Step-By-Step Guide to Creating a Digital Business

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You just need to come up with a super idea, and then quickly scale up and earn billions, like Sergey Brin and Larry Page from Google, Jeff Bezos from Amazon, Andrew Eun, and Daphne Koller from Coursera. Their success stories are widely known, business models are thoroughly studied, and cases adorn popular business books.

In this article, we will tell you how to gradually develop a digital business.

Stages of Development of a Digital Company

Technology companies go through several stages in the development process, which corresponds to different investment rounds. Each of the stages requires a new approach and competencies from the entrepreneur as if a new company is being created every time.

Project Launch. Investment Stage: Pre-seed

At the launch stage, the founders who decided to become entrepreneurs and their employees are full of enthusiasm.

The founder is responsible for:

• formation of a business model that meets the goals of the founders and the market situation;

• creating a team capable of solving tasks and working for little money;

• choosing an idea and an MVP;

• attracting financing (founders’ funds and/or external investments) and other resources; 

• optimizing the risks of the project and the founders.

Typical mistakes of the founders:

• too in love with the idea;

• pay insufficient attention to the commercial part of the project;

• poorly versed in the real market situation and the pains of potential customers;

• in a hurry to create a full-fledged product without confirming demand;

• focus on too small a market;

• trying to create a large company right away;

• their main and sometimes only motive is money.

Creating a Sought-After Product and Establishing Business Processes. Investment Stage: Seed

At the end of the first stage, the product enters the market, there is a certain interest in it and the first feedback from customers has been received. However, the business is not showing explosive growth.

In the second stage, an even more explicit separation of the roles of the owner and one of the team members begins. If there are several founders, you need to divide the operational roles and responsibilities between them.

The main tasks of the founder:

• productive analysis of the market reaction to MVP;

• establishing business processes for the creation and promotion of a full-fledged product;

• attracting resources;

• formation and maintenance of the team’s mood.

Ensuring Rapid Growth. Investment Stage: Round A

By the third stage, the demand for the product is obvious, there is a permanent team of 20-50 people, the business is profitable, and has already attracted the first investments for scaling and growth. The company’s successes inspire employees.

At this stage, the founder is working on the following tasks:

• determines the vector of the company’s development;

• provides the company with appropriate resources;

• creates an effective management system: forms the board of directors and optimizes operational management;

• develops his managerial competencies or hires a CEO.

Strengthening in the Market. Investment Stage: Rounds B, C, D…

The company has taken a certain market share, a stable operational infrastructure for development has been created, the company has more than 100 employees, an annual turnover of 4-5 million dollars, and the growth rate of key indicators is decreasing. Intensive work is underway.

The founder needs to focus on:

• detuning from competitors and outperforming them, strengthening the product’s position in the market;

• building relationships with existing and potential investors;

• designing a development strategy for the coming years.