What is a Startup and What are the Types of Startups?

decorative

Share This Post

Have you ever wondered, what is a startup and what are the types of startups?

Therefore, as leaders in the space, StartupDevKit is setting the record straight by defining what is a startup and what isn’t a startup. We’re also sharing the different types of startups as these two topics are relevant to each other.

Startup Definition

What is a Startup?

A startup is defined as a new business that is creating a product or service that’s somewhat easily scalable to create large profit margins. It fixes a problem in a market, fills a need in a market, and/or creates an entirely new market. They generally achieve lots of growth, are transformative, and are up to around five years old.

Startups don’t have to be a tech startup, but most are. Ones that are not software-based usually have physical products or services and often need inexpensive solutions to make and sell them so they can scale.

What’s Not a Startup?

There are agencies that sell marketing services, web development, software development, and public relations services starting every day. They call themselves startups.  However, agencies are not real startups because they aren’t filling any gaps or needs by a market and are not easily scalable.

That’s also because they have lower profit margins due to higher costs for paying employees. Therefore, an agency doesn’t qualify, nor would a new local business be considered one, either.

Small business “startups” are not designed to scale easily, so they are unlikely to be a “real startup,” as I would call it.

Industries and Sectors of Startups

In addition, there are a lot of different types of startups that come from different industries. Steve Blank says there are only six types and considers new local businesses to be startups, too. I very much disagree. There are a whole lot more.

Below is a list of the majority of different verticals that startups fit into. Many of which are tech-based startups.

  1. AdTech – Advertising tech
  2. AgTech – Agriculture technology-based startups
  3. AI – Artificial intelligence
  4. AR/VR
  5. AudioTech
  6. AutoTech
  7. BioTech
  8. Chemicals
  9. ClimateTech/CleanTech – Climate & clean tech solutions
  10. Cloud Infrastructure
  11. ConstructionTech
  12. Consumer Health
  13. Consumer Internet
  14. Consumer Software and Hardware
  15. Cosmetics
  16. Creator/Passion Economy
  17. Crypto/Web3
  18. Cybersecurity
  19. Data Services
  20. DeepTech – tech solutions based on overcoming substantial scientific or engineering challenges
  21. Developer Tools
  22. Diagnostics
  23. Digital Health
  24. Direct-to-Consumer (DTC) – when a brand or manufacturer sells its own products directly to its end customers without a third party.
  25. Drug Delivery
  26. E-commerce – Think online marketplaces like Amazon or Rakuten
  27. Education
  28. EdTech – the combined use of computer hardware, software, and educational theory and practice to facilitate learning
  29. Enterprise SaaS
  30. FoodTech – Scientifically creating foods or components of foods which are usually attempts at healthier solutions
  31. GovTech
  32. Hardware
  33. HealthTech – Healthcare-based startups with a focus on harnessing technology
  34. Intrapreneurial startups – New product or service lines of business created within an established company who are innovating in our ever-growing and ever-competitive market.
  35. IoT – Internet of Things (Hardware)
  36. LegalTech – Legal-based technology solutions
  37. Manufacturing
  38. MarTech – Marketing technology
  39. Media/Content
  40. MedTech – Medical device tech startups
  41. Membership-based startups
  42. Parenting/Families
  43. Payments
  44. Pharmaceuticals
  45. PropTech/Real Estate – Property technology-based
  46. Retail
  47. Robotics
  48. SaaS – Software as a service
  49. Sales & CRM
  50. Security
  51. Semiconductors
  52. Smart cities/UrbanTech – Urban technology, urban transportation, and urban real estate technology startups
  53. SMB Software
  54. Social Commerce
  55. Social Impact Startups – Mission and cause-based startups
  56. Social Networks
  57. Space
  58. Supply Chain Tech
  59. Therapeutics
  60. TransportationTech
  61. Travel
  62. Web3/Blockchain
  63. Wellness & Fitness

When Does a Company Stop Being a Startup?

Startup age is somewhat correlated with whether a company remains a startup or not. I consider 3 to 5 years of age to factor into whether or not a startup stays a startup.

On the other hand, we also have maturity via growth and milestones.

For instance, when a startup reaches product-market fit and is able to scale significantly without reverting back, then it stops being a startup and becomes a growth-stage company.

It really depends on the circumstance, but once a startup raises Series B funding, then I’d definitely call it a growth-stage company at that point.

The word startup is so loosely used by so many people, that some folks in the industry use it synonymously for any company under ten years old, even if it’s not really a startup anymore.

Are Startups Easy to Build?

I’d be lying if I said startups are easy to build and grow. They’re far from it. The reality is that 90% fail. Few people think it will happen to them. But the odds are against everyone.

To successfully build a sustainable company, they require education, strong teams, planning, passion, vision, discipline, emotional intelligence, drive, creativity, adaptability, and great products or services that people don’t want to live without.

Learn more about the necessary keys to success for founders. But start with trying to validate your idea before you start making it. Also check out our post, How to Start a Startup.

In addition, I’m taking action to fight against the brutal reality of startup failure. I’m releasing a book soon called Startup Survival Secrets. In the book, I break down the top 20 reasons why they fail with root causes for each one of them, how to prevent them, and what to do instead. I finished the manuscript but I’m working on editing it now.

Conclusion

A startup isn’t really a startup unless something that can be scalable. If it’s not scalable it’s just a new business or it’s a business idea. Startups drive innovation in our economy worldwide and are responsible for many of the technology enhancements we see today. If you’re not creating something innovative, then the chances are that you aren’t creating a startup, but rather a new business.

Was this article helpful to you? Let us know in the comments below!

Get more helpful startup and marketing content like this delivered to your inbox.

More To Explore

Leave a Reply

Your email address will not be published.