What Are High Growth Startups pt.1

A high-growth startup is a company that experiences rapid growth in terms of revenue, user acquisition, and/or market share. These companies typically have a business model that is scalable which allows them to be expanded quickly.

Examples of High Growth Startups

Linktree 🔗

Founded in 2016 Linktree has seen explosive growth in the last 7 years. Within the last 5 years, the company search growth has increased by 1780% which is totally insane.

Linktree saw its immense growth because it implemented a number of strategies to help launch its business:

1. Created a product by accident which solved a massive problem

2. Applied the Lean Startup methodology (which we will discuss in an upcoming week).

3. Created a freemium pricing model (this helps to get people in the door!)

4. Created a seamless customer experience (made it easier for customers to go onboard)

5. Developed a word-of-mouth marketing campaign

6. Leveraged growth hacking techniques (this will be spoken about in a later week where we will do a deep dive into specific examples of businesses and their growth hacking techniques)

Challenges for High-Growth Startups

Having a high-growth startup can be awesome and exciting, and it can be the experience of a lifetime. However, there are also challenges associated with it. Such as extreme stress brought upon by this forced growth and further, the need to manage all of your resources to ensure that you are still turning a profit can almost be an impossible task. Finally, it can be a challenge to maintain a high-quality product/service if you are being forced to rush through development.

I liken building a business to attempting to build a skyscraper. You need to start by building extremely strong foundations. If a business, especially a small one, fails to do this correctly, it can mean that the business is built on poor foundations, which can cause its high-growth business to crumble to the ground.

The Business Models Associated With High Growth

There are specific business models that work well with high-growth startups, as they help incentivise customers to pay more or invest more time into the business, or even refer the business to their friends. These businesses often make it extremely easy to scale with a lack of time management associated with the customer experience, which makes it easier for the business to grow. The business models associated with high growth are:

• Subscription-based businesses

  • These work well as they tend to allow customers to be incentivized to join by offering free sign-up or joining programs, which then means that there is low resistance for people to join. These businesses operate in the same way as gyms and they often rely on customers forgetting to cancel their subscriptions, which then rolls over month after month, making the business more and more money.

• Marketplace businesses

  • These are businesses that facilitate direct connections between groups of people. Think Facebook or Uber; both of these platforms allow individuals to get in contact with each other and also allow for an exchange of services (e.g., Uber connects drivers and passengers who are then able to facilitate an exchange between these two people).

• Partner-centric businesses

  • These businesses rely on strategic partnerships between groups of people who are then able to refer business to one another. This facilitates the opportunity for massive growth.

Please note! People often say that things like dropshipping or Amazon affiliate links or Ghost commerce are the way to go. However, these are often incredibly competitive and extremely hard to set up given the high level of competition. Generally, with these strategies, the best way to set up these businesses is during the early adoption phase where you are one of the only ones in your niche doing it!

Funding and investment explained

There are many different stages of funding for a startup. I will go into these far deeper another day but for the moment here are the key stages:

1. Pre-Seed Funding: early stage, testing out proof of concept

2. Seed Funding: helps startups refine their product. It is often spent on building a strong core team.

3. Series A Funding: This requires a solid track record, early customer traction, and the ability to scale. This is when startups focus on customer acquisition and growth

4. Series B Funding: Startups have demonstrated significant growth and have a substantial customer base as well as clear revenue streams.

5. Series C and Beyond: This is when the startup is trying to create large-scale customer adoption strategies. By this time they should have a robust management team in place. This is also when startups prepare for their initial IPO

6. IPO (Initial Public Offering): There are a number of requirements a startup must meet to prepare for IPO. However, IPO does allow startups to raise an epic amount of money which can be significantly beneficial for growth**.**

7. Crowdfunding: This is an alternative source of income and doesn’t follow the traditional path of startup growth. It instead is accessible to all startups who have an appealing product. Crowdfunding involves getting the public to invest in your idea to assist and to help with its growth. ****

Final Words 👋🏻

Before, we end up writing an entire thesis on this topic I have decided to split this into 3 parts. Next week we are going to discuss:

• Scaling strategies: strategies and best practices for scaling a startup, including hiring, expanding into new markets, and optimising operations.

• Becoming a Master of Technology: the role of Technology and innovation in the Success of high-growth Startups.

• Marketing (Growth Hacking): to increase customer acquisition and create mass adoption of your product

• Leadership & Team building: making sure to build a dynamic team that is highly motivated and works at peak productivity.

Make sure to subscribe to the newsletter if you want to stay up to date with the latest growth marketing strategies! If you are looking at building your own business please feel free to get in contact! 👇🏻