There are as many business models as there are digital startups. Each one has its specificities, its variations, but two standards seem to prevail: intermediation and underwriting. Benefits and constraints of these business models and four others (freemium, data monetization, etc.)
Behind the fundraising of millions of euros, behind the fabulous acquisitions of this or that American giant, the reality of digital start-ups is less rosy. Most fail before their fifth birthday. And it’s not necessarily the most innovative who survive.
“Very few business models stand the test of early customers…”
How come ? Could there be an ideal business model, a magic recipe whose assembly of ingredients should be followed to the letter or risk dropping the soufflé? ” No, no and no!“, replies unequivocally Xavier Lesage, director of the ESSCA incubator, a management school based in Angers and Paris. ” If there was a better way, it would be known! “, smiled the teacher. “ And that’s why startups rotate regularly. Very few business models stand the test of early customers…”. Especially since the Daf is often recruited only with the first fundraising.
What exactly is a start-up?
Used everywhere, sometimes abusively, the term start-up designates companies, regardless of their age, with the following characteristics: the start-up must bring an innovative technology or service to the market, therefore in an uncertain environment, and have strong growth potential often fueled by significant financing. When the company becomes profitable, it leaves the startup universe.
Matthieu Vetter, Timeshare finance director for start-ups (Espadon Finances), confirms: ” For definition, a start-up is a state through which a company is looking for a repeatable business model for scaling. He can try 5, 10, 15… Many combine several in the end”. Specify: ” Startups move forward no possibility of comparison with the standard models. The Daf can simply glow in the dark, waiting for profitability! “.
No ideal business model therefore, but the two experts indicate some revenue models that are more popular than others, more attractive to investors, more likely to generate medium-term profitability. But not necessarily innovative. “Startups often have technological innovations or innovations in use, but tvery few of them innovate in terms of business model. They are quite conservative in this area and use models that have been around for a long time. They just adapt them to the digital age “underlines Alexandre Chopin, chartered accountant and consultant specialized in innovation within the Soregor Group, and TGS France.
Beyond the model of raising money to develop a very innovative service and reselling it for millions of dollars without worrying about profiting from its innovation in the short term, two models have stood out for three years: the subscription and the brokerage. .
Numbers to remember
According to the 2017 Barometer of Economic and Social Performance
of digital start-ups in France (EY barometer with France Digitale), their turnover increased by 33% between 2015 and 2016, going from 4 to 5.3 billion euros. 54% of their income was generated abroad. Their workforce increased by 25% in the same period, surpassing 20,000 employees last year (89% of them on permanent contracts). Only 10% of CEOs are women. More than half of these startups use incubators or accelerators.
Methodology: barometer based on data collected from 317 start-ups. Survey sent by France digital and venture capitalists to the start-ups in which they have invested on the next page:
Brokerage – the most fashionable