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

The word startup is used very loosely in our society. A lot of people ask, “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.

16 Different Types 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.  Below is a list of 16 different types. Many of which are tech-based startups.

  1. HealthTech – Healthcare-based startups
  2. SaaS – Software as a service
  3. UrbanTech – Urban technology, urban transportation, and urban real estate technology startups
  4. MarTech – Marketing technology
  5. GreenTech – Green energy-based solutions
  6. LegalTech – Legal-based technology solutions
  7. Lifestyle startup – For entrepreneurs who are their own bosses as freelancers and/or create and sell their own systems for whichever field they work in.
  8. Membership-based startups
  9. Social Impact Startups – Mission and cause-based startups
  10. IoT – Internet of Things (Hardware)
  11. Enterprise Software and Hardware
  12. Consumer Software and Hardware
  13. AgriTech – Agriculture-technology-based startups
  14. FoodTech – Scientifically creating foods or components of foods which are usually attempts at healthier solutions
  15. Buyable startups – Their purpose is to create a product or service which will be bought by a larger company
  16. 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.

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.

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 startup, 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.

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Carl Potak

Carl is the Founder and CEO of StartupDevKit, a membership-based online startup incubator and accelerator. He's built a huge incubator-based platform with hundreds of the best curated and original startup resources to help anyone from idea-stage creators to recently launched startups develop and grow easier, smarter, and faster.

Carl is also the author of the book Startup Survival Secrets (coming soon), which is about the top 20 reasons why startups fail, the root causes for each of those reasons, how to prevent them, and what to do instead.

Being that 99% of startup accelerator applicants don’t get accepted and 90% of startups fail, both the platform and the book are here to help the worldwide startup community thrive. Carl has built the entirety of the StartupDevKit website and the Incubator Platform on his own.

Carl is a jack of all trades when it comes to startups and marketing (with exceptions to a few types). He's built StartupDevKit almost entirely on his own -- setting up the membership platform, designing the site and creating graphics, writing all of the site's content, writing over 30 long-form articles, curating hundreds of startup resources in 17+ verticals and about 100 subcategories, curating lists, doing the marketing, customer development, all of the back-end stuff -- you name it.

Carl is a serial founder and has been building and growing startups since 2007. He’s been a founder, marketing and startup consultant, marketing director, WordPress website creator, a technical IT recruiter for an intrapreneurial recruiting startup, and has dabbled in technical support as well.

Carl earned a certification in Inbound Marketing from HubSpot Academy, earned a certification in Google Analytics from Google, and earned a Bachelor's Degree from Binghamton University (SUNY) in Political Science. As a young adult, Carl achieved Eagle Scout rank in the BSA and led a top-ranked Counter-Strike team throughout college called Performance, until he began his last year of his college started in 2007 and started his first startup, EduDating.

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