Rise of cockroach startups and how your company can be one too

As much as we hate cockroaches, they are fast becoming the majority of today’s startup scene thanks in part due to their resilience to all sorts of environmental conditions. After all, the cockroach lasted the dinosaur extinction millions of years ago, and if you study it closely, it has a high survivability rate.

Cockroaches survived the dinosaurs.

That said, what has that got to do with investor sentiments?! Quite a ton actually, and it only takes us as far back as yesterday. When investors were throwing money at unicorn companies valued at $1 billion or more in the past few years, investors are now turning to cockroach startups built on strong business fundamentals and high growth potential. In other words, they are looking for startups that may be bootstrapped but may already be making money.

And investors are already liking the difference, primarily in how they conduct business. While unicorns have fancy offices, employee perks, play zones and other special memberships, cockroach startups have generally run-of-the-milll offices to shared office spaces, and are spending below their means.

Why is that important? Turns out extravagance in some cases can be a negative in investors’ eyes. Again, which sensible investor would fund a startup that hasn’t made money so that they can plan extravagant business parties or trips.

Value creation for customers are what investors of today are looking for and it should be the core focus of any serious startup.  Customer of the startup should see the value in the product/service so that they can keep coming. Like it or not, most cockroach startups are customer-centric and take customer requirements seriously.

Startups that have it in them to withstand turbulence, be flexible to changes and stay afloat despite limited resources are likened to cockroaches.

Want to be a successful cockroach startup? Here are some important qualities of a cockroach startup.

1. Focus on being a money maker

Forget being the flavor of the season! As a founder of the company, your focus should always be on increasing the bottom line and keeping the cash flow coming. Never scale your business beyond your capability and capital.

For a start, a successful start-ups should have sound fundamentals like product demand, short product development cycle and spending checks.

Also, smaller scale of operations should never be an issue with your company as it helps in keep the things in order so that your company can build and grow itself over a period of time.

2. Be able to operate without external funding

There is a fine line between surviving on one’s two feet and getting funded to survive.

An ideal start-up has to be based on sound business model supported by cost-effective value-chain, things like product ideation, product development, growth hacking, delivery and after sales support. Your business has to be able to be effective and ensure steady cash flows that is put back in to the business.

At the end of the day, when an investor sees a startup making money already, they are likely to give you the funds necessary to make your money maker a bigger contender.

3. Focus on your targeted market

Cockroach startups generally have a focused, long-term goal to capture a particular market. Fortune recently reported that the top reason startups fail is because they make products nobody needs. A careful survey of failed businesses found that 41% of them identified the “lack of a market need for their product” as the single biggest reason for their failure. Remember, looking at market demand for a product and catering to it efficiently is the bedrock of a successful startup.

4. Sound business model

A successful cockroach startup should have a clear, distinct and innovative business model to deliver value to a targeted market. At the end of the day, stakeholders are looking for returns and before investing in your company, they are going to want to see the profits you have made so far. Develop a niche and you’ll be better positioned.

5. Have a unique selling proposition

Many startups are actually the same in terms of what they’re selling. Remove their company name and logo from their website and you cannot make one from the other. And that is why it is crucial to have a distinct value-based proposition to sell to your target customers.

Your startup has to position your selling point differently so that investors and more importantly the customers are forced to make an apples-to-oranges comparison and eventually pick your business to buy from.

5 qualities for a cockroach startup to have to be successful

So there you have it. If you haven’t already, work on making sure your company has these qualities because the future could be golden for those who stay humble!

Written by Carl Fourtoy

Carl is a software developer with hands-on experience in data analysis, educational technology, artificial intelligence and blockchain. His key skills include knowledge of Java, JSON & XML Parsing. He's also a junk food lover so, you’ll either find him at his desk busy analyzing and churning out data problems or at a fast food chain trying out the latest fries.

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