What Is a Startup Company?

The concept of a “startup company” appeals to a contemporary idea of business.

The term was popularised in the late-90s to early 00s when the dotcom boom began. Startup as a buzzword encapsulates themes of trend-setting businesses and technology-rich ideas with young and ambitious entrepreneurs at the helm — which is why it really began to circulate during the digital era.

But what is a startup company really? This guide explains the true definition of a startup company, helping you to understand if your business idea fits within this bracket.

A startup company is loosely defined and the phrase can describe two separate ideas. Startups can refer to:

• A business culture or;
• A business itself.

What Is a Startup Company?

Startup companies are businesses that have developed the groundwork of an idea they intend to bring to market through investment.

The objective of a startup is to essentially form the framework of a product that can be launched using a strategy that gains a lot of traction and fast. This is why startups are generally in the technology sphere, as this is where many of the most lucrative markets are.

The term “startup” comes from the idea that the business is the start of something that could become very big. Startups are business ideas designed to grow into major brands, corporations or Fortune 500 companies.

What Is Startup Company Culture?

A business can be referred to as a startup without exhibiting any of the structural archetypes of a startup company. This is because there is a cultural ideal that surrounds the concept of a startup. Not all startups follow this kind of culture, but it has become so closely associated with the startup idea that many businesses replicate it without having a startup’s distinct strategy.

For example, coworking brands are usually considered startups.

Why? Because they follow the culture associated with a startup. They’re a new and fresh business offering innovation and new technology. They’re often staffed by young entrepreneurs who focus on modern business concepts with an emphasis on globalisation, team collaboration and introducing new-age solutions to common problems.

But they’re not technically startups.

Startups are frameworks that need investment to develop a market-ready product that can grow. A business like a coworking provider is a fully-formed service product that is scaled not by pure investment, but also by interest and consumer growth — just like a traditional business setup.

Therefore, while not a startup, these types of businesses — and many like them — are branded as startups because they follow the startup ethos and lifestyle. They embody the attributes well-known to most startup enterprises, even if they themselves aren't part of the startup community.

Difference between a Startup and a Small Business

Almost all businesses start small. Some grow larger, but many of them stay as a small business for their entire lifecycle. A small business opens after securing funding and presents a service or product to be sold. This can be national, global or highly local.

A startup works almost in the opposite way. It begins with little-to-no funding, presents a concept and acquires financing to develop. The startup will not remain a startup for its entire lifecycle. Instead, it is intended to scale to a large business through fast-paced market growth.

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