Around 90% of startups ultimately fail, and the reasons leading to failure are well known: Undercapitalization, scaling challenges, lack of a competitive advantage or realistic IP. However, what about the 10% that succeed? What did they do to beat the odds?
To create a pathway for market success, startups need two essential assets groups: venture capital and creative capital.
Venture capital is formed of the financial and operational assets invested in a new, unproven business enterprise. Creative capital comprises the design and development assets that bring an ingenious idea to life.
Venture capital gets the most attention, but it’s creative capital that can ultimately last longer and potentially become more valuable.
Billion-dollar unicorns like Airbnb, Lynda.com (now LinkedIn Learning), Square, YouTube, Byju’s and Pinterest have benefited from “creative” founders who were physical and digital product designers, educators, developers and visualizers. These companies found great success by creating and amplifying stories and visualizations to spark interest.
Venture capital usually arrives after rigorous assessments and due diligence cycles are completed. However, when creative capital is developed and applied before venture capital, it helps speed up these assessments and analysis of a company’s concept, often accelerating product deployment, reducing founders’ dilution and improving valuations.
So what is creative capital?
Depending on your industry, creative capital is defined as a mix of strategic assets that may include:
- Target audience insights and data.
- Visualizations of products, services, experiences, etc.
- Branding, naming and communication systems.
- Product design and engineering prototypes.
- Preliminary development cost projections.
- Network partner sourcing and introductions.
- Future product extensions and roadmaps.
- Digital content, platforms and setup.
- IP identification and development.
- Advisory expertise for investors.
These assets are almost always created to combine with business planning and introduction purposes, eventually helping companies bring their ideas to life.