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

About Carl Potak

Carl is the Founder and CEO of StartupDevKit, a membership-based online startup incubator and accelerator.

Biography

Carl is a serial founder and has been building and growing startups since 2007. He’s been a founder, marketer, political campaign manager and consultant, startup consultant, marketing director, WordPress website creator, and a senior technical technical recruiter for a Fortune 500 recruiting firm.

In 2007, Carl started his first startup, EduDating, a dating website for students and alumni, but it unfortunately failed because the technical requirements were too great to get it off the ground then. This experience gave way to his next startup called HireTicket, a video interviewing platform, but he could not continue after his co-founder stole all of their seed money. He then went to work as a technical recruiter and shattered the firm's growth records. He wanted to continue working on startups and simultaneously started working with CoFoundersLab, the leading platform for startup founders to find other startup founders. There, he was doing social media marketing, strategy, and sales part time. After CoFoundersLab was acquired for the first time, he and the founding team left. Carl went on to become the director of marketing for the fintech startup OnTrajectory, a retirement and life planning tool. Carl consulted for other various startups and and then left OnTrajectory to start StartupDevKit.

Carl has a certification in Inbound Marketing from HubSpot Academy, a certification in Google Analytics from Google, and earned his Bachelor's Degree from Binghamton University (SUNY) in Political Science with a minor in sociology.

As a young adult, Carl achieved Eagle Scout rank in the Boy Scouts and went to college for political science and graduated from Binghamton University for his major. He worked on several high-profile campaigns in New York throughout college and after he graduated in 2008. In addition, he created and led a top-ranked tournament-winning Counter-Strike team throughout college called Performance. Carl left it once he began his last semester of college in 2008 when he decided to start his first startup, EduDating.

Interests

Aside from his passion for business, Carl enjoys hiking mountains, playing drums with his band of talented friends and family, hanging with friends and family, listening to music, politics, Magic: The Gathering, watching and following the Yankees, Marvel and DC movies and shows, and going to museums among other things.

Carl's Role in Building StartupDevKit

Most recently, Carl built StartupDevKit's Startup Incubator Platform almost entirely on his own -- with hundreds (growing to thousands) of awesome curated and original startup resources that empower founders worldwide. The platform helps people anywhere from the idea-validation stage to recently funded startups in the growth-stage. In addition, the platform currently consists of 19 verticals and about 100 subcategories.

Carl has written all of the site's blog content thus far (over 30 mostly long-form articles on startups and marketing) which has helped over 15,000 startups. StartupDevKit ranks highly among some of the other most regarded accelerators and startup blogs on Google and has several #1 listings on Google. The content he's written is used by university entrepreneurship programs, cited all over the startup industry, and even other accelerators.

Startup Survival Secrets, the book

Carl is the author of the book Startup Survival Secrets, a book he's been writing 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. He started the writing process for the book in late 2016 and aims to have it done in the first quarter of 2020.

Being that 95-99% of startup accelerator applicants don’t get accepted and 90% of startups fail overall, Carl developed both the platform and wrote the book to help the worldwide startup community so that people have greater access to resources and wisdom for startups.

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