Stealth Startup and its Pros and Cons in Business

Many startup companies have emerged as newcomers to the business world. Not a few of these companies publish their brands to build general trust and credibility.

However, there are also types of companies that choose to become stealth startups. This method has become one of the popular trends developing in the business world. Even so, not everyone considers it a good strategy so in practice there are pros and cons.

What is a Stealth Startup?

Stealth startup is a business that is launched with a certain level of secrecy to keep it away from public attention. Typically, stealth startup founders and employees will hide all or some of the details of their business.

In practice, companies like this will not make press releases or specific marketing strategies. If there is a website or company page, the information is limited or even disguised with another name.

Stealth startups are often discovered when looking at investor portfolios because venture capitalists need to disclose their investments. You may be able to find companies with few details or whose names don't sound common. 

Typically, stealth startups acquire investors through private connections in deals that may not be announced. Most likely, the business he runs is a small group of customers obtained through referrals or cold emails.

Reasons to Become a Stealth Startup

Instead of appearing as a new business in society, of course there are reasons why businesses choose to become stealth startups, including the following.

1. Does not attract attention

Stealth startups will avoid premature attention before their public launch. This is usually done deliberately in technology startups. The goal is to hide the uniqueness from investors to avoid a number of disturbing issues.

2. Surprise competitors

A late appearance will give competitors less time to respond. Stealth startups will have the potential to get more funding while developing new technology with a secure position in the eyes of the audience.

3. Guarantee intellectual property

When they haven't registered a trademark or are still in the product development stage, stealth startups feel more secure about their technology. This gives the impression that the security of the technology used for their products will be safer.

Challenges for Stealth Startups

Even though the startup stealth mode is carried out consciously by the company, this choice will of course also present challenges which often become the following cons.

1. Longer product market fit

Getting feedback from customers is a way to realize product market fit. Of course, this can only be done by involving customer surveys and listening to input and comments from the community. This feedback is more limited if a company operates in stealth mode.

2. Limiting funding options

The biggest challenge in running a stealth startup is also related to funding. If you haven't publicly disclosed your services or products, you may be missing out on a large portion of the investor market. This usually also puts pressure on founders to use conventional methods to obtain funding such as personal meetings.

3. It is more difficult to find employee talent

When a company is looking for employees with limited credentials, job seekers may not be interested in applying. As is the opinion of the market, it will be more difficult to prove product credibility without established branding.

Without a strong reason, a startup should not choose to be in stealth mode. Being open about your new company can actually enable the emergence of various suggestions, potential investments, and talents that have the potential to develop products.

Some types of businesses may benefit from running a stealth startup, especially if the product idea is an innovative idea that is still in the development stage, or can be easily implemented by competitors. In short, independent stealth startups may have a positive impact, but they are also risky, especially in the presence of venture capital.