A key aspect of understanding a startup's potential success is knowing its growth trajectory. One commonly used model to explain this growth is the S curve.
Growth Over Time
The S curve represents the growth of a product or service over time, from initial development to maturity. It takes the shape of an "S" as it moves through three stages: the early or slow growth stage, the rapid growth stage, and the maturity stage.
Growth is Slow at Beginning
At the beginning of the S curve, growth is slow. This is the initial development stage, where the product or service is being developed and tested. It is also known as the "valley of death" stage because startups often struggle to get funding during this stage. However, if the product or service is promising, investors may provide seed funding to help the startup through this stage.
Traction with High Growth
As the startup moves into the rapid growth stage, the S curve starts to steepen. This is where the product or service gains traction and starts to experience significant growth in users or customers. This stage is often referred to as the "hockey stick" stage, as the graph begins to resemble the shape of a hockey stick. During this stage, startups often receive additional funding to help scale their operations and capture market share.
Matures with Flat Growth
Finally, the S curve levels off as the product or service reaches maturity. Growth in users or customers begins to slow, and the startup starts to focus on maintaining its market position and improving its profitability. This stage is often referred to as the "plateau" stage.
Good for Startups to Understand
The S curve is an important concept for startup founders and investors to understand as it can help to inform their decision-making. Investors may be more willing to provide funding if they see a promising startup entering the rapid growth stage of the S curve. Founders may use the S curve to help plan their growth strategies and identify opportunities for expansion.
Hire a Startup Advisor
The S curve is a model that represents the growth trajectory of a product or service over time. By understanding the three stages of the S curve - initial development, rapid growth, and maturity - startup founders and investors can make more informed decisions about funding, growth strategies, and market opportunities.
Upthriving is a fully integrated startup growth service for entrepreneurs that have built a product with market fit. More than a startup advisory service, we execute projects that maximize revenue for your business while you focus on building the product.