These startups operate secretly; know how they earn money
Every day, we hear about Fintech, Agritech, and Healthtech startups. But have you ever encountered a Stealth Startup? Do you know what it is and how it functions? Why does it carry such a mysterious name? The burning question is: how do they generate revenue? Let's uncover all the details.
Every day, we hear about Fintech, Agritech, and Healthtech startups. But have you ever come across a Stealth Startup? Do you know what it is and how it operates? Why does it have such a mysterious name? The pressing question is: how do they make money? Let's uncover everything about it.
What are stealth startups?
Stealth startups are companies that operate very quietly for several years after their inception. They avoid promotion and shun publicity. This is why they rarely seek early-stage investments; investors usually require some disclosure, which could reveal the startup’s activities. Even when they must share information, it is kept minimal and general to prevent others from understanding their operations.
Why do these startups operate secretly?
A major reason is that they don't want competitors to discover their activities. They keep as much information hidden as possible, often using non-disclosure agreements. This strategy helps the company dominate the market by refining their approach in secrecy. They do this to protect their ideas and intellectual property.
Ideas can be copied
If a startup is developing a revolutionary idea or product, it risks being copied if its work becomes known. By operating in secrecy, the startup ensures the world remains unaware of its product until its official launch. Although ideas can be protected by patents and copyrights, these are lengthy and expensive processes. Therefore, in the initial stages, startups work secretly until they secure a patent, then they launch their product.
How do these startups stay hidden?
To conceal their product or idea, these companies release very little information about themselves. Sometimes, the information provided is so vague that it doesn't reveal what the company is doing. For example, a company might claim it is developing a B2C product that will offer various benefits to consumers. They may label themselves as a stealth startup instead of revealing the company name. Instead of a website link, they might provide a link to a Wikipedia page explaining what a stealth startup is.
Benefits of a stealth startup
The primary advantage of a stealth startup is the ability to protect its idea. It gets the time needed to test and refine its concept. This secrecy allows the startup to focus on its work without external distractions.
Disadvantages are also significant
However, stealth startups face several challenges. Working secretly delays achieving product-market fit. They don't receive adequate community support, and their options for raising funds are limited because their business model isn't proven. Attracting talent can be difficult, as people may view such startups with suspicion. Building a brand also takes significantly longer.