What Is A Startup Company?

Startup companies can grow big very quickly. Photo by Helloquence on Unsplash
Startup companies can grow big very quickly. Photo by Helloquence on Unsplash
  • In comparison to traditional business ventures, startups are expected to grow rapidly, at a rate of between 5% and 7% per week in their initial stage – Paul Graham, co-founder of Y Combinator.
  • A venture capitalist (VC) is a private equity investor that provides funding to companies that has the potential to grow rapidly.
  • In the 1990s, the most common type of startup company was called a dotcom. Many failed but some like Amazon and eBay survived.

What is a Start-up Company?

A start-up is a business that’s still in its initial stages of operation something that has just opened or started. These companies are organized to provide a need or solve a problem that has never been addressed before. Many big companies like Facebook, Amazon, Uber, Airbnb, and Google started like this many years ago.

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They Can Grow Big Very Quickly

While they do start small—with minimal funding usually from the founder and a very small team—they can scale or grow big very quickly. They are designed to offer a product or a service they can sell to a very large market, think tech start-ups that use the Internet to reach customers from different parts of the world. In essence, many start-ups are designed to grow fast using technology to traverse time and space. This means their markets are not limited by a certain location or time zone only, they could be selling products to people in Tokyo as well as in London who may be in different time zones. This allows them to grow fast and double or even triple their revenue in a short period.

Start-ups can get funding initially from friends and family but they can also get funding from investors or venture capital firms. Unlike a bank providing a loan or a grant, venture capitalists (VC) can be more involved in the start-up’s operations. They can monitor the business and give advice. And for a new company that’s just starting, having guidance and supervision from experts or those more experienced in running a business is crucial.

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They Need a Business Model And Marketing Strategy

Aside from funding, start-ups also need a business model or a business plan. A business plan defines a company’s mission or vision, what they plan to achieve, and which needs they plan to address. It can also list specific goals with strategies the company can do to reach them.  Aside from that start-ups also need market research to find out if there’s a market for the product or service they plan to offer and who these customers are.

To help them grow faster, start-ups also need a marketing strategy. A marketing strategy help start-ups reach customers faster by letting them know about the company and what the company can offer. They can reach out to customers via email (email marketing), or by creating social media pages where they can post information about services, and promos.

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Another important thing start-ups need to consider is the location of their office. This will depend largely on the type of product or service they want to offer. Some start-ups that produce gadgets, for example, often need a physical store where customers can drop by and test the product. Others that offer services only remain online. The latter is more cost-effective because it’s cheaper to maintain a website and online presence than to rent a physical space.

The Dot-com Era

Dot-coms were the most common type of start-ups that were popular in the 90s. Dot-coms are companies that mainly conduct business online through their website and don’t need a physical store. Sadly, many dot-coms that were established in the 90s failed due to the lack of a proper business plan or source of revenue to keep them afloat. Although others survived like Amazon and eBay which have grown to become some of the biggest companies we have today.

Photo by John Schnobrich on Unsplash

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