4 key components for a successful startup

28 December, 2020

Due to its fast growing young population, Indonesia is expected to reap the benefits of an agile, innovative and increasingly digital economy. In parallel with this growing demographic, startups have and will continue to play a pivotal role in Indonesia’s economic growth.

Indonesia’s working-age group is predicted to reach 70 percent of the total population by 2030.

Speaking at the Makassar Startup Weekend in March 2020, East Ventures’ Partner, Melisa Irene, shared that in the new economy, startups have to think about value creation to support sustainability.

“The products and services must deliver a positive, lasting impact to the society,” Melisa said. “However, as startups must also consider healthy economics, they must ensure that the solution that they are proposing also has a huge addressable market and the ability to be delivered to the right consumers.”

Melisa further emphasized that while profit might not come in the first days of operating, startup founders must have a profit-oriented mindset from the very beginning.

Lesson learned from successful startups

There are four components that startup founders and entrepreneurs must pay attention to. These include market acquisition, human resources, intellectual property, and efficient capital management.

Market acquisition

A unicorn such as Tokopedia can reach high valuation due to its scale. With Tokopedia, starting a business is made easy, and those businesses can serve millions of consumers despite their geographic location.

While every startup aspires to be at Tokopedia’s scale, it is statistically impossible. Hundreds of companies will operate to acquire consumers, but only a handful will be the top – these are the companies that can dominate market share.

“The market will decide the direction of the company. We have to understand the consumer and serve them well in order to be the market leader,” said Melisa.

Human resources

There is a gap in the job supply and demand in Indonesia which has resulted in difficulties to recruit talent.

“If our goal is to become a market leader, we need strong human resources or great talent to fuel growth,” said Melisa.

“Recruiting should not be based on talent alone, but also shared aspiration and values. When people have the same goals and values, they tend to stay longer and contribute more,” said Melisa.

Intellectual property

As most startups provide technology-based solutions, their assets are no longer physical but take form in intellectual property. It is the asset that gives a company a competitive advantage in the market.

It is important to continue being innovative to thrive.

Capital efficiency

The three aforementioned components are long-term investments that only can show results in the future. VCs plays a huge role in providing capital for startups to acquire market share, hire the right talent, and build the right solutions. The capital supports and sustains the company.

“Every business model requires a different quantum of funding, every founder has different capital management style” said Melisa.

What sets a great founder apart is their ability to manage capital efficiently, which, in essence, is their ability to deliver great performance at a cheaper cost.