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Building a Software Startup: Key Aspects

All-round IT services provider with 32 years on the market, ScienceSoft has been working side by side with software startups since 2002.

Software Startup Market Highlights

As of 2020, the overall startup market keeps growing, creating $3 trillion in value, while the share of software and software-enables startups is traditionally high. 45% of fastest growing software startups being created globally now deal with deep tech, e.g., AI, blockchain, robotics, agtech, cleantech. However, traditional tech sectors, such as fintech, cybersecurity, edtech, gaming, adtech, and digital media are not far behind.

About 72% of startups saw their revenue drop since the beginning of the crisis, with the average startup experiencing a decline of 10 – 30%. Shockingly, about 12% of startups managed to see a significant revenue growth.

The good news is that governments understand the startup software company role in economy revival and propose support programs. Naturally, the greatest support will be given to startup specialties that can help during the crisis. Those include healthcare (aiding in the provision of testing, sanitation, and contact tracing), social services (providing non-health related care and food delivery for the immunocompromised and elderly), and e-education.

How to Launch a Software Startup: Important Stages

1. Market research to identify business opportunities and idea productization.

2. Defining value proposition and market-entry strategy development.

3. Minimum Viable Product (MVP) feature set outline, technology choice, architecture design; MVP project planning.

4. Creating Proof of concept (PoC) to check technical feasibility and pitching to investors (optional).

5. (if relevant) Getting a sustainable competitive advantage proved by a patent/patents.

6. MVP development and launch.

7. Testing MVP with customers, feedback assessment, measuring the product/market fit and finding a revenue model that works.

8. Fundraising (optional).

9. Iterating to improve product-market fit, active product and brand marketing.

Popular Startup Business Models

Multi-sided marketplace (or XaaS)

  • Min. two groups of users – service providers and service consumers (e.g., Uber – drivers, and passengers).
  • Revenue model examples: commission-based, subscription-based.

Examples: eBay, Uber, Airbnb, Spotify, LinkedIn

Focus on:

  • (for ecommerce marketplaces) An optimal ecommerce platform for creating a multi-vendor marketplace (e.g., Magento).
  • Powerful search and recommendation engine.
  • Marketing automation.
  • Guaranteed confidentiality of business and personal data.
  • Features to automatically adjust prices.

Software-as-a-Service (SaaS)

  • Software is provided on the basis of subscription (monthly, annual, etc.) and/or pay-for-use basis.
  • High focus on building customer loyalty.

Examples: Salesforce.com, Dropbox, Netflix

Focus on:

  • Recurring payment functionality (if subscription-based).
  • Freemium pricing (entry-level functionality is free, more advanced plans are paid):
    • An optimized conversion funnel to turn free users into paid ones.
    • A robust infrastructure that can handle a broad base of free users.
  • Bulk licensing (for enterprises).

User-generated content

  • Free or low-cost app is distributed to users and can be subsequently monetized via ads or selling data segments.

Examples: Instagram, TikTok, Snapchat

Focus on:

  • High-volume traffic.
  • Advertising and cookie-based targeting.

Data collection

  • Deriving value from selling research services or aggregated, de-identified data.

Examples: Google, PatientsLikeMe

Focus on:

  • High-volume traffic.
  • Powerful data analytics capabilities, including big data analysis.
  • Data security measures.
  • Software and infrastructure scalability.

Common Functionality of a Startup Product

Below we provide the common functionality of modern startup software products. The specific features will depend on the purpose of the product and its target users.

Identity and access management

  • Single sign-on.
  • Multi-factor authentication.
  • User privileges.
  • Session management:
    • Identifying an unauthorized session.
    • Protection against multi-session.
    • Session hijacking countermeasures.

Data protection

  • Automated assessment of potential security threats.
  • ML-assisted investigation of vulnerability roots.
  • Built-in DDoS protection.
  • Compliance, e.g., with PCI DSS, GDPR, HIPAA, GLBA.

Payment

  • Integrated payment gateways (Braintree, PayPal, Adyen).
  • One-time or recurring payments by card, bank transfer, Apple Pay, Google Pay and other popular payment methods.
  • Smart retries of failed payments, automated failed payment emails.

Marketing

  • Integration with social media.
  • Pricing and promotion management.
  • Loyalty management.
  • Email marketing.
  • User experience surveys.

Analytics and reporting

  • Enhanced SEO metrics monitoring (for web solutions).
  • Conversion optimization (heatmaps for mouse movements and clicks on webpage elements, session recording, A/B testing, personalized conversion paths, web form analytics).
  • Visitor profile tracking.
  • User engagement and pattern tracking.
  • Live chat, short surveys, and social media to collect user feedback.

Controlled experimentation and feature management

  • A/B testing to determine the best version of a new feature, or measure the improvement you’re making.
  • Feature toggles (feature flags) to hide, disable and enable certain functionality during runtime, without deploying new code.
  • Feature variables to configure components or parameters on the fly, without deploying code, and experiment to determine the optimal values for each parameter.

Strong Competitive Differentiators

Monetizing on privacy

With the rise of companies that make money by harvesting consumer data, customer intimacy has become an industry – more and more people are looking for software that respects privacy (e.g., DuckDuckGo, a privacy-focused search engine).

Advanced techs

Since market leaders rarely pioneer radical innovations, the delivery of an innovative product or service is what can make a startup’s competitive advantage.

  • AI and machine learning for personalization; behavior and business process prediction; mimicking the mind of a human being and performing human-like tasks; advanced data security; image analysis, and more.
  • IoT techs to enter the market of smart, connected products, smart cities, industrial IoT, IoMT.
  • Blockchain to ensure fair transactions supported by data privacy and transparency.

Exceptional customer support (especially important for B2B startups)

  • Anticipating customer challenges or questions.
  • Proactively providing solutions and answers to potential issues.
  • Ensuring customers achieve the max outcomes while using your product or service.

Planning to Deliver New Software Product or Online Service?

23% of startups attribute their failure to not having the right team in place. Hiring the right talents requires significant time, money and management resources. ScienceSoft’s professional business consultants and developers is one click away to assist you in:

  • Market entry strategy design.
  • Idea productization.
  • Product development planning and tech choice.
  • Quick development and deployment of the new software product.
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Sample Investments, Skills and Timelines

SaaS MVP Development

Duration: 3 months

Skills:

  • BA/Consultant
  • UI designer
  • Project manager + 3 developers + 1 tester
  • DevOps engineers

~ $105,000+

SaaS application Development from scratch

Duration: 6 months

Skills:

  • BA/Consultant
  • UI designer
  • Project manager + 3 developers + 1 tester
  • DevOps engineer

~ $200,000+

Ways to Optimize Startup Product Development

  • Ready-to-use cloud services (e.g., AI and IoT services of AWS and Azure) to optimize development efforts.
  • Public APIs (for examples, open APIs of social media tools).
  • Using platforms (e.g., Magento for a ecommerce marketplace launch) and reasonably customizing it.

Consulting and Development Services to Succeed in Software Startup Launch

Software Startup Consulting

Our consultants:

  • Structure the software product idea.
  • Split functionality into subscription plans.
  • Define MVP functionality.
  • Determine the architecture tech stack.
  • Advise on disruptive techs (AI, machine learning, big data, AR/VR, etc.).
  • Help comply with security and industry regulations.
  • Deliver a detailed software startup implementation roadmap.

End-to-end Software Product Development

Our team takes over:

  • Idea productization and feature management.
  • PoC, MVP development.
  • Clean, intuitive, conversion-driven UX design.
  • Unique UI design.
  • Iterative development of the product.
  • Testing and QA.
  • Integrations with third-party systems.
  • Supporting smooth and safe work after launch (optional).

About ScienceSoft

A US-based IT consulting and software development company, ScienceSoft has been helping startups (e.g., 1 billion-user Viber) envision and build disruptive software products since 2016. Our competencies in quality and data security management are backed by ISO 9001 and ISO 27001 certifications. Don’t hesitate to contact us if you want to quickly deliver stable software with sleek, conversion-driven UX into the hands of users in 2-6 months and consistently upgrade it with new features.