Since the cold season arrived in the domestic startup ecosystem, the kindline and evaluation criteria proposed to startups have changed dramatically. Just a few years ago, when capital liquidity was abundant, venture success strategies proposed by investment institutions and market experts focused on rapid growth and technological innovation. However, now that we have entered a recession, the main message we send to start-ups is securing self-vitality and proving performance. In other words, the perspective of innovative companies has moved from future potential and quantitative expansion to survival potential and management effectiveness.
This change in tone may seem like a consequential interpretation or whim due to market adjustments, but I think the main management elements of startups that have been overlooked have come to light too late. It is unfortunate that relevant opinions are being poured out through media reports and the like “only after winter has arrived.” Despite the fact that growth and fulfillment are not incompatible values, it is true that the market's attention has been focused on electronics. Therefore, if emphasis had been placed on the latter “before winter came,” I wonder if it would have been possible to prepare more systematically for the current crisis.
I think the indicators for evaluating innovative ventures and startups focus on quantitative aspects in both the public-private sector. The market assesses the success of companies based on investment stage (series A, B, C, etc.) or valuation (corporate valuation) results, and public institutions analyze support performance by setting sales, employment, and investment promotion amounts as key items in running corporate development programs. It is clear that all of these indicators are important factors, but even excellent companies cannot guarantee success and may be rather vulnerable in times of austerity.
For example, even if a specific company secures investment funds and realizes significant sales, it is difficult to survive without attracting additional investment if the size of the deficit greatly exceeds this. Most of the recent cases of startup management difficulties, restructuring, and closure of businesses reported through various media are stories of companies where subsequent investment promotion is impossible or suspended. It may not be a problem during the investment boom, but in today's macroeconomic trend, the corporate structure that must rely entirely on external financing is bound to be shaken from the ground up.
A startup is also an enterprise. Therefore, profit generation and management capabilities, which are the essence of a company, are just as important as market innovation, which is the essence of a startup. The current recession is acting as an opportunity to expand market interest and entrepreneurs' focus, which had been focused on the former, to the latter. This is because if the profitability of the business model, the stability of the financial structure, and the productivity of organizational activities are not supported, it is possible to experience firsthand that the technology development and market penetration of startups are not sustainable. I hope that a healthy balance can be established from the perspective of running and looking at a startup using the telephone as an opportunity.
In this context, the 'Data Lab' service, a big data platform for ventures and startups recently introduced by MoneyToday Unicorn Factory, has symbolic significance. This is because unlike existing startup data platforms on the market, it provides a variety of information related to business performance, owned technology, and organizational operations that can illuminate individual companies from multiple angles in addition to simple investment status. In addition, a “Company Analysis” section has been set up to supply data on a startup's business scale, technical level, and corporate performance by comparing it with a group of companies in the same industry. It is expected that this will contribute to establishing a sound perspective for analyzing innovative companies.
Recessions, booms, crises, and opportunities are repeated, but it is difficult to predict when and how much. As a result, a startup management strategy that focuses on only one phase may be helpless in the face of a sudden change in the situation. This long cold wave will come to an end someday, but I hope to keep the lessons learned through this winter when we enter spring. The basic spirit of innovation is important for startups, but a healthy corporate structure is also necessary. If this is cultivated and prepared evenly on a regular basis, it will be possible to lay the foundation for sustainable growth while responding more proactively to environmental changes.
[MoneyToday startup media platform 'Unicorn Factory']
