What Is A Startup?

What Is A Startup

In recent years, such a phenomenon in business as a startup has become not just popular, but, perhaps, fashionable. They talk about a startup on television, books are being published about it. There appear new thematic resources on the Internet every day. Not everyone understands what is a startup and whether there are differences between a startup and a “new” company. Does the startup have any specificity? Or is this term used to refer to any promising initiative?

What is a startup?

A startup is a company that has just been created or is still in the process of creation.

This company has a certain business idea that needs to be developed and promoted, but its creators are still engaged in market research and the search for means for its implementation.

Sometimes startups refer to companies that are going to offer innovative products and services to consumers but are currently in the process of finding suitable business technologies and financial support. The future of such companies looks uncertain.

A startup can be any company, regardless of its field of activity. However, in some circles, startups are considered only initiatives in the field of high technology, Internet business and “related disciplines.”

When hearing a “startup”, people usually imagine Internet resources that stand out among their own kind. The most famous and successful startups are video hosting Youtube, the “people’s encyclopedia” – Wikipedia, as well as the largest social networks, such as Facebook. Many people think that these projects have gained such popularity because they were based on some unique ideas, but that’s not exactly true.

In other countries, the concept of “startup” is interpreted a little differently. The most impressive examples of startups are IT corporations with a “world name”: Microsoft, Apple, Google. The history of these giants really started from a small one – namely, from a small group of like-minded people, burning with the desire to realize their ideas.

A brief history of startup

The first mentions of the term date back to 1939. That year, San Francisco was filled with firms focused on IT-development. Students innovators David Packard and William Hewlett called their project a start-up, which grew into the largest company “Hewlett-Packard”.

Now, all Internet projects with a twist are called startups. This is due to the success of some well-known startups, such as:

  • Social networks Facebook, Vkontakte. At the same time, only the first one is really a startup (original idea and free niche). Another one is a successful copy that was only successful on the RuNet;
  • Wikipedia – ever-growing online encyclopedia;
  • YouTube – the largest database of videos;
  • Flickr – the most popular photo storage service;
  • Twitter – a messaging platform;
  • The concept of a startup applies to all areas of production not only to the field of IT.

Distinctive features

A startup has some features, which distinguish it from other “young” companies:

  1. High speed of development. The project starts in the shortest possible time, sometimes in less than six months.
  2. The presence of an innovative idea, which has never been implemented before. Novelty and utility should attract customers.
  3. Availability of funds. Startup attracts investment at the time of its inception. In this case. investors invest money in an idea but not in a successful company.
  4. Low chances of success. Only 30% survive for more than a year, and only 15–20% of them exist for 2 years or more. This is due to the high risk of unsuccessful implementation of a new idea.
  5. In most cases, the purpose of creating a startup is selling it by entering an IPO. There are cases when a startup manages to sell its project for millions of dollars (for example, Summly application).
  6. The presence of a team. A team of friends, partners or classmates with well-coordinated teamwork has a higher chance of success.

Stages of development

The startup project goes through 5 main stages during its development:

  1. Seed stage. Studying market, making up an action plan, preparatory activities, first negotiations with interested parties.
  2. Startup stage. The moment of launch and the first weeks of work is the most critical period in the life of a startup.
  3. Growth stage – the position of a startup in which it has already taken a stable position in the primary market and is confidently moving towards the achievement of the goals outlined in the business plan.
  4. Expansion stage. When the plan to conquer the primary market is almost complete and business expands to other markets, including by buying other startups, we can talk about expansion.
  5. Exit stage – the exit from the project of the initial investors in the person of venture funds, and the further sale of the project to strategic investors. In case of failure, the “exit” is the closure of the business.

As you can see, a startup is not just a young company. A startup is a company created by ambitious young people who are ready to promote their project at any cost. Since startups always lack funding, investors come to help, attracted by the opportunity to make money. Without them, the project has no chance.

safestartup.org is presented by the Institution of Occupational Safety and Health (IOSH), sponsored by Norwich Union and supported by HSE and Small Business Service.

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