46 Typical Success Criteria for Start-ups

Below is a list of 46 signs that shows whether a start-up company has good chances of future success (or continued success).

Founders And Their Cooperation

1. The company has at least two founders.

2. If its business idea includes both technical and commercial challenges, it is a great advantage if there is at least one founder with each of these backgrounds. Only if there are very large networks effects it may be advantageous to have a 100 percent commercially oriented founder team.

3. At least one of the founders has a "star power" that will make it easier to attract talent to the company.

4. It is a plus if some or all of the founders have attended top universities (irrespectively of whether they graduated or dropped out)

5. Although the founders have different professional backgrounds, they have compatible social and cultural values.

6. The founders show many of the following characteristics:

1. Enterprising

2. Self-motivated

3. Impatience

4. Fast-working

5. Thrive with speed, chaos and uncertainty

6. Resistant to adversity

7. Forward-looking but, nevertheless, learn by mistakes

8. Constantly think about improvements in their surroundings

9. Have a professional pride

10. Ability to immerse themselves

11. Curious by nature

12. Cooperative

13. Persistent

14. Good at postponing reward

15. Have had unpleasant, unrewarding jobs during their youth

16. Are happy and optimistic by nature

7. The founders should preferably know each other well in advance. Best is if at least some of them have worked together before, and even better is it if this happened within a young start-up company with high growth.

8. The founders agree on the distribution of the workload.

9. The founders agree on whether on the conditions for an exit - what it might require and when it might happen.

10. The founders have made a shareholder agreement and agree on the fundamental purpose of the company and their individual roles and effort.

11. The share allocation of the founders is distributed partly dynamic, i.e. based on some performance criteria.

12. The founders reserve the "founder" title to most of the C-suite team, although some of these positions are occupied later.

13. The founders are well-versed in sharing economy, crowdsourcing, productivity-enhancing apps and other ways to minimize costs and increase efficiency in a fast-moving, cost-constrained company.

14. Ideally, the founders have an experienced mentor and follow blogs from leading entrepreneurs.

The Planning Processes

15. Initially, the management team does not make a comprehensive written business plan, but rather a simple business canvas, which they often change during the first many months.

16. They probably make several pivots, i.e. high-speed strategic readjustments, in the early phases.

17. They develop and test a "minimum variable product" before starting on a finished product.

18. They outsource activities such as bookkeeping, etc., which are not relevant to their core competencies. However, during the early phases, they engage personally and intensely in the product and marketing development, and they spend a lot of time with customers to learn about how to evolve the product.

19. The product that the company seeks to develop should, as a rule, be so good that about half of its users would be "very disappointed" if it disappeared again.

20. They develop well thought through metrics that make it easy for them to keep track of the extent to which they meet their strategic goals.

21. The company does not begin aggressive scaling until there is clear evidence that it has a very strong product/market fit.

22. If management expect many funding rounds, they consider a possibly physical presence near a leading venture capital center.

23. When the company scales, there is a high focus on lifting all elements synchronously, so that they do not, for example, sell an unfinished product or over-develop a product without focusing enough on its marketing.

24. The management shows great attention to any possible challenges concerning the transitioning from an early adopter to the mainstream market.

The Business Models

25. The business models contain elements that are very original.

26. The business models enable extreme scaling with decreasing or unchanged marginal costs. Likewise, it can lead to very high earnings, clearly worth the investment and the risk.

27. The company's strategy points to a niche that it can dominate. Only when such a niche dominance has been achieved, does it plan to expand further.

28. If the company introduces a new product to an already mature market, the product with respect to at least one important product features at least ten times better than what it will compete against.

29. Ultimately, it is an advantage if the product is relatively simple and easy to promote – or sells itself through word-of-mouth.

30. The company offers not only features but a complete product.

31. The company does not have a product or technology that is looking for a need. Instead it shows a clearly identified need that can be met with the company's product.

32. The business model contains elements that can clearly counteract competition, such as network effects, patents or exclusivity agreements.

33. The company operates within an area dominated by core technologies that develop hyperexponentially and therefore opens opportunities for start-up companies.

34. The company focuses on locating itself in commercial ecosystems where payments are made.

35. Their project has low capital requirements.

36. The company's product invites for repurchases and habit formation.

The Funding Patterns

37. They have participated in prominent incubator/accelerator programs.

38. They have received funding from some of the most successful VCs – preferably at an early stage in their development.

39. The early investors have participated proportionally in the subsequent rounds (especially important if these are high-performing, prominent VCs).

40. Their funding has taken place at short intervals; preferably with max nine months between each round (this also means that they raised many rounds if they are no longer at the seed stage).

The Business Momentum

41.  The company is seen as a category king – thus leadings its space.

42. There is clear positive momentum in how often they are mentioned in the press and on social media. The best is if they had low profile from the outset and then built it up rapidly as their business evolved.

43. There is clear positive momentum in their following on social media.

44. They have been able to attract more competent staff as they have progressed.

45. Their business reach, sales, and gross profits follow an exponential path.

46. They have repeat- or referral users.

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