What Are the Different Types of Startups?

By Natalie Zweig

A startup is a company created by an entrepreneur to develop a new product or service. All entrepreneurs start a company with the ambition of making it big; and all companies face inevitable stages of growth and setbacks. A large percent of companies fail; according to Investopedia, 90% of startups ultimately dissolve.

Reasons for failure include lack of finances, research, or insight into correct market choice. Success, on the other hand, is often attributed to having a strong business plan, pre-launch marketing, and startup advisors.

There are 6 main types of startups:

  1. Lifestyle startups
  2. Small business startups
  3. Scalable startups
  4. Buyable startups 
  5. Large company Startups
  6. Social startups

Lifestyle startups are created by lifestyle entrepreneurs. These individuals turn their lifestyle into a business opportunity. Examples include a musician teaching guitar to underprivileged youth, or a travel blogger documenting personal trips. This business model stems from the entrepreneur's passion; it's less focused on profits than other types. The goal of a lifestyle startup is to spread the founder's passion.

Small business startups are simple; they feature people who work for themselves instead of a traditional company that might employ someone in their profession. Examples include handymen, personal trainers, and boutique owners. These businesses aren’t meant to make it big or change the world, they are intended to provide financial compensation to the owner. The business is the owners source of income.

types of startups

Scalable startups strike a contrast with small business startups. They are huge companies who run the market. Examples include Uber, Facebook and Google. It starts with a unique idea; a scalable concept. The goal is to compete with other companies in the market. These companies search for high growth and high profit. They aim to offer new solutions. They require large investments, and capital to get off the ground. The end goal is often to IPO and sell stock shares in exchange for equity. Unicorn startups are successful scalable startups.

Buyable startups are aimed to attract larger companies to purchase them. This type of business has become more popular in recent years. These companies require less capital than most and are sold off at peak value. Buyable startups are typically in the web or app development markets.

Venture Capital

Large company startups
are large companies that start small and expand by offering new products and services to consumers. This is building on an existing company instead of creating a new one. Growing companies often have both sustaining and disruptive innovation. Apple is the perfect example of this; Apple started off exclusively selling computers, but now it offers a wide variety of products and services: iPads, Apple music, Apple TV, iCloud, and Apple Card.

Social startups are intended to make a difference in the world. One of the most famous examples would be Ben & Jerry’s ice cream, whose goal is prison reform. This company, however, still aims for profits; some other social startups are technically non-profits. These organizations are oriented solely towards improving the world in some way. Corporate social responsibility or (CSR) is great place to start if your company is interested in making a difference (see also ecopreneurship).

different types of startups

Build-for-equity is an opportunity for entrepreneurs to turn their startup ideas into reality. Startups require lots of time, money, and resources. Successful startups require even more. Having experts work with you to build your company can put you on the path to success.

Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.

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