Do you have a million-dollar idea? Thinking of founding your own startup? Or have you recently launched your own startup? Wherever you stand, it is helpful to know about different stages of a startup lifecycle in order to have a clearer vision.
Six Phases of a Startup Lifecycle
In organizing a taxonomy for the funding of innovation, one can think of a matrix along two dimensions:
- The company’s age and maturity
- The position of funding in the company’s capital structure.
As far as the first dimension is concerned, there are six distinctive phases in the startup lifecycle, according to Global Innovation Index 2020. They are:
- Early stage
- Later stage
The first stage is the seed phase, where entrepreneurial startups usually do not generate revenue. As they build their business, their cash flow becomes increasingly negative. Next, in the early stage, companies are typically completing development, with products being in testing or pilot production. Then comes the expansion stage. At this stage, companies are already producing and have growing accounts of receivable and inventories. In the later stage, start-ups have already reached a fairly stable growth rate. The next stage is the growth phase, where companies begin to generate positive earnings. Finally, companies reach their mature phase.
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