what is a startup

What is a Startup?

Investopedia defines a startup as “a company that is in the first stage of its operations”. What’s Up, Germany? further expands on what is a startup. Here are the three main criteria for qualifying as a startup:

 A big idea  Though startups are small companies, their ideas are big and disruptive. More often than not, these ideas are technology-oriented. They are either new products or services, or innovative ways of solving a problem. To come up with a big idea, ask yourself, “What sucks?”, and then address that problem. You might just be on to the next big thing that’ll disrupt the market! But the idea is just the first step.

 A registered set-up  For a startup to be recognised, it has to be registered. The founder needs to get a certificate of incorporation and open a bank account. An internal startup within a large company, on the other hand, need not be registered, as it is regarded as a new business division that operates independent of the rest of the company but can use all its resources.

 Scalability and growth  A startup needs to have a scalable business model and the ability to grow rapidly with limited investment. This laser-like focus on growth, unconstrained by geography, is what differentiates a startup from a small business.

Read more on what is a startup here.

PRE-STARTUP

Phase 1 (-2): So you’ve got an out-of-the-box idea? You’re sure that people would be willing to pay for your product/service. Market research has been done and your business plan is ready. Your best buddy is also on board as a partner. Your family and friends are your investors at this stage. You can’t think about anything else other than starting your own company! Welcome to phase one: you’ve figured out what’s missing (or messed up) in the world and have found a solution.

Phase 2 (-1): It’s time to give the baby a name! Think about a logo, get an office space, register your company and put together a lean team. Open an official bank account. Power up your internet connection, calculate your costs and risks. Figure out your market and pricing! Essentially, put your financial, human and capital resources in place. This is the bootstrapping stage. You need to s-t-r-e-t-c-h your money as much as possible. At the end of phase two, you’ll be ready to launch the startup rocket. Blast off!

STARTUP

Phase 3 (0): So many things are happening simultaneously! You and the other founding member(s) are involved in just about every decision—from which coffee machine to buy to creating the landing page of your website. Your basement office is buzzing with hectic activity as you develop your product/service. It is a time of pure adrenalin, lots of coffee and sleepless nights.

Phase 4 (1): Your client list has begun to grow. You will soon need more funds. You’re practically living in your office tweaking your business plan and updating your product/service and market projections. You utilise the rest of your time looking for an angel investor and talking to other like-minded entrepreneurs. You are sleep deprived, but couldn’t care less! There’s so much going on and you’re thriving on the action.

GROWTH

Phase 5 (2): Congratulations! You and your team have made it! You have found an angel investor to fund your product/service. The bank account is healthy and you have to hire more people. Keep refining what you’re doing. You might want to take your team out for a holiday to celebrate together and chill out for a bit. The next adventure is just around the corner. . .

STARTUP DEVELOPMENT PHASES (What is a Startup?)