What is a Startup?

We hear the word ‘startup’ all the time, but many people are still wondering, “what is a startup company?”

Essentially, a startup, or start-up, is a young company with a business model that supports innovation. For example, if you were to develop a unique software program that addresses an unsolved widespread problem, creates a business plan, and acquires funding, you’d be a tech startup entrepreneur!

Startup founders often have a vision for a product or service that can impact the world in a positive way. In fact, this is the essence of business, to solve a need, want, or problem that millions of individuals all over the world share, and receive monetary compensation in the form of profit from that solution.

Startup companies, unlike large bulky corporations, are very lean in their operations and can focus on rapid growth in the very beginning. There isn’t any bureaucratic “red tape” to get through in order to push a project forward or bring an idea to fruition — startup founders can immediately assemble a team and start solving problems for their customers.

As the term implies, ‘startup’ is not a permanent phase for any business — nor does it solely refer to companies in the tech sphere. It’s a vital, early stage of the business life cycle, and can refer to virtually any industry.

In general, startups tend to have few employees and fast growth potential. They provide products with widespread appeal that either don’t exist yet or solve a problem better than the options currently available.

To quickly review, here are the main characteristics of a successful startup company:

• Innovative
• Disruptive
• Problem-solving
• Fast growing
• Scalable


By definition, a startup is designed to scale aggressively. In fact, the key attribute of a startup is its ability to grow, according to well-known expert Paul Graham in his popular essay on business growth: “A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of ‘exit.’ The only essential thing is growth. Everything else we associate with startups follows from growth.”

In other words, a startup is looking to move fast, maximize profits, and either sell or get really big with a scalable business model. By this definition, a startup is a small, early version of a future large corporation.