What’s the difference between a “startup” and just a new company?
In: Economics
As others said, there’s no strict definition. Personally, I’d say a startup is a new company that intends to grow very quickly.
Tmk a startup exists to be sold. It’s end is to become just successful enough to be sold to a larger company then abandon it
It’s mostly branding these days but a start up is typically a tech company that is funded by investors and intends to lose money for a few years while doing something innovative, risky, and new. Often a start-up isn’t designed to be profitable ever but instead get purchased by a larger company.
So, if you just open a store (online or not) selling t-shirts or candles or whatever, it’d be a small business. It’s not a new concept and you want to make a profit from day one.
If you invent some cool new tech but the business model isn’t clear, you’d be more of a start up. An example of that might be if you came up with a new way to detect SPAM. Is it a business? Not really. But investors see it could have value if Google, Microsoft, etc. see the potential. So, it’s a start up. You (and your investors) eventually want to make money but maybe the end-game is being bought by a bigger company interested in your technology or patents rather than just selling a product to consumers.
That being said, “start-up” became a trendy term and every company looking for investment said they were one. So, the distinction is blurry nowadays.
Financials: A startup doesn’t have any income. A company does. A startup has a bunch of capital to spend, donated by rich dudes and their friends. A new company is more focused on its revenue to pay wages.
I’ve always understood a startup to be a new business in a novel field. The sort of companies that dream of being “disrupters”.
Yep, there’s no strict definition, but “startup” is typically a tech-forward company focused on fast growth and disruption.
Example. You love baking so you decide to open a bakery. You are starting up a bakery, that is a business, but no one would call that a startup. If, on the other hand, you found a company that buys a bunch of storefronts across different cities and then connects a bunch of cottage bakers in those areas using the Internet in order to stock those stores with bakery products, that’s a startup.
Start-ups are companies that are entering young or non-existent markets. They have the potential for enormous growth, but also a high chance of failure.
Because of that they don’t get capital investment the regular way, like bank loans, but instead use venture capital or crowdfunding.
They usually start off very small, developing a product to sell in the first place. This period is the most difficult one, since they only run at a deficit and if they run out of capital or can’t find new investors, before finishing the product the start-up fails.
Examples are SpaceX, Rocket Labs or Virgin Galactic in the commercial space sector. This is a young market, merely a couple years old. They have to develop a lot of rocket technology, but will be worth billions if they succeed in the long term.
Then there is creating new markets, like carbon capture. There is no viable solution to carbon capture at the moment, but many start-ups are trying to find one. The first one to do so, will be rewarded with a lot of contracts and money.
While other responses are correct, no one is mentioning the **key** difference between startup and conventional fresh company (that also explains why most startups are tech related).
*Potential* for growth, or in other words, potential market size.
If you starting pizzeria, no matter how hard you try there is a hard limit on profits you’re gonna get from it. There is limited number of people you can serve, it’s just not feasible to drive couple hours just to eat **your** pizza. Sure, you can start in another location, but you need to rent it, hire new people – the costs increase linearly.
The startup is the idea for a business where with roughly the same resources you can potentially serve millions of people. With online services it’s just given (hardware is cheap and one server can *serve* thousands of people at the same time).
Most of these comments are totally wrong.
A startup is a new company growing very fast.
That is it. It does not have to be a tech company (yes – you can sell cupcakes and be a startup), it does not need venture funding, and it does not have to even be innovative (though these things often help with growth). Good growth as I see it is 5-7% weekly in the first year, and 3-5x in the following years.
Paul graham explains it well: http://www.paulgraham.com/growth.html
I like [Steve Blank’s] (https://www.youtube.com/watch?v=ApjXY3Mh0xI&ab_channel=gigaom) definition of a startup – it is a business in search of a business model. Once it has product-market fit then it graduates into a grown-up.
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