startup growth

Startups as Game Changers
Startups as Game Changers 1024 623 RAISE fosters startup growth and scale-up within and across Europe

In recent years, startups have emerged as some of the most innovative and influential players in the global economy. These young, often scrappy companies are pushing boundaries, disrupting industries, and driving significant changes in how we live and work. From technology to healthcare to finance, startups are changing the world in ways that were once thought impossible.

One of the key reasons that startups are so successful at driving innovation and change is that they are unencumbered by the constraints that often burden larger, established organizations. Startups are free to experiment, take risks, and try new things without worrying about damaging their reputation or alienating their customer base. This gives them a significant advantage over larger competitors, who may be more hesitant to try something new for fear of upsetting their existing business model.

Another key advantage of startups is their agility. Unlike large, bureaucratic organizations, startups are lean and nimble, able to pivot quickly in response to changing market conditions or new opportunities. This allows them to adapt to changing circumstances and take advantage of emerging trends, often before larger companies even realize what’s happening.

Perhaps most importantly, startups are driven by a deep sense of purpose and passion. Founders and employees at startups are often motivated by a desire to make a difference in the world, to solve important problems, and to create new and better ways of doing things. This sense of mission and purpose can be a powerful force, driving creativity and innovation and pushing companies to achieve great things.

Whether they are focused on technology, healthcare, finance, or any other field, startups are driving innovation and pushing the boundaries of what’s possible.

Of course, not all startups will succeed, and not all will have a lasting impact on the world. But even those that fail can contribute to the larger ecosystem of innovation, paving the way for future entrepreneurs and pushing the envelope of what’s possible.

In conclusion, startups are proving to be some of the most innovative and influential players in the global economy. With their agility, passion, and willingness to take risks, startups are driving significant changes in how we live and work. As we look to the future, it’s clear that startups will continue to be at the forefront of innovation, pushing the boundaries of what’s possible and changing the world in ways that were once thought impossible.

How Affiliate Marketing Can Grow Your Startup
How Affiliate Marketing Can Grow Your Startup 1 1 RAISE fosters startup growth and scale-up within and across Europe

Affiliate marketing has become a popular marketing strategy for businesses of all sizes, but particularly for small and up-and-coming businesses. It involves hiring people to promote your brand and then rewarding them with a fixed salary per post or on a commission basis. Businesses cannot turn a blind eye to the effectiveness of affiliate marketing, which is often used in tandem with other marketing strategies. One of the primary reasons why affiliate marketing is such a popular strategy is that it delivers results, which can be quantified through increased traffic and sales.

If you’re a small business owner, affiliate marketing through platforms is good option. It’s an attractive marketing strategy for growth as it helps to increase the customer base and stabilize the business’s profit levels. Before you launch an affiliate marketing strategy, it’s important to understand why adopting it as a strategy is beneficial for your business.

One of the primary benefits of affiliate marketing is its low starting cost. One of the biggest challenges that startups face is their budget. They have already spent a lot of money on capital, and their sales are not yet strong, which means that their profits are not yet stable. As a startup, it’s essential to be mindful of your finances, and now is not the time to overspend, even if it’s for essential business activities like marketing.

Something to mention is that digital marketing has given birth to strategies that are less costly to run than traditional marketing, and one of these strategies is affiliate marketing. The cost is significantly less than other marketing forms, as you only pay the affiliate for every post they make. The more followers they have, the higher the rate. As a startup, you can begin with affiliates who have yet to demand high rates.

Furthermore, some affiliates are also paid on a commission basis, which is even more ideal. You only have to pay them for every sale made through the affiliate’s specific code. With this agreement, you have a higher guarantee that the affiliate will work even harder to make sales so they can be paid the agreed commission.

Another benefit of affiliate marketing is that it results in low ongoing costs. Since the affiliate is undertaking all marketing activities, the affiliate bears a bulk of the ongoing costs to keep the marketing campaigns running. Therefore, this marketing model makes the costs associated with advertising activities more manageable. Unlike other marketing activities, there isn’t any interruption experienced in the cash flow.

Affiliate marketing also boosts brand awareness, which is crucial for startups that need to work hard to make themselves known in the industry. The goal is that, despite being a startup, you’ll be so famous in your market that eventually, your startup business becomes a household name in the industry. Affiliate marketing boosts brand awareness because of the power of affiliates. Their word is often given so much trust and weight by their loyal followers, mainly if they’ve already been in the industry for so long. This removes the need for your business to double the time and effort in reaching a target audience when each affiliate already has its respective sets of followers.

Progress tracking is another aspect that businesses should always do after the release of every marketing campaign to check whether or not it’s bringing in the intended results. With progress tracking, you could save time and effort on effective marketing strategies. The longer it takes to discover that, the bigger the chance of wasted resources. This isn’t a situation that businesses, particularly startups, would want to have.

The good news is that affiliate marketing offers real-time tracking. This means you know when a visitor clicks a link and goes to your site. You can also monitor sales through the affiliate’s links or with their code. Because everything is trackable, you can check and see how well each affiliate is performing from time to time. Changes can be implemented before it becomes too damaging for your startup if it’s negative.

In conclusion, affiliate marketing is an effective marketing strategy that startups should consider. It reduces risks inherent in startups, decreases upfront marketing costs, and offers quantifiable benefits. With its low starting costs, low ongoing costs, real-time progress tracking, and increased product reviews, affiliate marketing is a viable option for jumpstarting business growth.

How to Create a B2B Social Media Strategy
How to Create a B2B Social Media Strategy 683 1024 RAISE fosters startup growth and scale-up within and across Europe

The use of social media channels varies greatly between business-to-consumer (B2C) and business-to-business (B2B) brands. While B2C brands use social channels primarily to reach consumers and drive sales, B2B brands use social media to build brand awareness, create relationships with other businesses, decision-makers, and industry influencers, with the ultimate hope of landing sales agreements further down the line.

However, it’s not just enough for B2B brands to be present on social media platforms. A well-thought-out strategy is required to ensure social media efforts are reaching the right people with the right content. Laura Weidner, communications manager at HR tech firm Personio, provides her top tips for creating a successful B2B social media strategy.

One of the first steps is to outline your business goals for social media and how they align with your broader business goals. This could involve increasing brand and business visibility, establishing thought leadership or building and strengthening relationships with customers and partners. Having clear aims will help you create relevant and helpful content for your audience.

Another important step is to clearly define your target audience. It’s essential to know who they are, what they want to see, and how they like to engage with content. Additionally, identifying the social media platform that best reaches your target audience is crucial. In most cases, your target audience on social media will match your business’s target audience and buyer persona. Therefore, analyzing current customer data can help to identify who your social media target group might be.

To further pinpoint the social target group, research industry-specific hashtags, keywords, topics, accounts, key influencers, articles, and media directly on social platforms via the search function. Most social networks offer insights into your current followers and their demographics, industry, company size, job function, etc.

Selecting the most suitable social media channels for your brand is also crucial. LinkedIn, for example, is popular with professionals and businesses, making it an excellent choice for B2B brands. You can create a comprehensive company page, share content with your audience, and connect with other businesses and industry experts. Meanwhile, Instagram may not be used as heavily by B2B brands, but it can be used for more behind-the-scenes content, less polished posts, and to engage with a wider audience.

Once you have outlined your business goals, defined your target audience, and selected the most suitable social media channels, it’s time to find your content angle. This involves conducting social listening via tools such as Hootsuite to track keywords, hashtags, and mentions about your brand and its specific products. This will help you identify what your audience talks about, what type of topics they are interested in, what their pain points are, and what content resonates with them.

Incorporating industry trends into your content is also vital. For example, if you’re in the HR space, you could create posts related to HR trends on onboarding, employee benefits, and hiring. When creating content, it’s essential to think more “conversation” and less “broadcast.” Making content more intimate and telling a story can help to engage your audience. You could showcase a product feature through a video of one of your customers using it and show the value it brings them.

In addition to tracking social media analytics to identify which types of posts are getting the most engagement and which might need some adaptation, it’s also important to get employees involved in content creation. By showcasing employee stories, you can give potential candidates an insight into your company culture.

Overall, a well-executed social media strategy can help B2B brands build brand awareness, create relationships with businesses, decision-makers, and industry influencers, and ultimately lead to sales agreements.

Start-up Loans
Start-up Loans 1 1 RAISE fosters startup growth and scale-up within and across Europe

A startup loan is a valuable source of funding for new businesses that need capital to launch and grow. It is a type of business loan that provides a lump sum of money, which the borrower must pay back with regular repayments at a fixed interest rate.

To qualify for a startup loan, lenders will typically require details about your business plan, turnover, trading history (if any), founders, and projected earnings. While many types of businesses can obtain a startup loan, some areas of industry are excluded. For example, companies that engage in illegal activities such as drugs, weapons, and chemical manufacture are not eligible for a startup loan.

Startups that obtain a government startup loan don’t have to worry about their business ownership being affected. The loan is designed to help seed or early-stage businesses get off the ground, and it can be used for a variety of purposes, including concepts, testing, designs, prototypes, machinery, plans, legal needs, premises, marketing, and staff costs. In many cases, a startup loan is the only cash a company has when it first begins to operate.

There are several options for obtaining a startup loan, including traditional business loans, asset-backed loans, merchant cash advances, funding from angel investors, business grants, and business credit cards. Choosing the right source of funding is critical, and factors such as the amount of funding required, the length of time the money must last, the company’s ability to repay, and the retention of ownership must all be considered.

One significant advantage of a startup loan is that it allows you to start your business and usually lets you retain full or majority ownership. Additionally, government startup loans require no security or personal guarantee and often have lower interest rates and deferred payments. Lenders provide the loan based on the business plan and financial projections, not on historical business accounts, and startup loan providers will consider riskier businesses or ideas than most traditional lenders. Startup loans can also help you build business credit.

However, there are also some disadvantages to consider when taking out a startup loan. The application criteria for the government scheme can be restrictive and slow, and non-government backed loans can be expensive and may require collateral. Furthermore, taking out a startup loan can put your personal credit rating at risk.

Overall, a startup loan can be an excellent option for new businesses that need funding to get off the ground. When used wisely, it can help you bring your ideas to life, grow your business, and achieve long-term success.

Signs Your Business is Ready to Scale Up
Signs Your Business is Ready to Scale Up 1 1 RAISE fosters startup growth and scale-up within and across Europe

Knowing when to scale up your business is always challenging for entrepreneurs. Scaling up is never easy, as it is expensive, disruptive and can present numerous challenges. However, when the timing is right, many business owners do take the plunge and pursue new avenues of growth. Every step taken in scaling up must be strategic and well-planned. This article outlines six signs that indicate your business is ready to scale up.

Firstly, if your business is constantly exceeding its targets, then it is likely on an upward trajectory, and it might be time to set new goals for the company. Additionally, if your business is generating positive cash flow, you will have the financial security to cover the costs of expansion or growth, such as hiring new staff or acquiring new resources or tools. Furthermore, developing a skilled and trusted team is necessary for any thriving business, and if you know your team is capable of driving the company forward, then it might be time to take the next crucial step.

Moreover, acquiring and retaining clients takes a huge amount of hard work, and it is crucial to ensure that your client base is strong and reliable. If you have established a firm client base that is loyal and returning to you in spades, then it is a sign that you might be ready to scale up. Also, turning down business is a sign that your business is on shockingly shaky ground, and you might need to upscale with enough pre-planning.

Finally, your business must have a reliable infrastructure before scaling up. Risks are necessary to take in business, but only if they are necessary. So, if your team has smashed its targets and your profits are up in one quarter, that doesn’t mean you should necessarily take that as a sign to scale up.

Bloomberg Línea: 2023, a challenge or an opportunity for entrepreneurs to scale up?
Bloomberg Línea: 2023, a challenge or an opportunity for entrepreneurs to scale up? 1024 683 RAISE fosters startup growth and scale-up within and across Europe

Bloomberg Línea spoke to experts and entrepreneurs of European companies with a presence in Latin America to identify the five main challenges they face and what will determine a business’s ability to secure venture capital.

Innovation-driven companies, including both startups and established companies, called “scaleups,” are facing a difficult year. This is due to widespread layoffs in the technology industry globally, and the current economic climate of rising interest rates, high inflation, and lower demand, which will result in less available funding. As investors become more cautious, these companies must come up with strategies that prioritize their project’s viability. 

Scaleups are companies that have achieved a certain level of success and are now looking to grow further. They typically have a proven business model, a large customer base, and a team of experienced professionals. Scaleups are often differentiated from startups in that they have a more established presence in the market, and are more likely to have access to capital, a more mature product, and a larger customer base. Scaleups are in a unique position to take advantage of the current environment of low capital, as they have the resources and experience to effectively manage their growth.

A Dynamic and Evolving Environment

This presents both a challenge and an opportunity, according to Joan Riera, president of Active Development and a professor at ESADE Business School. He thinks that there’s no better time to start a company. In this environment, startups are more flexible and quicker in making decisions and adapting to changes. Riera has started 12 companies during his career, many of which were founded during times of crisis.
Alejandro Gutiérrez-Bolivar, co-founder and CEO of Ladorian, a provider of digital point-of-sale advertising in Europe and Latin America, shares this view. He says, “This will be a year for those with an entrepreneurial spirit, for those who know how to navigate uncertainty.”

More Costly Capital and Less Investment

The current macroeconomic situation is not favorable, with central banks worldwide raising interest rates and consumer purchasing power declining due to high inflation. This has reduced the capital available for investment, and supply chain efficiency is another challenge for 2023.
According to Crunchbase, global VC funding in 2022 was $445 billion, a 35% year-on-year decline from the $681 billion raised by startups in 2021. This decline is steeper than what was seen after the 2008 financial crisis or the dotcom bubble, as reported by consulting firm Preqin.

Ability to Monetize and Grow

Gutiérrez-Bolivar from Ladorian says that with more challenging conditions, entrepreneurs will have to leverage their competitive advantages more effectively, and demonstrating business models that positively impact the bottom line in the short-term will be essential.
Albert Nieto, the founding partner of Seedtag, which provides AI and ML-based contextual advertising solutions, anticipates a difficult global situation. He believes that companies must show they can generate revenue and grow quickly to secure funding. The key is to demonstrate that the product can be sold on an international scale.

War for Talent in the Tech Industry

The tech industry is currently facing massive layoffs while at the same time, society is undergoing rapid technological change. Keeping talented employees in this environment of crisis and intense competition is a concern that experts have highlighted.

Joan Riera also highlights the shift in behavior brought about by the pandemic. “The concept of freedom has taken shape after Covid, making talent retention both a challenge and an opportunity,” he notes.

For Ladorian Gutiérrez-Bolivar, talent retention is critical as it affects companies on both a tactical and strategic level. He explains for Bloomberg Linea that we need to integrate talent in a productive way, adapting to the hybrid scenario of remote and in-person work. However, the new ecosystem has made it difficult to maintain team cohesion, so when it comes to talent, it is crucial for people to work with those who can make a positive contribution.

Juan de Antonio, a founding partner of Cabify, states that the startup and scaleup environment is always striving to refine its tools to better manage talent. He also points out that Spain’s recent startup law, which improves tax conditions for stock options, is a step forward in valuing professionals in the industry.

Innovation at the Forefront

Venture capital is seeking out companies that offer disruptive technologies without sacrificing profitability and scalability. According to Ladorian Gutiérrez-Bolivar, from a commercial standpoint, the markets need to keep a close eye on thriving sectors and those with a stronger presence.

On the other hand, Riera believes that healthcare innovations will have a major impact, particularly in mental health, followed by exponential tech trends such as digital transformation, AI, 5G, and the Internet of Things (IoT).
He concluded that customers are demanding more experiences, they are connected and eager to learn.

Source: Bloomberg Linea

RAISE at the European Angel Investment Summit 2022
RAISE at the European Angel Investment Summit 2022 1024 763 RAISE fosters startup growth and scale-up within and across Europe

RAISE is working on the creation of collaboration space to help raise startups and scale-ups: Open Startup Forum. The RAISE project team will present the Forum at the European Angel Investment Summit 2022, organised by the RAISE project consortium partner – EBAN.

We invite you to join our community of interested peers ‘Open Startup Forum’. Workshops, matchmaking events, speed dating with investors, acceleration programmes, business mentoring will be some of the opportunities that will raise from our ‘Open Startup Forum’.

Every startup will have an equal chance at success, with access to top-quality information and training. They will be given all the possible tools to grow, and finally, all the players in the EU startup ecosystem under one umbrella will be linked to help them scale up.

Join our Forum to build collaboration amongst key players of the innovation ecosystem, and create a joint agenda that will contribute to the growth and scale-up of start-ups. Want to find out more about this? Write to us at or visit us at the European Angel Investment Summit 2022.

The European Angel Investment Summit 2022, taking place in Brussels on 11-12 October, is the annual conference where early-stage investors, entrepreneurs, and change-makers get together to fuel Europe’s growth.

The EAIS will allow participants a glimpse into the future, a chance to influence the course of tomorrow and a unique opportunity to connect meaningfully with other international colleagues that enable innovations to come to life. During this 2022 edition of the Summit, we will be discussing topics that go from how startups and investors can leverage science to build global companiesto what angel investors can do to foster more interconnected and inclusive innovation communities.

This event is a must-attend for business angels, but also for any other early stage investment actor, supporter of entrepreneurship or innovation at large.

The audience is typically made up by 50% business angels, 20% VCs, CVCs and PEs; 10% startup entrepreneurs; 10% policy makers; 10% other startup ecosystem stakeholders.

The RAISE project consortium partner – EBAN is partnering with the InvestEU Portalthe European Commission DG GROW and DG ECFIN, and the Enterprise Europe Network for the event. 

Startup = Growth
Startup = Growth 1024 683 RAISE fosters startup growth and scale-up within and across Europe

A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.

The good news is, that if you get growth, everything else tends to fall into place. This means you can use growth like a compass to make almost every decision you face.

Startups do have a different sort of DNA from other businesses

Not every newly founded company is a startup. Millions of companies are started every year. Only a tiny fraction are startups. Most are service businesses — restaurants, barbershops, plumbers, and so on. These are not startups, except in a few unusual cases. A barbershop isn’t designed to grow fast. Whereas a search engine, for example, is.

That difference is why there’s a distinct word, “startup,” for companies designed to grow fast. If all companies were essentially similar, but some through luck or the efforts of their founders ended up growing very fast, we wouldn’t need a separate word. We could just talk about super-successful companies and less successful ones. But in fact, startups do have a different sort of DNA from other businesses. Google is not just a barbershop whose founders were unusually lucky and hard-working. Google was different from the beginning.

To grow rapidly, you need to make something you can sell to a big market. That’s the difference between Google and a barbershop. A barbershop doesn’t scale.

For a company to grow really big, it must:
(a) make something lots of people want, and
(b) reach and serve all those people.

Barbershops are doing fine in the (a) department. Almost everyone needs their hair cut. The problem for a barbershop, as for any retail establishment, is (b). A barbershop serves customers in person, and few will travel far for a haircut. And even if they did, the barbershop couldn’t accommodate them

Writing software is a great way to solve (b), but you can still end up constrained in (a). If you write software to teach Tibetan to Hungarian speakers, you’ll be able to reach most of the people who want it, but there won’t be many of them. If you make software to teach English to Chinese speakers, however, you’re in startup territory.

Most businesses are tightly constrained in (a) or (b). The distinctive feature of successful startups is that they’re not.

Ideas: A startup has to make something it can deliver to a large market

If you’re going to start a company, why not start the type with the most potential? The catch is that this is a (fairly) efficient market. If you write software to teach Tibetan to Hungarians, you won’t have much competition. If you write software to teach English to Chinese speakers, you’ll face ferocious competition, precisely because that’s such a larger prize.

The constraints that limit ordinary companies also protect them. That’s the tradeoff. If you start a barbershop, you only have to compete with other local barbers. If you start a search engine you have to compete with the whole world.

A startup has to make something it can deliver to a large market, and ideas of that type are so valuable that all the obvious ones are already taken.

That space of ideas has been so thoroughly picked over that a startup generally has to work on something everyone else has overlooked.

Usually successful startups happen because the founders are sufficiently different from other people that ideas few others can see seem obvious to them. Perhaps later they step back and notice they’ve found an idea in everyone else’s blind spot, and from that point make a deliberate effort to stay there. [3] But at the moment when successful startups get started, much of the innovation is unconscious.

What’s different about successful founders is that they can see different problems. It’s a particularly good combination both to be good at technology and to face problems that can be solved by it, because technology changes so rapidly that formerly bad ideas often become good without anyone noticing. Steve Wozniak’s problem was that he wanted his own computer. That was an unusual problem to have in 1975. But technological change was about to make it a much more common one. Because he not only wanted a computer but knew how to build them, Wozniak was able to make himself one. And the problem he solved for himself became one that Apple solved for millions of people in the coming years. But by the time it was obvious to ordinary people that this was a big market, Apple was already established.

Google has similar origins. Larry Page and Sergey Brin wanted to search the web. But unlike most people they had the technical expertise both to notice that existing search engines were not as good as they could be, and to know how to improve them. Over the next few years their problem became everyone’s problem, as the web grew to a size where you didn’t have to be a picky search expert to notice the old algorithms weren’t good enough. But as happened with Apple, by the time everyone else realised how important search was, Google was entrenched.

That’s one connection between startup ideas and technology. Rapid change in one area uncovers big, soluble problems in other areas. Sometimes the changes are advances, and what they change is solubility. That was the kind of change that yielded Apple; advances in chip technology finally let Steve Wozniak design a computer he could afford. But in Google’s case the most important change was the growth of the web. What changed there was not solubility but bigness.

The other connection between startups and technology is that startups create new ways of doing things, and new ways of doing things are, in the broader sense of the word, new technology. When a startup both begins with an idea exposed by technological change and makes a product consisting of technology in the narrower sense (what used to be called “high technology”), it’s easy to conflate the two. But the two connections are distinct and in principle one could start a startup that was neither driven by technological change, nor whose product consisted of technology except in the broader sense.

What growth rate do successful startups tend to have?

For founders, that’s more than a theoretical question, because it’s equivalent to asking if they’re on the right path.

The growth of a successful startup usually has three phases:

  1. There’s an initial period of slow or no growth while the startup tries to figure out what it’s doing.
  2. As the startup figures out how to make something lots of people want and how to reach those people, there’s a period of rapid growth.
  3. Eventually a successful startup will grow into a big company. Growth will slow, partly due to internal limits and partly because the company is starting to bump up against the limits of the markets it serves.

Together these three phases produce an S-curve. The phase whose growth defines the startup is the second one, the ascent. Its length and slope determine how big the company will be.

The slope is the company’s growth rate. If there’s one number every founder should always know, it’s the company’s growth rate. That’s the measure of a startup. If you don’t know that number, you don’t even know if you’re doing well or badly.

What matters is not the absolute number of new customers, but the ratio of new customers to existing ones. If you’re really getting a constant number of new customers every month, you’re in trouble, because that means your growth rate is decreasing.

A good growth rate during Y Combinator (explained below) is 5-7% a week. If you can hit 10% a week you’re doing exceptionally well. If you can only manage 1%, it’s a sign you haven’t yet figured out what you’re doing.

The best thing to measure the growth rate is revenue. The next best, for startups that aren’t charging initially, is active users. That’s a reasonable proxy for revenue growth because whenever the startup does start trying to make money, its revenues will probably be a constant multiple of active users.

What’s your compass?

At Y Combinator they usually advise startups to pick a growth rate they think they can hit, and then just try to hit it every week. The key word here is “just.” If they decide to grow at 7% a week and they hit that number, they’re successful for that week. There’s nothing more they need to do. But if they don’t hit it, they’ve failed in the only thing that mattered and should be correspondingly alarmed.

Focusing on hitting a growth rate reduces the otherwise bewilderingly multifarious problem of starting a startup to a single problem. You can use that target growth rate to make all your decisions for you; anything that gets you the growth you need is ipso facto right. Should you spend two days at a conference? Should you hire another programmer? Should you focus more on marketing? Should you spend time courting some big customers? Should you add the X feature? Whatever gets you your target growth rate.

Judging yourself by weekly growth doesn’t mean you can look no more than a week ahead. Once you experience the pain of missing your target one week (it was the only thing that mattered, and you failed at it), you become interested in anything that could spare you such pain in the future. So you’ll be willing for example to hire another programmer, who won’t contribute to this week’s growth but perhaps in a month will have implemented some new feature that will get you more users. But only if (a) the distraction of hiring someone won’t make you miss your numbers in the short term, and (b) you’re sufficiently worried about whether you can keep hitting your numbers without hiring someone new.

Having to hit a growth number every week forces founders to act, and acting versus not acting is the high bit of succeeding. Nine times out of ten, sitting around strategizing is just a form of procrastination. Whereas founders’ intuitions about which hill to climb are usually better than they realize.

The fascinating thing about optimizing for growth is that it can actually discover startup ideas. You can use the need for growth as a form of evolutionary pressure. If you start out with some initial plan and modify it as necessary to keep hitting, say, 10% weekly growth, you may end up with a quite different company than you meant to start. But anything that grows consistently at 10% a week is almost certainly a better idea than you started with.


A company that grows at 1% a week will grow 1.7x a year, whereas a company that grows at 5% a week will grow 12.6x. A company making $1000 a month (a typical number early in YC) and growing at 1% a week will 4 years later be making $7900 a month, which is less than a good programmer makes in salary in Silicon Valley. A startup that grows at 5% a week will in 4 years be making $25 million a month.


Considering how valuable a successful startup can become, anyone familiar with the concept of expected value would be surprised if the failure rate weren’t high. If a successful startup could make a founder $100 million, then even if the chance of succeeding were only 1%, the expected value of starting one would be $1 million. And the probability of a group of sufficiently smart and determined founders succeeding on that scale might be significantly over 1%. For the right people — e.g. the young Bill Gates — the probability might be 20% or even 50%. So it’s not surprising that so many want to take a shot at it. In an efficient market, the number of failed startups should be proportionate to the size of the successes. And since the latter is huge the former should be too.

Why do investors like startups so much?

The test of any investment is the ratio of return to risk. Startups pass that test because although they’re appallingly risky, the returns when they do succeed are so high. But that’s not the only reason investors like startups. An ordinary slower-growing business might have just as good a ratio of return to risk if both were lower. So why are VCs interested only in high-growth companies? The reason is that they get paid by getting their capital back, ideally after the startup IPOs, or failing that when it’s acquired.

The other way to get returns from an investment is in the form of dividends. Why isn’t there a parallel VC industry that invests in ordinary companies in return for a percentage of their profits? Because it’s too easy for people who control a private company to funnel its revenues to themselves (e.g. by buying overpriced components from a supplier they control) while making it look like the company is making little profit. Anyone who invested in private companies in return for dividends would have to pay close attention to their books.

The reason VCs like to invest in startups is not simply the returns, but also because such investments are so easy to oversee. The founders can’t enrich themselves without also enriching the investors.

Why do founders want to take the VCs’ money? Growth, again. The constraint between good ideas and growth operates in both directions. It’s not merely that you need a scalable idea to grow. If you have such an idea and don’t grow fast enough, competitors will. Growing too slowly is particularly dangerous in a business with network effects, which the best startups usually have to some degree.

Almost every company needs some amount of funding to get started. But startups often raise money even when they are or could be profitable. It might seem foolish to sell stock in a profitable company for less than you think it will later be worth, but it’s no more foolish than buying insurance. Fundamentally that’s how the most successful startups view fundraising. They could grow the company on its own revenues, but the extra money and help supplied by VCs will let them grow even faster. Raising money lets you choose your growth rate.

Money to grow faster is always at the command of the most successful startups, because the VCs need them more than they need the VCs. A profitable startup could if it wanted just grow on its own revenues. Growing slower might be slightly dangerous, but chances are it wouldn’t kill them.

Fundamentally the same thing that makes everyone else want the stock of successful startups: a rapidly growing company is valuable. It’s a good thing eBay bought Paypal, for example, because Paypal is now responsible for 43% of their sales and probably more of their growth.

But acquirers have an additional reason to want startups. A rapidly growing company is not merely valuable, but dangerous. If it keeps expanding, it might expand into the acquirer’s own territory. Most product acquisitions have some component of fear. Even if an acquirer isn’t threatened by the startup itself, they might be alarmed at the thought of what a competitor could do with it. And because startups are in this sense doubly valuable to acquirers, acquirers will often pay more than an ordinary investor would.

Understanding growth is what starting a startup consists of

The combination of founders, investors and acquirers forms a natural ecosystem.
If you want to understand startups, understand growth. Growth drives everything in this world. Growth is why startups usually work on technology — because ideas for fast-growing companies are so rare that the best way to find new ones is to discover those recently made viable by change, and technology is the best source of rapid change. Growth is why it’s a rational choice economically for so many founders to try starting a startup: growth makes successful companies so valuable that the expected value is high even though the risk is too. Growth is why VCs want to invest in startups: not just because the returns are high but also because generating returns from capital gains is easier to manage than generating returns from dividends. Growth explains why the most successful startups take VC money even if they don’t need to: it lets them choose their growth rate. And growth explains why successful startups almost invariably get acquisition offers. To acquirers a fast-growing company is not merely valuable but dangerous too.

It’s not just that if you want to succeed in some domain, you have to understand the forces driving it. Understanding growth is what starting a startup consists of. What you’re really doing (and to the dismay of some observers, all you’re really doing) when you start a startup is committing to solve a harder type of problem than ordinary businesses do. You’re committing to search for one of the rare ideas that generates rapid growth. Because these ideas are so valuable, finding one is hard. The startup is the embodiment of your discoveries so far. Starting a startup is thus very much like deciding to be a research scientist: you’re not committing to solve any specific problem; you don’t know for sure which problems are soluble; but you’re committing to try to discover something no one knew before. A startup founder is in effect an economic research scientist. Most don’t discover anything that remarkable, but some discover relativity.

This article is sourced from Paul Graham’s website.


Paul Graham (born 1964) is an English-born American computer scientist, essayist, entrepreneur, venture capitalist, and author. He is best known for his work on the programming language Lisp, his former startup Viaweb (later renamed Yahoo! Store), co-founding the influential startup accelerator and seed capital firm Y Combinator, his blog, and Hacker News. He is the author of several computer programming books, including: On Lisp, ANSI Common Lisp, and Hackers & Painters. Technology journalist Steven Levy has described Graham as a “hacker philosopher”.

Y Combinator (YC) is an American technology startup accelerator launched in March 2005. It has been used to launch more than 3,000 companies,[2] including Airbnb, Coinbase, Cruise, DoorDash, Dropbox, Instacart, Quora, PagerDuty, Reddit, Stripe and Twitch. The combined valuation of the top YC companies was more than $300 billion by January 2021. The company’s accelerator program started in Boston and Mountain View expanded to San Francisco in 2019 and has been entirely online since the start of the COVID-19 pandemic. Forbes characterized the company in 2012 as one of the most successful startup accelerators in Silicon Valley.

7 lessons some startups seem quicker to learn
7 lessons some startups seem quicker to learn 1 1 RAISE fosters startup growth and scale-up within and across Europe

Some startups seem quicker to learn some lessons than others.

Paul Graham, author, entrepreneur, and venture capitalist claims he learned a trick for determining which points are the counterintuitive ones for startups. Here are some of his learned lessons:

1. Release Early

Get version 1 out fast, then improve it based on users’ reactions.

By “release early” he doesn’t mean you should release something full of bugs, but that you should release something minimal. Users hate bugs, but they don’t seem to mind a minimal version 1 if there’s more coming soon.

There are several reasons it pays to get version 1 done fast. One is that this is simply the right way to write software, whether for a startup or not.  A lot of startups die because they were too slow to release stuff, and none because they were too quick.

One of the things that will surprise you if you build something popular is that you won’t know your users.

Even if you had no users, it would still be important to release quickly, because for a startup the initial release acts as a shakedown cruise. If anything major is broken– if the idea’s no good, for example, or the founders hate one another– the stress of getting that first version out will expose it. And if you have such problems you want to find them early.

Perhaps the most important reason to release early, though, is that it makes you work harder. When you’re working on something that isn’t released, problems are intriguing. In something that’s out there, problems are alarming. There is a lot more urgency once you release.

2. Keep Pumping Out Features

Of course, “release early” has a second component, without which it would be bad advice. If you’re going to start with something that doesn’t do much, you better improve it fast and “pump out features”. This is something all startups should do for as long as they want to be considered startups. By “feature” it is meant one unit of hacking– one quantum of making users’ lives better. The more ideas you implement, the more ideas you’ll have. You should make your system better at least in some small way every day or two.

This is not just a good way to get development done; it is also a form of marketing. Users love a site that’s constantly improving.

They’ll like you even better when you improve in response to their comments, because customers are used to companies ignoring them. If you’re the rare exception– a company that actually listens– you’ll generate fanatical loyalty. You won’t need to advertise, because your users will do it for you.

Force yourself, as a sort of intellectual exercise, to keep thinking of improvements. Ok, sure, what you have is perfect. But if you had to change something, what would it be?

If your product seems finished, there are two possible explanations: (a) it is finished, or (b) you lack imagination. Experience suggests (b) is a thousand times more likely.

3. Make Users Happy

Improving constantly is an instance of a more general rule: make users happy.

When you’re running a startup you feel like a little bit of debris blown about by powerful winds. The most powerful wind is users. They can either catch you and loft you up into the sky, as they did with Google, or leave you flat on the pavement, as they do with most startups. Users are a fickle wind, but more powerful than any other. If they take you up, no competitor can keep you down.

There are two things you have to do to make people pause. The most important is to explain, as concisely as possible, what your startup is about. How often have you visited a site that seemed to assume you already knew what they did?

For example, the corporate site says: ‘the company makes enterprise content management solutions for businesses that enable organisations to unify people, content, and processes to minimize business risk, accelerate time-to-value and sustain a lower total cost of ownership.’

An established company may get away with such an opaque description, but no startup can. A startup should be able to explain in one or two sentences exactly what it does.  And not just to users. You need this for everyone: investors, acquirers, partners, reporters, potential employees, and even current employees. You probably shouldn’t even start a company to do something that can’t be described compellingly in one or two sentences.

Give people everything you’ve got, right away. If you have something impressive, try to put it on the front page, because that’s the only one most visitors will see. Though indeed there’s a paradox here: the more you push the good stuff toward the front, the more likely visitors are to explore further.

In the best case these two suggestions get combined: you tell visitors what your site is about by showing them. One of the standard pieces of advice in fiction writing is “show, don’t tell.” Don’t say that a character’s angry; have him grind his teeth, or break his pencil in half. Nothing will explain what your site does so well as using it.

The industry term here is “conversion.” The job of your site is to convert casual visitors into users– whatever your definition of a user is. You can measure this in your growth rate. Either your site is catching on, or it isn’t, and you must know which. If you have decent growth, you’ll win in the end, no matter how obscure you are now. And if you don’t, you need to fix something.

4. Fear the Right Things

Startups are right to be paranoid, but they sometimes fear the wrong things.

Most visible disasters are not as alarming as they seem. Disasters are normal in a startup: a founder quits, you discover a patent that covers what you’re doing, your servers keep crashing, you run into an insoluble technical problem, you have to change your name, a deal falls through– these are all par for the course. They won’t kill you unless you let them.

Nor will most competitors. A lot of startups worry “what if Google builds something like us?” Actually, big companies are not the ones you have to worry about– not even Google. The people at Google are smart but no smarter than you; they’re not as motivated, because Google is not going to go out of business if this one product fails; and even at Google they have a lot of bureaucracy to slow them down.

What you should fear, as a startup, is not the established players, but other startups you don’t know exist yet. They’re way more dangerous than Google because, like you, they’re cornered animals.

Looking just at existing competitors can give you a false sense of security. You should compete against what someone else could be doing, not just what you can see people doing. No matter what your idea, there’s someone else out there working on the same thing.

And in any case, competitors are not the biggest threat. Way more startups hose themselves than get crushed by competitors. There are a lot of ways to do it, but the three main ones are internal disputes, inertia, and ignoring users. Each is, by itself, enough to kill you.  If you want a recipe for a startup that’s going to die, here it is: a couple of founders who have some great idea they know everyone is going to love, and that’s what they’re going to build, no matter what.

Almost everyone’s initial plan is broken. If companies stuck to their initial plans, Microsoft would be selling programming languages, and Apple would be selling printed circuit boards. In both cases their customers told them what their business should be– and they were smart enough to listen.

As Richard Feynman said, the imagination of nature is greater than the imagination of man. You’ll find more interesting things by looking at the world than you could ever produce just by thinking. This principle is very powerful. No idea for a product could ever be so clever as the ones you can discover by smashing a beam of prototypes into a beam of users.

5. Commitment Is a Self-Fulfilling Prophecy

The most important quality in a startup founder is determination. Not intelligence– determination.

Time after time VCs invest in startups founded by eminent professors. This may work in biotech, where a lot of startups simply commercialize existing research, but in software, you want to invest in students, not professors. Microsoft, Yahoo, and Google were all founded by people who dropped out of school to do it. What students lack in experience they more than makeup in dedication.

It’s not enough merely to be determined. You have to be smart too, right?

You can lose quite a lot in the brains department and it won’t kill you. But losing even a little bit in the commitment department, and that will kill you very rapidly.

Running a startup is like walking on your hands: it’s possible, but it requires extraordinary effort. If an ordinary employee were asked to do the things a startup founder has to, he’d be very indignant. Imagine if you were hired at some big company, and in addition to writing software ten times faster than you’d ever had to before, they expected you to answer support calls, administer the servers, design the web site, cold-call customers, find the company office space, and go out and get everyone lunch.

And to do all this not in the calm, womb-like atmosphere of a big company, but against a backdrop of constant disasters. That’s the part that really demands determination. In a startup, there’s always some disaster happening. So if you’re the least bit inclined to find an excuse to quit, there’s always one right there.

But if you lack commitment, chances are it will have been hurting you long before you actually quit.  If you lack commitment, you’ll just find that for some mysterious reason good things happen to your competitors but not to you. If you lack commitment, it will seem to you that you’re unlucky.

At Y Combinator we sometimes mistakenly fund teams who have the attitude that they’re going to give this startup thing a shot for three months, and if something great happens, they’ll stick with it– “something great” meaning either that someone wants to buy them or invest millions of dollars in them. But if this is your attitude, “something great” is very unlikely to happen to you, because both acquirers and investors judge you by your level of commitment.

Paul Graham

If an acquirer thinks you’re going to stick around no matter what, they’ll be more likely to buy you because if they don’t and you stick around, you’ll probably grow, your price will go up, and they’ll be left wishing they’d bought you earlier. Ditto for investors. What really motivates investors, even big VCs, is not the hope of good returns, but the fear of missing out. So if you make it clear you’re going to succeed no matter what, and the only reason you need them is to make it happen a little faster, you’re much more likely to get money.

You can’t fake this. The only way to convince everyone that you’re ready to fight to the death is actually to be ready to.

You have to be the right kind of determined, though. I carefully chose the word determined rather than stubborn because stubbornness is a disastrous quality in a startup. You have to be determined, but flexible, like a running back. A successful running back doesn’t just put his head down and try to run through people. He improvises: if someone appears in front of him, he runs around them; if someone tries to grab him, he spins out of their grip; he’ll even run in the wrong direction briefly if that will help. The one thing he’ll never do is stand still.

6. There Is Always Room

There is always room for new stuff. At every point in history, even in the darkest bits of the dark ages, people were discovering things that made everyone say “why didn’t anyone think of that before?”

The reason we don’t see the opportunities all around us is that we adjust to however things are and assume that’s how things have to be. For example, it would seem crazy to most people to try to make a better search engine than Google. Surely that field, at least, is tapped out. Really? In a hundred years– or even twenty– are people still going to search for information using something like the current Google? Even Google probably doesn’t think that.

Sometimes you hear people saying “All these guys starting startups now are going to be disappointed. How many little startups are Google and Yahoo going to buy, after all?” That sounds cleverly skeptical, but I can prove it’s mistaken. No one proposes that there’s some limit to the number of people who can be employed in an economy consisting of big, slow-moving companies with a couple thousand people each. Why should there be any limit to the number who could be employed by small, fast-moving companies with ten each? It seems to me the only limit would be the number of people who want to work that hard.

The limit on the number of startups is not the number that can get acquired by Google and Yahoo– though it seems even that should be unlimited, if the startups were actually worth buying– but the amount of wealth that can be created.

So for all practical purposes, there is no limit to the number of startups. Startups make wealth, which means they make things people want, and if there’s a limit on the number of things people want, we are nowhere near it.

7. Don’t Get Your Hopes Up

Startup founders are naturally optimistic. They wouldn’t do it otherwise. But you should treat your optimism the way you’d treat the core of a nuclear reactor: as a source of power that’s also very dangerous. You have to build a shield around it, or it will fry you.

 The place to draw the line is between what you expect of yourself, and what you expect of other people. It’s ok to be optimistic about what you can do, but assume the worst about machines and other people.

This is particularly necessary for a startup because you tend to be pushing the limits of whatever you’re doing. So things don’t happen in the smooth, predictable way they do in the rest of the world. Things change suddenly, and usually for the worse.

Shielding your optimism is nowhere more important than with deals. If your startup is doing a deal, just assume it’s not going to happen. The VCs who say they’re going to invest in you aren’t. The company that says they’re going to buy you isn’t. The big customer who wants to use your system in their whole company won’t. Then if things work out you can be pleasantly surprised.

For example, if someone says they want to invest in you, there’s a natural tendency to stop looking for other investors. That’s why people proposing deals seem so positive: they want you to stop looking. And you want to stop too because doing deals is a pain. Raising money, in particular, is a huge time-sink. So you have to consciously force yourself to keep looking.

Even if you ultimately do the first deal, it will be to your advantage to have kept looking, because you’ll get better terms. Deals are dynamic; unless you’re negotiating with someone unusually honest, there’s not a single point where you shake hands and the deal’s done. There are usually a lot of subsidiary questions to be cleared up after the handshake, and if the other side senses weakness– if they sense you need this deal– they will be very tempted to screw you in the details.

VCs and corp dev guys are professional negotiators. They’re trained to take advantage of weaknesses. So while they’re often nice guys, they just can’t help it. And as pros, they do this more than you. So don’t even try to bluff them. The only way a startup can have any leverage in a deal is genuinely not to need it. And if you don’t believe in a deal, you’ll be less likely to depend on it.

When you hear someone say the words “we want to invest in you” or “we want to acquire you,” the following phrase should appear automatically in your head: don’t get your hopes up. Just continue running your company as if this deal didn’t exist. Nothing is more likely to make it close.

The way to succeed in a startup is to focus on the goal of getting lots of users and keep walking swiftly toward it while investors and acquirers scurry alongside trying to wave money in your face.

This article is sourced from Paul Graham’s website.


Paul Graham (born 1964) is an English-born American computer scientist, essayist, entrepreneur, venture capitalist, and author. He is best known for his work on the programming language Lisp, his former startup Viaweb (later renamed Yahoo! Store), co-founding the influential startup accelerator and seed capital firm Y Combinator, his blog, and Hacker News. He is the author of several computer programming books, including: On Lisp, ANSI Common Lisp, and Hackers & Painters. Technology journalist Steven Levy has described Graham as a “hacker philosopher”.

Y Combinator (YC) is an American technology startup accelerator launched in March 2005. It has been used to launch more than 3,000 companies,[2] including Airbnb, Coinbase, Cruise, DoorDash, Dropbox, Instacart, Quora, PagerDuty, Reddit, Stripe and Twitch. The combined valuation of the top YC companies was more than $300 billion by January 2021. The company’s accelerator program started in Boston and Mountain View expanded to San Francisco in 2019 and has been entirely online since the start of the COVID-19 pandemic. Forbes characterized the company in 2012 as one of the most successful startup accelerators in Silicon Valley.

Latvian Startup Ecosystem
Latvian Startup Ecosystem 150 150 RAISE fosters startup growth and scale-up within and across Europe

So you’ve got your idea, a business plan and an ambitious startup team. Is there anything you’re still missing? Well, in Latvia it sure won’t be the case, as you’ll have the support of a compact yet dynamic startup ecosystem that has everything you need to succeed. It’s where state, industry and academia work hand in hand to achieve the best result and it’s what will help you meet all the right people (and have fun) at exciting tech events or get funding for your R&D projects.

Overview of Latvian Startup Ecosystem

Latvian ecosystem is small, yet vibrant, it consists of highly motivated multilingual (often with at least 3 languages or more) talented people of various age and backgrounds. The startup environment is dynamic and rapidly growing. To nurture this growth, all important stakeholders have joined hands together.

Latvian startup infrastructure consists of 400+ registered startups, a pool of institutional investors and business angels, a diverse range of modern co-working spaces, dozens of business incubators fuelled by the government, academia and private individuals, as well as full of exciting gatherings, productive conferences, hackathons and meetups. The capital city Riga hosts numerous annual Tech & Innovation conferences: the iNovussDeep Tech AtelierRiga Tech GirlsTechChill and others. Moreover, a unique Startup Law has been passed and Startup Visa, officially – temporary residence permit, has been created in order to make Latvian startup ecosystem even more vibrant and productive.

Government support

Latvian government has particular interest and determination in boosting the development of startup environment, therefore, the support is provided at various stages: ideation & conceptualization, initiation, development and expansion. No matter what stage you have reached – there is a support mechanism just for you! And it is implemented and delivered through Magnetic Latvia Startup (also known as StartupLatvia), which represents a brand under Investment and Development Agency of Latvia (LIAA).

Startup Law

The Law creates a favorable tax regime for startups. The law foresees two benefit scenarios: 1) a special flat tax regime, currently 340,90 euros/month per employee, regardless of salary paid, combined with the 0% individual income tax rate, or 2) 45% co-financing for the highly qualified specialists. Read more on StartupLatvia – Law Benefits website.

Startup Visa

Startup visa, officially – a temporary residence permit, is offered to all non-EU startup founders who are willing to come and develop their startup ideas in Latvia. One startup can have up to 5 founders with a startup visa. The application process takes one month. The visa is given for the period of maximum 3 years and it is also issued to the spouse and children. Read more on StartupLatvia – Startup Visa website.

Innovation Vouchers

Innovation voucher program is aimed for any-size businesses that develop new products or technologies. The R&D actions supported by the program are the development of a new product or technology, the strengthening of industrial property rights and the certification and testing of new product or technology. Innovation vouchers are up to 85% co-financed in the amount of 25 000 EUR. Read more on StartupLatvia – Innovation Vouchers website.

Science Commercialization

The Investment and Development Agency of Latvia provides support to public research organizations for commercialization of research results. Among supported activities are: carrying out a feasibility study, preparation of a commercialization strategy, industrial research, experimental development, participation in international exhibitions, contact exchanges, conferences (seminars) abroad, individual visits and participation in national booths and trade missions, preparation of commercialization offers, attraction of experts and other activities. Read more on StartupLatvia – Science Commercialization website.

Business Travels

Visibility for startups and the ability to build and expand their business network are of high importance. Investment and Development Agency of Latvia (LIAA) is offering an opportunity to reach out to investors, clients, and partners. Startup representatives can attend various events all over the globe, conferences, go on trade missions and get co-financed by the government..

Business Incubators

There are 13 LIAA incubators throughout the whole Latvia that support the necessary environment for the set up and development of business by offering training, mentor support and grants, and organizing events on general business issues. Read more on StartupLatvia – Incubators website.

Acceleration Funds

In 2017, the government made a special EUR 15 million acceleration fund (allocated by the European Regional Development Fund during the planning period of EU structural funds 2014-2020) available through ALTUM to support Latvia-based early-stage startups. The fund was then equally divided after a public procurement between three professional funds: Buildit focusing on hardware and the internet of things startups, Commercialization Reactor focusing on deep-tech startups, Overkill Ventures focusing on B2B software startups. There is one more acceleration fund in Latvia – Startup Wise Guys, focusing on B2B Fintech startups. More on StartupLatvia – Acceleration funds website.


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