Startup company
A startup company is typically defined as a new business entity that seeks rapid growth and market impact, often founded by young entrepreneurs or established within larger organizations. These companies are characterized by their innovative ideas or services and a business model that aims for wide-reaching market influence, pulling in various investors for quick capital to fuel their ambitions. The term gained prominence during the 1990s, particularly during the tech boom, when many high-risk ventures emerged, although only a few, like Amazon and Google, managed to endure.
Startups often operate under a culture of dynamism and risk, aiming to disrupt established markets with unique solutions to existing problems. The definition of a startup has evolved, now encompassing a broader range of new enterprises that may not necessarily have ambitious expansion plans. Importantly, most startups do not remain in that phase indefinitely; they typically transition into more stable business models as they grow in size and revenue. Despite the allure and excitement surrounding startups, many ultimately face challenges that can lead to failure or consolidation within larger firms, reflecting the inherent risks of high-reward entrepreneurship.
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Startup company
Start-up has been a cultural buzzword in business since the 1990s to designate promising companies just beginning operations but with defined growth intentions. These companies are most often begun by visionary entrepreneurs still in their twenties, or are started within established companies as a way to engage a wider market, to attract young and promising managers, to promote a vision of itself as hip and cutting edge, and to generate quick interest and create buzz for their companies. Start-up companies promote a new idea, service, or invention and seek rapid and wide market impact. Not every new business, of course, can be (or wants to be) classified as a start-up company—indeed, most new businesses are localized and defined by a relatively narrow market reach, a tight and relatively stable small core of employees, a narrow circle of managers, and by manageable risk (a new grocery store, a family restaurant, or a mall outlet, for instance). Start-up companies, on the other hand, are designed for growth—they seek a wide range of investors to guarantee rapid impact on a market and to advance their product or service quickly to establish a foothold in a market. They expect a rapid return on investment as their product or service offers a new (often radical) solution to a problem or condition other businesses with far more established records of success have either ignored or have been unable to solve.
Background
The risk/reward business model typical of start-up companies has been a staple in American entrepreneurship since the business boom years immediately after World War II. However, the term start-up gained wide usage during the first decade of the personal computer boom during the Bill Clinton presidency (1993–2001), when a young and brash generation of business- and technology-savvy people started hundreds of high-risk businesses trying to cash in on the potential markets created by the reach of the Internet. Only a relatively few “dot.com start-ups,” as they were known, survived into long-term viability—Amazon and Google are among the most prominently known. Although the new ideas were exciting, few entrepreneurs had the patience to develop long-term business plans to manage revenue. But the opportunity of quick returns and the enticement of working new ideas into market success has maintained the credible validity of the start-up as a standard business model.
Indeed, the term start-up has evolved into less an exact business model and more a type of work environment defined by a vigorous sense of possibility, far-reaching potential, and confidence as well as a brash mentality that sees breaking into an established market as an adrenaline rush. Obviously, given their design for wide growth, start-up companies most often marshal a variety of resource investors for seed monies to guarantee a quick-strike entrance into the market—partnerships of like-minded talent seek investors with deep pockets (termed angels) who relish the challenge of high risk, banks with histories of entrepreneurial support, and even short- and long-term government investment programs. In 2013, the Securities and Exchange Commission, under pressure from a Republican-controlled Senate, in an effort to help new businesses gain a foothold in their markets and to generate new and sustainable jobs, significantly modified the long-established ban on solicitation of investments for start-up companies. This action cleared the way for a new generation of computer-savvy entrepreneurs to use email, social media, spam, blogs, and video sales conferences as ways to generate (and secure) financial backing and seed monies.
Topic Today
Start-up businesses identify a trend or a problem, design a solution, and then develop a business plan that is a kind of declaration of independence, one that promises growth and commits to investing in the future. But the term has undergone a rapid redefinition. Given that the dot.com boom and bust of the Clinton years is now ancient history by business standards, the term start-up company has largely lost its viability as a measure of an actual business or service. Start-up has been used to describe virtually any business in its first stages of operation, even small-scale enterprises that have little chance (or designs) to expand into genuine impact. Rather, the term start-up company has become more of an abstract in the business world, a conceptual model to help generate interest in a new enterprise.
In the twenty-first century, being a start-up business is an enticement and a way of generating excitement within a network in which all employees feel that they are part of a radical, even experimental business. Because there is no hard and fast way to measure the success of a start-up company, the term can be used to describe any high-risk, high-return enterprise. Business models generally agree that a business cannot stay a start-up indefinitely. Once a company or service exceeds 100 employees or earns annual revenues that exceed $25 million, or once its controlling board admits more than the relatively small number of people who began the company, the business is no longer considered a start-up. The reality, of course, is that most of these start-up businesses fail to achieve the grandness (and audacity) of their vision or must be absorbed into more established enterprises to sustain their service or product. In American business cultural history, start-up companies have become part of the long tradition of the brash free market entrepreneurship that is as old as the American economic experiment itself.
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