A startup is a young company focused on developing an innovative product or service, usually with the goal of achieving rapid growth and scalability. Unlike traditional businesses, a startup is still searching for a viable business model and operates under high uncertainty. These companies often begin small but aim to become major players in their markets.
Startups play an important role in driving technological progress and economic development. They challenge established markets, set new trends, and create jobs. At the same time, building a startup is risky, many fail within the first few years. Understanding what a startup is and how it works helps entrepreneurs, investors, and policymakers make better decisions.
Startups differ from traditional businesses in several key ways. Below are the most important characteristics that define a startup.
A startup is in the early stages of development. The business is typically newly founded and doesn’t yet have a stable source of income. It is still experimenting with products, services, and strategies to figure out what works in the market.
Startups often aim to solve an existing problem in a new way. This innovation can be related to technology, but also to the business model, customer approach, or distribution. Think of companies like Airbnb or Uber, which disrupted traditional markets with a fresh perspective.
One of the core features of a startup is the ambition to scale fast. Growth is often built into the business model. Many startups therefore focus on scalable solutions: products or services that can be delivered to many more customers without a proportional increase in cost, like software or digital platforms.
A startup isn’t fully developed yet. Instead of following a fixed plan, it constantly tests and refines its ideas in search of a repeatable and scalable business model. This is often done through a process of testing, measuring, and adjusting. Once a sustainable model is found, the company may evolve into a scale-up.
Startups operate in highly uncertain environments. The market may not be fully understood, the customer needs might still be unclear, and the business model is unproven. That’s why startups often work with experiments: small, fast tests to validate ideas before making big investments.
Working at a startup requires a different mindset than in traditional companies. It’s all about speed, flexibility, and learning by doing.
Startups often use the lean startup method, which focuses on quickly testing ideas based on customer feedback. Instead of building a complete product right away, they launch a minimum viable product (MVP): a basic version used to learn from real users. Many startups also work with agile methods, short cycles where improvements and adjustments are made step by step.
Customer feedback is essential. Startups actively seek input from users to improve their product or service. This iterative approach allows them to pivot quickly when something doesn’t work as expected.
In addition to lean and agile, many startups apply design thinking, a problem-solving approach that centers on the end user. By diving deep into user needs, pain points, and context, startups can design solutions that actually provide value rather than just being “innovative” on paper.
High expectations, long hours, and ongoing uncertainty can make working in a startup mentally exhausting. Founders especially face heavy pressure. Burnout, stress, and fatigue are common. That’s why healthy work environments, coaching, and setting boundaries are becoming increasingly important in startup culture.
Experienced mentors can make a huge difference in a startup’s success. They offer guidance, ask the right questions, and share their network. That’s why many incubators and accelerators provide mentoring programs where founders are coached by those who’ve been through the startup journey before.
A startup doesn’t remain a startup forever. Once the company has found a working business model and achieved market validation, it often enters the next phase: scaling.
Once a startup achieves product-market fit, meaning the product meets a real need for a specific target group, the focus shifts toward growth. This usually involves raising more capital, expanding the team, and improving internal processes. Marketing and sales also play a larger role. This transition marks the beginning of the scale-up phase.
There’s no strict definition, but generally, a company is no longer considered a startup when:
It has a repeatable and scalable business model.
Revenue growth is stable and ongoing.
The biggest uncertainties have been resolved.
During this phase, the internal structure of the company often changes. More hierarchy, standardized processes, and defined roles are introduced to support sustainable growth.
Not every startup makes it to the scale-up phase. Many fail within the first few years due to:
Lack of market demand
Poor timing
Team issues
Running out of money
However, failure isn’t the end for every founder. Many start again, stronger and more experienced. These entrepreneurs are often referred to as re-starters.
To grow effectively, most startups require external funding. This allows them to invest in product development, marketing, and hiring, often before they generate any meaningful revenue.
Most startups begin with an idea and a small founding team. In the early stages, there’s little to no income. At the same time, expenses pile up, from software and development costs to marketing and legal fees. External funding helps cover these costs and buys time to validate the business idea.
Startups raise money in different investment rounds, each with its own purpose and investor types:
Each round usually requires a higher valuation and stronger proof of traction.
Startup valuation can be tricky, especially in early stages. Investors typically look at:
Market size potential
Founding team experience
Growth trajectory
Competitive position
At this point, valuation is often based more on future potential than current revenue.
In addition to traditional investors, some startups raise money through crowdfunding platforms, tapping into the public for support. This not only provides funding but can also attract early users and build buzz. Other online investing models include equity crowdfunding or blockchain-based token investing.
A startup doesn’t exist in a vacuum. Its success often depends on the strength of the environment around it, the startup ecosystem.
Networks are crucial for finding partners, hiring talent, attracting investors, and learning from others. A healthy ecosystem brings startups in contact with other founders, mentors, and experts who can help them move forward.
Incubators and accelerators offer structured programs to support early-stage startups. They often provide office space, coaching, workshops, and access to funding networks. Well-known examples include Y Combinator and Techstars. In the Netherlands, programs like Startupbootcamp and YES!Delft are active.
Governments often support startups with subsidies, innovation programs, or tax incentives. Universities contribute by turning research into spin-offs and offering entrepreneurial resources. Many tech hubs are also emerging in cities like Amsterdam, Eindhoven, and Delft, offering a dynamic environment where startups can grow and connect.
There is a lot of confusion around the term startup. It’s often used too broadly or incorrectly applied.
A company that has been operating for years, has a proven business model, and is focused mainly on optimizing rather than innovating, is no longer considered a startup. Similarly, a freelancer or small marketing agency without a scalable model doesn’t qualify, even if it’s newly founded.
Not all new businesses are startups. For example, a newly opened bakery or hair salon isn’t a startup, because the concept isn’t scalable or particularly innovative. A true startup typically has a disruptive idea, often with a tech-driven approach and the potential for rapid growth.
A unicorn is a startup valued at over $1 billion. Notable examples include Stripe, ByteDance (TikTok), and SpaceX. While rare, unicorns have become symbols of what many startups aspire to achieve: massive impact and high valuation.
Some critics argue that the startup world is too focused on rapid growth and securing investment, rather than long-term sustainability or social value. The "all or nothing" mentality is often glamorized, making failure seem like a badge of honor. A healthier startup climate requires a better balance between ambition and realism.
A startup is a young, innovative business designed to grow quickly and discover a scalable, repeatable business model. Startups operate under conditions of high uncertainty and rely heavily on testing, learning, and customer feedback to refine their product or service.
Not every new company is a startup, true startups combine innovation, scalability, and growth potential. To succeed, they need more than a great idea: a strong team, funding, and a supportive ecosystem are crucial.
Although building a startup involves considerable risk, it can lead to significant technological progress, economic growth, and even market disruption.
A startup is a young and innovative company that is still searching for a scalable and repeatable business model. It’s typically designed for fast growth and operates in uncertain conditions.
A company is considered a startup until it has validated its business model and achieved sustainable growth. This can take anywhere from several months to a few years.
Startups are early-stage companies focused on innovation and scalable growth. They typically disrupt existing markets or create entirely new ones through new technology or approaches.
It varies widely. In the early stages, startup CEOs often earn little or nothing as resources are invested in product development and growth. Compensation usually increases with successful funding rounds or revenue growth.
