What exactly makes a small and youg company a "Start-Up", among other small and young companies which are not necessarly start-ups?

  • $\begingroup$ Please add a description for the new tag "company" that you just created, or risk it being removed again. Right now, I personally don't know what to associate with that. Perhaps you rather want to use firm or industrial-organisation $\endgroup$ – FooBar Jul 30 '15 at 11:19
  • $\begingroup$ Huh I created it? That was an accident. It's hard to belive it didn't already exist, after all economics are all about companies, is it not? $\endgroup$ – Bregalad Jul 30 '15 at 11:24
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    $\begingroup$ Right, but if "all economics is about companies", "company" is a quite useless tag, as it would have to be applied to all questions, isnt it? I removed it. $\endgroup$ – FooBar Jul 30 '15 at 11:43
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    $\begingroup$ I'm voting to close this question as off-topic because it does not seem to be about economics terminology rather about business or general terminology. $\endgroup$ – denesp May 20 '18 at 9:47

Probably, there's no clear-cut definition, however, there's an article of Paul Graham called Startup=Growth which represents the opinion many agree upon: startup is a company that plans to grow fast (... and scale). A quote:

A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. The only essential thing is growth. Everything else we associate with startups follows from growth.

That's why a new barbershop isn't a startup since

A barbershop doesn't scale.

This definition probably still leaves some space for interpretation, but not that much.

  • $\begingroup$ Cool. So if someone makes a company for a novel technology, but plans for the company to remain very small, then it's not a start-up even though it shares similarities, right? $\endgroup$ – Bregalad Jul 30 '15 at 18:02

There is no clear separation between what is and what is not a start-up. It's a non-technical term, and so has all the usual blurriness and context-sensitivity that goes along with that.

A start-up is usually taken to have come from nothing, with a new product or service (or new variation of existing ones). Its founders typically put in all the equity themselves, perhaps leveraged with some debt (maxing out personal credit cards, for example); and then manage it, and typically provide (almost) all the labour inputs themselves. And as a founder, it consumes all your time and energy.

Whereas some young companies are spun out of existing enterprises. Some young companies start with an existing product, and/or have separation of ownership, management and workforce. They would typically not be referred to as start-ups.

  • $\begingroup$ I would add that in my experience, having "the founders put in all the equity" relates to start-ups being in sectors with less capital required, typically involving IT and located at the service sector. $\endgroup$ – FooBar Jul 30 '15 at 11:17

I might be late to the party.

A Start Up is a stage where company is still not so clear about so many things, viz

  1. Models to profit
  2. Clear plan about the product
  3. Clear plan about their target/market

In simple terms they are figuring out those and many such things.
Once they are done with clear product, cash flow model and market they come out of Start Up stage (if they still managed to sustain).

That's why Yahoo! was still called as world's biggest Start Up till 2015 or so because they might had not figured out so many things and still experimenting

  • $\begingroup$ A company with a clear business plan can still be a start-up. In fact, having no clear business plan is a rather bad sign from a start-up. $\endgroup$ – Acccumulation May 18 '18 at 19:53

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