Early sales as a success factor for startups - A case study on how early sales affects the business decisions taken and thus the success of early stage ventures.

Abstract

Keywords: Norwegian student incubators, startups, early sales, startup success factors, customer feedback, need for capital, startup reputation, startup motivation.

The research question we seek to answer in this thesis is how early sales affect the success of startups in an Norwegian incubator. In the research, we explore this question through a dual case study of startups from the NTNU School of Entrepreneurship in Trondheim, Norway, that had early sales. Through substantiation of propositions for the research question, the thesis finds that early sales is likely to be a success factor for startups in this environment (the NTNU School of Entrepreneurship).

Theory from the field of strategy and the field of entrepreneurship was collected to support the research question. Theoretical frameworks include Risk Management, Effectuation vs. Causation, Lean Startup, Crossing the Chasm and lastly, Blue Ocean Strategy. The frameworks are used in a theoretical discussion that build up the propositions for the empirical study. These propositions state that early sales lead to valuable customer feedback, a decreased need for capital, a reputation to increase market interest, as well as contribute to the motivation of the startup team. All propositions, apart from the one suggesting that early sales decrease the need for capital, were substantiated. This proposition was not disproved, but partially substantiated.

In the qualitative dual case study, the case startups were selected to be different from one another. One of the startups was technical and one non-technical. The method chapter defines boundaries and context for the case, and considers the choice of case startups and limitations that come with the selection. The primary data source is semi-structured open-ended interviews with founders of each startup. Secondary data sources include archival records and documentation through the startups websites, newspaper articles and other publicly available sources. A corroboration interview and follow-ups with founding members of the case startups are used to validate the interview transcriptions and the case stories.

Analysis of the cases reveal how different the two startups are, and highlights the fact that both have arrived at several of the same business decisions. These decisions, along with their stories and the theoretical frameworks, helps the researchers to discuss and substantiate three out of the four propositions. The limitations of this study are discussed. Further research is recommended to elaborate on whether the findings can be generalised throughout Norwegian incubators, and across borders. Implications of the findings lead the researchers to recommend Norwegian student incubators and -startups to dedicate themselves more towards getting early sales.