Startups can feel like a magic box: normal people enter and out pop crores. But the startup ecosystem is much like the Wizard of Oz, where, when you pull back the green curtain, there stands a man.

There’s actually a fairly systematic process behind the formation, growth and financial success of many startups. Which is not to say that it is a fool’s errand to launch a successful startup and grow it into a billion-dollar company, but only to say that it has been done, and there is a worn path and a mature ecosystem surrounding this routine.

And the way to making money for you looks like this:

how-to-make-money-the-startup-way

San Francisco-based startup organization Funders and Founders generated the infographic, breaking down the way an entrepreneur goes from idea generation through to initial public offering. The infographic is based loosely based on famous programmer and venture capitalist Paul Graham’s essay “How to Start a Startup.”

  1. Find a product (or idea) that is popular but not yet perfect
  2. Buy one and study it in detail
  3. Figure out how to improve it
  4. Make a prototype
  5. Show the prototype to 100 people
  6. Remake it until people are willing to pre-order (for example on Kickstarter)
  7. Find a co-founder who can build it with you
  8. Split the equity – give your co-founder 50%, but use a vesting agreement so that their share becomes worth more the longer they work on the company
  9. Find an investor. This can be a person who has a lot of money (an angel investor)
  10. Give her or him 10% of your company
  11. Make the product
  12. Sell your product to 1 Million people
  13. Get more money (this time from VCs)
  14. List your company on stock exchange (this is after you’ve either raised a lot of money or have a lot of revenue, or better yet profit)
  15. Sell a lot of shares when you list on stock exchange
  16. Then just wait out the cooling off period (about 6 months) and you will have your money

About Author

Biplab Ghosh

Biplab lives his life around technology and is particularly keen to explore the intersection of technology and human behaviour. Always looking for new ideas, and ways that can make things simpler. He is a geek with the flair for travel and has great passion for music and theatres.

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