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, but every company goes through their stages and a large percent of company’s fail. Data shows 90% of startups fail. Source: Investopedia.
There are 6 main types of startups.
- Lifestyle startups
- Small business startups
- Scalable startups
- Buyable startups
- Large company Startups
- Social startups
Lifestyle startups are created by lifestyle entrepreneurs, who turn their lifestyle into a business opportunity. Examples include a musician teaching guitar to underprivileged youth, or a travel blogger documenting their trips. The business stems from the entrepreneurs passion and is less focused on profits. The goal is to spread their passion.
Small business startups are people who run their own business. 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.
Scalable startups are very different. They are huge companies who run the market. Examples include Uber, Facebook and Google. It starts with a unique idea with a scalable business model. The goal is to compete with other companies in the market. These companies search for high growth and high profit and hope to offer new solutions. They require large investments and capital to get off the ground. The end goal is often to IPO and sell shares of stock on the market in exchange for equity. Unicorn startups are successful scalable startups.
Buyable startups are aimed to attract larger companies to purchase them. This is becoming more popular in recent years. These companies require less capital than most and are sold off at peak value. Examples include web and app development.
Large company startups are large companies who start small and expand on the company 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 innovation and disruptive innovation. Apple is the perfect example of this, they began with the computer but now offer a wide variety of products and services including iPads, Apple music, Apple TV, iCloud, and Apple Card.
Social startups are meant to make a difference in the world. Examples include ecopreneurs and Ben & Jerry’s, whose goal is prison reform. Ben & Jerry’s still aims for profits but other social startups are non-profits and are designed solely to make a difference in the world. CSR is great for your company to make a difference.
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.
Do you want to build a successful startup? Consider using MassLight for all your technical efforts. We build software for early stage startups solely in exchange for equity. Learn more about our build for equity program or contact us directly.