A startup is a newly established business created to develop and bring to market a product, service, technology or business model, typically under conditions of substantial uncertainty. The term is commonly associated with businesses attempting to discover a repeatable and scalable way of generating revenue rather than simply operating an established commercial model. A startup can be formed in almost any industry, including software, biotechnology, financial services, manufacturing, education, healthcare, retail and professional services.
Age alone does not determine whether a business is a startup: a company can remain a startup for several years while it searches for product-market fit, whereas another business may cease to be considered a startup relatively quickly after establishing stable operations. The concept therefore describes a stage and operating condition as much as an age or legal category.
A central characteristic of a startup is uncertainty. Founders may not yet know precisely which customers will buy the product, how much they will pay, which distribution channel will work, what features are required, how large the addressable market is, or whether the business can achieve sustainable profitability. Startups therefore commonly use experimentation, customer research, prototypes, minimum viable products, pilot programmes, testing and iterative product development to reduce uncertainty.
The process is often described using concepts such as product-market fit, customer discovery, validation and business-model development. A startup differs from an ordinary new business in this respect because the startup concept generally emphasises discovering a business model capable of substantial growth, rather than merely opening a new operation that follows an already understood commercial model.
Scalability is another important feature of the conventional startup concept. A scalable business can increase revenue substantially without requiring an equivalent increase in every category of cost or operational effort. Software is a familiar example because distributing an additional digital copy can involve very little incremental production cost. However, scalability is not limited to software; manufacturing systems, marketplaces, financial products, franchises, logistics networks and other models can also be designed for significant expansion. The popular association between startups and technology is therefore historical and economic rather than a strict definition. A technology company can be a startup, but a technology company is not automatically a startup, and a startup does not have to be a technology company.
Startup financing is frequently associated with founders' capital, friends and family funding, angel investment, venture capital, accelerators, incubators, grants, loans, crowdfunding or revenue generated by early customers. Venture capital is particularly associated with startups because investors may seek businesses capable of achieving very substantial growth and potentially producing a large return through a future sale of the company or public offering.
External investment commonly involves exchanging capital for equity or another ownership interest, although debt and convertible instruments are also used. Raising investment is not itself a requirement for being a startup, and many startups are bootstrapped entirely or partially through founder savings and operating revenue. Funding strategy depends on capital requirements, risk, growth expectations, ownership preferences and the economics of the particular industry.
Startup terminology includes several concepts that are often confused. A founder is a person who establishes or co-establishes the business; a founding team consists of multiple founders. A startup's business model describes how it creates, delivers and captures value, while its value proposition explains why customers might choose its offering. Product-market fit refers broadly to evidence that a product satisfies a significant and sufficiently defined market need.
A minimum viable product is an early version containing enough functionality to test important assumptions with users. A pivot is a significant change in strategy, product, customer segment or business model in response to evidence. These concepts describe startup activities rather than separate legal forms, so a startup can simultaneously be a limited company, corporation, partnership or another legally recognised entity depending on jurisdiction.
The history of the modern startup concept is closely connected with entrepreneurial businesses in rapidly changing industries, particularly the technology and venture-capital ecosystems that developed around Silicon Valley and other innovation centres during the twentieth century. The word startup is simply formed from the idea of a business that is starting up, but its modern business meaning became increasingly associated with high-growth technology ventures, especially during the expansion of personal computing, internet businesses and software companies.
Contemporary usage is broader and includes businesses pursuing innovation in areas such as climate technology, artificial intelligence, biotechnology, financial technology and consumer products. The term has consequently acquired both a technical business meaning and a more general cultural meaning referring to young, innovative or fast-growing companies.
Startups have potential advantages because their small initial size can permit rapid decision-making, experimentation, organisational flexibility and concentrated attention on a specific customer problem. They can introduce new technologies or business models that established organisations may be slower to adopt. Their disadvantages include high failure rates, uncertain demand, limited resources, financing difficulties, intense competition, dependence on key personnel and the possibility that rapid growth creates operational, regulatory or financial problems.
Growth itself can create new risks: systems that work for one hundred customers may fail at one hundred thousand, while an organisation that expands rapidly may encounter weaknesses in governance, hiring, security, accounting, customer support or compliance. A startup therefore requires more than an interesting idea; sustainable development depends on evidence that the underlying economic model can work.
A startup should not be confused with every newly formed company, every small business or every company seeking growth. A newly opened local plumbing business, consultancy or independent shop may be a new business but can operate from the beginning according to an established model with predictable demand and no intention of achieving venture-scale growth. Conversely, a startup can become a substantial company and eventually cease to be described as a startup even though it remains innovative.
There is also no universally binding legal definition of startup applicable across all countries. Legal registration, taxation, employment, accounting and reporting depend on the business's actual legal form and jurisdiction. In practical usage, the most useful definition is therefore a young or developing venture pursuing a business model under significant uncertainty, generally with an intention or potential for substantial growth and scalability.
