What are the stages of a Startup as per DPIIT: Ideation, Validation, Early Traction, and Scaling? Explained

Overview : In this article, we have discussed various stages of a Startup as per the DPIIT, including Ideation, Validation, Early Traction, and Scaling. The reader will learn the key characteristics and requirements for startups as they progress through these stages. A clear understanding of the startup stage is essential, as the startup scheme applies differently to each stage of development. For support, the setindiabiz advisors are available.

The Department for Promotion of Industry and Internal Trade (DPIIT) provides specific criteria for startup recognition at each stage. For the purpose of the Startup Indian Initiative/scheme, a startup’s progress in business is divided into four stages. In the following section of this page, we explain each stage in detail and in simple language for easy understanding.

Ideation Stage

The ideation is the very first stage of a startup when the entrepreneur has conceived an idea or a concept and starts working on the idea or the concept to bring it to life. The ideation phase of a startup sets the foundation for the entrepreneur journey of the startup and lays the groundwork for future stages of growth. A website or pitch deck is not necessarily required at the ideation stage, but having them can improve the chances of approval when filing the application. It has the following characteristics.

Conceptualisation of a business idea.
Conducting initial market research for its viability
Developing a business model and plan to test its feasibility
Creating a prototype or Minimum viable product for user feedback for further development

Validation Stage

The validation stage is next to the ideation stage, where the idea conceived by the startup takes shape into a viable product or service. The startup needs to provide user testimonials, feedback, and iteration history, showing initial traction with early adopters and how their feedback has helped the startup to improve its product. Filing an application with the DPIIT for the recognition of the startup, at this stage, should ideally include a Pitch deck demonstrating the progress or website, or both, to enhance the likelihood of approval. At the Validation stage, the startup needs to validate the potential demand for its product or service. which includes below :

Launching a minimum viable product (MVP)
Gathering user feedback and iterating the product.
Validating product-market fit.

Early Traction Stage

The third most crucial stage in a startup’s entrepreneurial, journey is when the product or services are launched in the market and users consume them. In this stage, the startup starts gaining initial customers or users, generating revenue that indicates market acceptance and growing demand, and providing data to support scalability. Filing an application under the Early Traction stage mandates both a Pitch deck and website as essential requirements. The startup at this stage, including the above, needs to highlight the following :

Customer acquisition numbers
Revenue earned
Engagement rates show key performance indicators (KPIs), such as customer lifetime value (CLV) and customer acquisition cost (CAC).

Scaling Stage

At the Scaling stage, startups focus on rapid revenue growth while improving efficiency. The startup, in this stage, expands its operations and market reach, streamlines its process and sets the stage to secure additional funding. To file an application for startup recognition at the Scaling stage, a Pitch deck, a website and a video showcasing the innovation in products and services are mandatory. To file an application for startup recognition at the Scaling stage, a Pitch deck, a website and a video showcasing the innovation in products and services are mandatory. This stage includes below :

Demonstrates the potential for significant growth and market penetration
Focuses on sustainability and long-term viability.

Conclusion

The startup's stage must be supported with appropriate documents and evidence to meet various DPIIT criteria for the selected stage by the entity applying for DPIIT Startup Recognition/80 IAC approval/funding. Your application should reflect the current stage. Highlight relevant achievements such as product development in the ideation stage or revenue metrics in the early traction stage.