What is a Stealth Startup and Should Your Small Business Be One?

What is a Stealth Startup and Should Your Small Business Be One?

If you are an entrepreneur about to launch a new product or business, you have the option of launching in stealth mode. A stealth startup is a business that avoids public attention in order to be invisible to competitors and to hide information.

By launching a business in stealth mode, a startup can quietly improve its products or services, test the market or gain crucial funding, prior to its official launch.

If you are thinking about launching a stealth startup but are unsure about what is involved, take a look at what exactly a stealth startup is and whether your business should operate in stealth mode.

Keep Your Business a Secret from Competitors

No matter how much you think you’ve differentiated your products or services and created something new and innovative, there is always the risk that your creativity and innovation will be stolen by a competitor.

Launching a stealth startup can overcome the problem of having your ideas or products stolen by competitors. By operating in total secrecy until you’re ready to launch publicly, stealth startups keep their products or services away from the prying eye of competitors.

To keep your business activities hidden, you can execute nondisclosure agreements with your contacts and avoid talking to industry members or the media about your business. This way, you are able to protect your intellectual property while you perfect your products and secure copyrights or patents.

By launching a stealth startup, you can tweak business plans, acquire additional funds if required and basically hit the ground running without the risk of competitors homing in on your product before you have even gotten it off the ground.

Many startups go through a short stealth stage while they work on perfecting their products or services prior to a ‘big launch’. Others can take years working on the idea and raising sufficient funds before they finally go public.

Examples of Successful Stealth Startups

One example of a business that started out as a stealth startup is Forge.AI, a startup dedicated to providing structured intelligence streams by creating fuel for intelligent machines. Jim Crowley, former CEO of Skyhook Wireless and his former colleague Jennifer Lum, co-founder of Adelphic Mobile, worked together to raise capital for the new intelligence startup.

The venture-backed startup was officially founded in 2016 and, following a stealth period, is now pushing the boundaries of Artificial Intelligence and is on its way to achieving its mission of making the world’s data actionable.

Working secretly behind the scenes, Forward Networks has managed to raise $11.9 million without ‘Joe Public’ even knowing what they do. According to the company’ website, Forward Networks is the “first vendor to accurately model large private cloud and multi-site data center network behavior in software to provide a range of new insights and analytical capabilities for internet-based networking.”

Now an established business, Forward Networks is an award-winning company, proudly shouting about its awards like being winner of the ‘2018 Modern Infrastructure Impact Award for Best Software-Defined Infrastructure Solution.’

Should Your Business Be a Stealth Startup?

While launching and operating in stealth mode brings a number of advantages to small businesses, not every business warrants being a stealth startup. Whether you decide to be a stealth startup very much depends on which industry you work in.

Generally speaking, if you operate in a highly competitive environment and are working on a niche or specialized product that could effectively be stolen by competitors, it may prove prudent to launch in stealth mode.

For example, if you are a tech-based business developing a new technology or innovation like the pioneering products both Forge.AI and Forward Networks created, you may want to develop your technology ‘behind the scenes’ until you have the necessary funding and intellectual property protection in place.

Developing a new product that is going to disrupt the market in some way in full view of the world could easily mean your technological innovations are replicated by a competitor, meaning your hard work and creativity goes to waste.

By contrast, if you are launching a brand offering nothing new or innovative and simply providing products or services that already exist, there is little point in starting your small business in stealth mode.

In this situation, you may want to create buzz and raise awareness about your startup early on — perhaps by releasing pre-launch versions of your products, giving way testers and asking for customer feedback. This is the complete opposite to a stealth startup but may be the best move for you if raising awareness is more important than keeping your products  secret.

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Gabrielle Pickard-Whitehead Gabrielle Pickard-Whitehead is a professional freelance writer and journalist based in the United Kingdom. Since 2006, Gabrielle has been writing articles, blogs and news pieces for a diverse range of publications and sites. You can read "Gabrielle’s blog here.".

One Reaction
  1. This is true. You should start without telling anyone and you should never inform anyone about your progress. Focus more on doing and less on talking.