There are as many business models as there are digital start-ups. Each has its peculiarities, its variants, but two standards seem to prevail: dissemination and subscription. Advantages and limitations of these business models and four others (freemium, data monetization, etc.)
Behind the fundraising with millions of euros, behind the fabulous takeovers by this or that American giant, the reality for digital start-ups is less rosy. Most go bankrupt before their fifth birthday. And it is not necessarily the most innovative that survive.
“Very few business models stand the test of the first customers…”
Why ? Could there be an ideal business model, a magic recipe whose composition of ingredients had to be followed to the letter or risk causing the soufflé to fall? ” No, no and no!“, Xavier Lesage, head of the ESSCA incubator, a management school based in Angers and Paris, answers unequivocally.” If there was a best way, it would be known! “, smiled the teacher.” And that’s why startups pivot regularly. Very few business models stand the test of early customers…”. Especially since Daf is often only recruited with the first collection.
What exactly is a start-up?
Used everywhere, sometimes misused, the concept covers start-up companies, regardless of their age, with the following characteristics: the start-up must bring an innovative technology or service to the market, in an uncertain environment therefore, and have strong growth potential often driven by significant funding. When the company becomes profitable, it leaves the startup universe.
Matthieu Vetter, timeshare finance director for start-ups (Espadon Finances), confirms: ” Per definition, a start-up is a state through which a company is looking for a repeatable business model for scaling. She can try 5, 10, 15… Many combine several in the end”. He specifies: ” Start-ups are moving forward without the possibility of comparison with the standard models. Daf can simply light up the darkness while they wait for profitability! “.
No ideal business model therefore, but the two experts point to some revenue models that are more popular than others, more attractive to investors, more easily generating profitability in the medium term. But not necessarily innovative. “Start-ups often have technological innovations or innovations in use, but e.gvery 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 very long time. They just adapt them to the digital age “emphasizes Alexandre Chopin, certified public accountant and consultant specializing in innovation within the Soregor Group, and TGS France.
Beyond the model of raising funds to develop a highly innovative service and reselling it for millions of dollars without worrying about monetizing its innovation in the short term, two models have stood out over three years: subscription and dissemination. .
The numbers to remember
According to the 2017 Economic and Social Performance Barometer
of digital start-ups in France (EY barometer with France Digitale), their turnover increased by 33% between 2015 and 2016, rising from 4 to 5.3 billion euros. 54% of their income was generated abroad. Their workforce increased by 25% over the same period to exceed 20,000 employees last year (including 89% on permanent contracts). Only 10% of CEOs are women. More than half of these start-ups use incubators or accelerators.
Method: barometer based on data collected from 317 start-ups. Survey sent by French digital and venture capitalists to start-ups in which they have invested
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