Start-up Company

Description of Start-up Company. Explanation.

Definition Start-up Company. Description.

A Start-up Company (SC) is a new business venture or company in the earliest stage of its operations. It is a relatively new, usually small business. Sometimes SCs are not even real legal companies yet, because they are still temporary or in formation.

Quite often, the term startup company is used to indicate just a subset of new companies: technology-oriented firms having perspectives for exceptional growth, aiming at disruptive innovation, or at creating a Blue Ocean. Such startups, when they are successful, are typically more profitable than established businesses, in the sense that they can potentially grow rapidly with limited investment of capital.

Attractiveness of Startup Companies for Investors. Scalability!

In case they are designed to search, build and implement a repeatable and scalable business model, allowing for fast future growth, SCs are very attractive for suppliers of private equity or venture funding, such as angel investors, venture capitalists. A startup company represents an attractive opportunity for an exceptional return on investment, albeit with high risk levels.

The End of Startup Businesses

Due to disappointing demand, revenues, or errors in the underlying strategic vision, strategy or business plan, many small scale entrepreneurial organizations turn out not sustainable in the long term. In such circumstances, a sound exit strategy is useful.

In a more positive scenario, a startup business will cease to be considered a 'startup' when it passes certain milestones, such as becoming profitable, or becoming publicly traded in an Initial Public Offering. Also it may end its life as an independent entity through a merger with or an acquisition by another firm.

Start-up Companies Forum (4)

Heavy Competition is Beneficial for Startups
"Having studied tax data of 2 million companies that were launched in the UK between 1995 and 2005, Andrew Burke and Stephanie Hussels in a short article "How Competition Strengthens Start-ups" (HBR March 2013), report that companies launched in crowded markets had higher odds of failure in the first year, but once they survived this year, had a much greater chance of surviving the first 3 years.
Competition apparently helps startups thrive... The authors explain this effect by stating that a challenging environment causes young firms to focus extra on satisfying client needs on one hand and keeping costs down to a minimal level on the other hand.
They advise venture capitalists not to spoil young entrepreneurs with too much seed capital as this might decrease the appetite to build a lean, low cost company."

Creating the Foundation for a Later Success Culture in Start-ups
"How does a start-up lay a foundation for a success culture during early stages?
Does culture happen naturally, or can the company consciously build it. Would love to hear your comments."

Strategy in Startup Stage
"Is strategy development important at the start up stage? Any actual experiences?"

Life Cycle of New Venture. Growth and Transitions
"Is the life-cycle model appropriate to use when describing the growth and transition of a new venture?"

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