Our nation has such an impressive list of home-grown tech success stories, which shows it’s obviously a great place for startups to set up base and grow. But it’s that transition point I’ve been pondering this week. When does a startup stop being a startup?
Is the graduation from startup status connected to duration of existence? Level of funding received? Profitability? Number of employees?
Let’s see what the dictionary says:
Start-up /ˈstɑːtʌp/ n. A newly established business
So, Oxford Dictionaries uses the duration of existence as the key factor in defining a startup, which seems fair enough, but it does raise questions about what exactly constitutes ‘new’. Deciding where to draw the line between new and old is particularly difficult.
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Personally, I think if a company has been able to stay in operation for more than three years, it’s no longer a startup – it has learned the ropes, understands how to sustain itself and so becomes a fully-fledged company.
However, this cutoff point comes with some caveats. There are a number of companies that go from zero mph to lightspeed in the blink of an eye. Take Digital Asset Holdings, for example – the blockchain company was only founded in 2014, yet raised $60m last month.
I’m not convinced a company with $60m under its belt and a valuation of over $100m should remain in the same box as a month-old company being run out of someone’s bedroom. To me, a startup conjures images of jeans-clad, coffee-swilling entrepreneurs with a strong will and a weak bank balance. Plonk $60m in their bank account and this changes overnight. Bootstrapping ends, hiring ramps up, office space expands and marketing efforts galvanise.
Perhaps, then, the number of years a company has been running isn’t the answer. Maybe it’s funding that ushers in the graduation from startup to scale-up to downright impressive tech company.
If a startup stops being a startup once it raises a certain level of funding, what exactly is the magic number it needs to raise?