Earlier, we’ve talked about cooperation with startups. We’ve described our general criteria for startup selection. Basically, for a successful launch, a novice startup must work out marketing ideas and selling strategies. The founder must be prepared to devote the bulk of his time to the project. All this is true for any model of cooperation. But if we are talking about a profit-sharing model when we provide technical expertise almost for free (revenue sharing), we are even more thoughtful in choosing a founder and an idea for a partnership.

We “board the same boat” as the startup. Therefore, it is important for us that the project falls into the technology segment that is common for us, founder has time to test the main hypotheses, have a product owner, prospects for scaling beyond the local market and a development roadmap. Let’s be more specific.

The right segment

We are more comfortable working in those areas in which we have strong expertise. Therefore, we consider partner startups from the Ad Tech, Fintech segments, including those working with the blockchain technology. We do not work with cryptocurrencies and cryptocurrency stocks. We use blockchain to solve the problems of real sectors.

Lean startup hypothesis

Two key hypotheses must be tested before launching any business:

• Benefits of the proposed solution. Does the target audience really have a problem that the startup solves?
• Growth. Is it possible to scale a service?

By the way, the author of the popular “startups survival” methodology Eric Ries writes about the importance of hypotheses in his book “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.”

Scalability

Startup geography is the most important matter during the test of the scaling hypothesis. Of course, you can earn money in a single country, but we are still inclined towards those decisions that could later be transferred to the international level (starting in one country to focus marketing efforts).

Product owner

Most basic distinct roles in the startup are:

• techie who is responsible for development,
• marketing and sales specialist who understands the target audience and acts as a product owner (if we use scrum terminology).

For successful interaction inside the revenue sharing model, we, on the side of the startup, need a person who will determine development goals and their priorities. The technical part of the project is our business.

Roadmap

It is important for us that at the start of the collaboration, the partner must realize the path of product development, at least at the first stage, i.e. the idea must be worked out.

Unfortunately, the typical startup approach is: “If something is not working, let’s make a new feature, then everything will be ok.” This approach demonstrates the lack of a clear understanding of the product market placement and prospects for the selected target audience. Inside the revenue sharing model, it’s more interesting for us to work with a partner who has a clear vision of the planned MVP so that development is predictable in terms of time and cost.

Project scope 

Scope of the project must be inextricably linked with the vision of the final goal.

Sometimes a vision of the project helps to form a variety of training programs aimed at startups in business incubators. However, we do not want to establish, as a prerequisite, the training or resident status of the incubator, since each has individual characteristics and goals. On the contrary, in fairly mature projects, even if they didn’t go through mentors, we are ready to take the tech role and create MVP so that we can further participate in more serious events. One of the prerequisites for passing the selection is the presence of a team that covers both the marketing and technology sides of a startup. For such startups, we can be useful and provide a highly competent team instead of unreliable freelancers.

Article author: Maxim Korotkov, CEO Maxilect

Contact, if you have a well-developed business idea, but no team.