What is a Startup Company?

//What is a Startup Company?
What is a Startup Company? 2017-10-10T07:28:51+00:00

Definition: A startup company, or simply a startup, is an entrepreneurial venture in its early stages of operations typically aimed at resolving a real life issue with an innovative product or service. These ventures are typically small in nature, new, and funded by either to founding entrepreneur or a group of investors who believe in the founder or company concept.

What does a Startup Company Mean?

What is the definition of start up company? These companies often start with just an idea and a plan that might actually resolve a burning issue or plug a business gap in the market. Typically, these companies grow in one of two ways: investor funded or debt funded. Many startups solve a need in society and attract investors because of the growth opportunity. Some entrepreneurs, however, are leery of taking on new investors and don’t want to dilute their ownership, so they opt for debt financing instead.

Most of the startups focus on quick and sustainable scalability, which essentially includes standardization of processes, which were previous unstructured and can be replicated by the company in quick time.

Let’s take a look at an example.

Example

Adam lived away from his home during his college years and faced a challenge of unaffordable decent housing. Adam has an idea that would help his peers find affordable housing and benefit the landlords with better rental income and property maintenance. He could create an app that would match renters and landlords together based a set amount of criteria.

Adam decides to turn this idea into a business and forms a company. He then creates a business plan to convert his idea into a real operating business. Now that he has a plan in place, he needs to fund the operations some how. Since the company doesn’t have a product to sell, it can’t fund this app development by itself.

Thus, Adam meets with investors to pitch his idea. After several meeting, Adam finds an investor who is willing to take a chance on the new company and he receives a $500,000 investment to start developing the app.

Summary Definition

Define Start up Companies: Startup company means an emerging company started by an entrepreneur still in its initial phases of operation.