problem. Solving customer problem doesn’t require any pedigree, IQ or capital,
it only requires relentless pursuit. Stay Focused on it. #startups
Originally posted by Abhishek Goyal on LinkedIn
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The valuation and the losses of a company or a start-up are the two important aspects of a company which are headed in different direction.
In today’s era, companies are having high valuation or in other words ‘ over-valued valuation ’, even when they are in great loss .
The reasons is:-
°) EARLY PHASE OF STARTUPS
In the early phase all the start-ups are in loss only. This is due to surviving in the competitive business world.
In this phase of the start-up, the company is not having any asset, on which their valuation can be calculated. So, the investor uses his own model of valuation calculation i.e.
5X Investment model
In this model the investor calculates valuation by multiplying 5 with the amount of money the start-up founder’s asked in exchange of 20% stakes of the company.
Suppose a start-up ask for an investment of Rs. 1cr. In exchange of 20% of the stake of the company then, then investor will provide the start-up, the amount of Rs. 1cr. And will take 20% of the stakes which makes the total valuation of the company of Rs. 5*1 cr.= 5cr.
So, the company which was in lass is now highly profitable as they are valued of Rs 5cr. Even when they are having loss in their initial phase of the start-up
°) STABLE/LAST PHASE OF STARTUPS
In the last phase, the startups have compiled a large amount of loss that, they cannot overcome over it. But at this... (More)
Red ocean strategy is a strategy of entering a fully of mostly full contested market space i.e.
Entering in the business which is having high competition. Red oceans are all the industries in existence today – the known market space.
This type of business or start-up strategy is having an head to head competition, where there is very less of no more space left for new beginners i.e. the new business age not able to survive in such type of competition.
In this type of business strategy, the industrial boundaries are predefined by both big giants companies and the competitive rules are set by them only. Due to this these companies tries to outperform each other, in order to survive in the market place.
To be the biggest shark of this ocean, the companies reduces or cut the profit to such a level that no other company can provide to the customer .
In the market place of smartphones, most of the smartphones are using android as a rom (software) installed in them. Due to this there is head to head competition in the smartphone market b/w brands like ‘ Xiaomi ’ and ‘ Realme ’. So they apply the custom skin on android to give extra features to their customers which are named as ‘ MIUI ’ and ‘ Realme Os ’( commonly known as ‘ Color Os ’.
Blue ocean strategy is a strategy of creating and capturing... (More)
These two theories are widely used for Small scales enterprises, and multinational enterprises, these also find use in startups also.
Basically these strategies concerned about the level to which the concerned market is concentrated or still.
In this we considered those markets which are highly concentrated and there is heavy competition going on inside that market also the products are generally of same types and differ very less among them.
and in order to enter in this market one need to do something to disrupt this stillness and this could be done by heavy advertisements and brand recognization.
In this the product is new to the market and as a result the market is not still or concentrated and the competition is not much and the product get the necessary recognisation if it is upto the expectation of the customer.
So the level of marketing required in this is not that heavy as compared to Red Ocean.
for example The introduction of new gaming set up in the market that can provide you next level of gaming experience which is not previously possible.
For startup, both Blue Ocean and Red Ocean is not much of concern as it totally depend upon the idea that you have and how... (More)