Startups and their founders need to be willing to make adjustments to the plan without drastically changing their end goals. Remember the issue of being too proud to see a problem? This is where flexibility comes in. Founders must be willing to see what’s happening in the company and adjust to meet new challenges and changing conditions.

Use Business Principles

Many people who startup their own company aren’t business experts. That doesn’t mean they can’t begin successful businesses though. Instead, it means that they must seek expertise and mentorship to make sure they’re covering their bases. For example, if you’re an engineer, artist or other expert outside the business arena, you may want to seek business advice when beginning your company to ensure that your financial ducks are all in a row and procedures are in place to protect the business. Bring on an accountant early in your business’s life to ensure you’re meeting the bottom line.

Plans

Finally, successful startups are strong in planning goals. Raise enough funding for each stage of the plan. You need to know approximately how long it will take for you to reach your goals and use intermediate milestones in between so you are constantly able to evaluate your progress.

Beginning a successful startup is no easy task, that’s certain, but it’s not impossible either. By studying and carefully creating a business plan, committing to it, but adjusting as you go along and seeking mentorship, you can work towards adding your business to the list of successful startup companies. 

Have you begun your own startup company? Are you thinking about it? Tell us about your biggest challenge or fear in the comments below.

Government Makes New Plan to Support Start-Ups After Brexit

As the reality of Brexit sets in, the British finance ministry is making plans detailing how the country will continue to support new businesses now that funding from the European Investment Fund (EIF) may become unavailable. The treasury is working based on information from a study that shows British start-ups are missing out on £4 billion in funding when compared to what’s available to US firms. This funding gap exists even in the current set-up which includes EIF funding.

Experts that specialize in guidance and advice on company set-ups and corporate structures like Henner Diekmann of Diekmann Associates know just how crucial funding during the first years of business can be. Even promising businesses need funding to gain access to capital, staff and a marketing budget. In the UK, many start-ups aren’t able to gain access to this essential financial assistance so that they can move on to become important players in the country’s economy.

If the EIF funding were to disappear after Brexit, an even greater funding gap would exist. Last year alone, British companies were assisted by about £800 million of equity financing and £400 million of other additional assistance such as loan guarantees, all through the EIF. The fund also works with projects outside of the EU, but nothing is certain now that Britain will exit the bloc. 

The plan for creating a new funding solution is still in progress. As of now, the Treasury says it’s considering setting up a public-private partnership or putting the fund only on the government’s balance sheet with the possibility of selling it off at a later date. The fund could open up new possibilities for UK start-ups.

UK Start-up Needs

As mentioned above, there is a significant funding gap between UK and American firms. This funding gap can be seen clearly in the lack of fourth round investment funding available to UK start-ups. While in the USA nearly a quarter of start-ups receiving seed funding reach the fourth round of investment, only 1 in 10 British firms achieve this level of funding. Another interesting point is that although the UK leads the way in Europe in creating start-ups valuing $1 billion or more (also known as unicorns), the nation is far from leading the way on the world stage. The US creates a whopping 54% of the world’s unicorns, followed by China which creates 23%. One final interesting fact is that the top US firms are younger than the top British firms, suggesting that the US is better at growing new businesses into impressive, large-scale companies.

Based on these numbers, it seems obvious that the UK could stand to improve its numbers. If start-ups had better access to funding, it’s entirely possible that more UK businesses could be grown into big, stable companies capable of employing many more people.

Despite lagging behind the USA and China, Britain is still home to innovation and leads the way in Europe in terms of new successful start-ups. The goal is to take this innovation to new heights by eliminating the problems related to too little funding. The UK start-up sector will likely benefit from this initiative, even if it began due to concerns over the consequences of Brexit. 

Brexit: An Overview

This initiative to boost funding for start-ups appeared as a response to concerns about the economic consequences of Brexit. The process of Brexit has been looming in UK politics and among citizens for a few years. In June 2016, the entire UK had the opportunity to vote in a referendum to approve or reject leaving the European Union. The referendum to leave was approved in a narrow vote.

Currently, the UK is undergoing talks with the European Union council to discuss the terms of Brexit including fees that the UK will pay to the EU. The talks will take two years or more. The current scheduled leave date is 29^th March 2019. 

Brexit will have many consequences and will affect both Great Britain and the rest of the EU countries. However, to date, there haven’t been signs of immediate severe trouble for the British economy. In fact, the UK showed 1.8% growth in 2016, which is good when compared to other strong economies. Unemployment has also continued to fall, although growth has slowed in 2017.  Overall, things look pretty good considering that some predicted doom and gloom should Brexit be passed.

Turning to Start-ups After Brexit

A funding for start-ups initiative along with a growth in entrepreneurial spirit was noticed shortly after the Brexit vote was made. In London, over 600 start-ups were launched daily during the first 6 months of 2016, suggesting that Brexit will not deter the creation of businesses, but rather spur them on. This trend will only improve if more funding becomes available to help start-ups make the step to full-fledged, stable businesses.