What Is A Startup Company

What is a Startup Company and how are they any different (if any) from other types of businesses. This article will define a startup, with some examples of booming startups today.

What Is A Startup Company

A startup is a small firm, focused on technology-based products, started by one or more entrepreneurs to develop and market a unique product or service. The average startup is, by definition, a shoestring company, with early money provided by the founders or their friends and family.

A startup, sometimes known as a start-up, is a business or project started by an entrepreneur to find, develop, and validating a scalable business model. One of the startup's first tasks is raising substantial money to further develop the product. To do that, they need to have strong pitch decks, if not a minimum viable product, that supports their claim that their idea is truly new or a great improvement to something on the market.

what is a startup company

Startup enterprises have little or no revenue in the early phases. They have a concept that they must refine, test, and market. That takes a lot of money, and entrepreneurs can get it from a variety of places. While entrepreneurship encompasses all new firms, including self-employment and enterprises with no plans to register, startups refer to firms with plans to expand beyond the founder's single location. Startups confront a lot of uncertainty at first and have a high failure rate, yet a small percentage of them go on to be successful and important.

Some startups become Unicorn Companies; that is privately held startup companies valued at over US$1 billion.

Characteristics Of Startups

From thorough product-market fit research to focusing on what matters most to creating engaged communities. To help others learn from those that have succeeded, we have summarised to go over the features that are common among successful businesses for this section.

  • They're Passionate About Disruption. The phrase "disruptive technologies" was coined by Harvard Business School professor Clayton Christensen. Successful startups are based on disruptive ideas. Newmarket and value networks emerge as a result of disruptive technologies, eventually displacing more established ones. As a result, the motivating force behind a successful startup isn't just the desire to be your own boss—it's the desire to create "a new normal" for their target market. It is this drive that propels them forward in the face of established competitors, industry standards, and norms.
  • Highly Focused on Tech and Innovation. To build a successful startup, you'll need a unique idea. This enables potential clients to gain value from a solution to a requirement like this, whether it's an upgraded version or a whole new one. Furthermore, it has been highlighted as one of the primary selection factors for startup support programs. Thus, the importance of innovation in a company's success can be determined once more.
  • They Have Product-Market Fit. Selling a product or service customers actually want is important. The market must be willing and able to pay for what you're selling. Seems straightforward, and obvious, yet many startups struggle with defining their product-market fit. You may have a well-received product or service, only to discover later that it lacks the amount of support you require to be successful. Successful entrepreneurs understand that an initial concept or idea may need to be tweaked as the business grows. They examine their assumptions on a regular basis and adjust their strategy as appropriate.
  • They Start With Small Test Markets. It's counterintuitive: you need a product that covers a large market share, or you'll never be able to scale into a large company. However, start small to fine-tune your process and ultimately get there. A classic tech example of starting with a small market is Facebook. Mark Zuckerberg infamously launched the site at Harvard, followed by a handful of other Ivy League universities. Later the platform opened its doors to anyone in the country with a .edu email address. Long before Facebook took over the world, the company was constantly innovating and adjusting to feedback.

Types of Startups

If you know what type of startups your company is, you are better prepared for the future and, which is most important, know where to look for funding. The main types of startups are the following:

Small Business Startups

The most common sort of startup is a small firm, which accounts for the majority of any country's economy. On the one hand, they do not require a lot of cash and investment, making them easier to start; yet, they do not usually generate a lot of profit, and instead serve their owners to feed their families.

They are not built for scale, go mostly unnoticed by investors, and their employees are either family members or friends, yet they produce local jobs and represent the backbone of "entrepreneurship" due to their vast numbers.

Scalable Startups

Scalable startups, such as Google, Twitter, and Facebook, come to mind when we think about firms that make billions of dollars and make headlines instantly. Such businesses rely on their founders' faith that they would one day thrive and grow into another giant.

Visionaries who want to transform the world — and attract wealthy investors — are frequently the owners. The concepts that these firms are built on are potent, and the startups themselves tend to form innovation clusters.

Social Startups

This type of business frequently incorporates a nonprofit foundation. Their purpose is to improve the world, but unlike scalable enterprises, they are not motivated by a desire for wealth or power. In theory, these businesses can be for-profit, non-profit, or hybrid, and they typically rely on donations from like-minded individuals.

Even a little coffee shop can serve as a source of inspiration for a mobile app and another aspect of your firm. Should it be an AI-powered coffee-client matching system?

Startup Financing

The most important resource for any startup is money, and finding the proper investor is the most difficult component of starting a business. The purpose of funding at this stage is to maximise future fundraising potential by testing the product, assembling an ideal core team, and progressing beyond a prototype. Because the firm is still in the idea or conceptual stage, the quantity of money is usually small, but depending on the type of startup, there are still numerous choices.

  • Let's start at the beginning of your business. You have a hazy sense of what you want your business to be; perhaps you have a concept or a working prototype. Right now, you're seeking ways to supplement your personal investment with outside capital. A pre-seed fundraising round is for the creation of a minimal viable product at an early stage.
  • The purpose of funding at this stage is to maximise future fundraising potential by testing the product, assembling an ideal core team, and progressing beyond a prototype. Because the firm is still in the idea or conceptual stage, the quantity of money is usually small, but depending on the type of startup, there are still numerous choices.
  • Funding is required at the seed stage to keep a company afloat while it tries to establish a product-market fit, scale, grow, and become a competitor in the present market. Startups have already proven their value proposition by generating continuous and somewhat consistent monthly income, and their company is expanding.
  • Business angels, and, to a lesser extent, early-stage venture capital firms continue to be the primary sources of finance at this point. However, in recent years, more players have entered the game, altering the rules and expanding the number of ways to obtain cash.

Examples of Startups Today

Lapasar

Lapasar, a B2B wholesale-tech company based in Kuala Lumpur led by Thinesh Kumar, Lakshmandas, Dannis Raj & Noomi Fessler. With a dynamic and diverse team of 70, Lapasar has recently raised 7.5mil from NEXEA’s Angel Investors, Family Offices, and Corporate Investors such as shopper360 Limited who led the round. Other co-investors include PitchIn and individual investors.

Lapasar started entering the FMCG wholesale market only in June 2020 which has helped the company grow 172% Y-o-Y and above 100x since their first funding round. Their growth has been unaffected by the pandemic and they see a lot more growth in the future given they have only begun to set a small footprint in their huge target market. Lapasar has ambitions to become the largest wholesale platform in the country by 2025 targeting above RM 2 billion revenues and the largest distribution and financial services capabilities for retailers in the country.

ZCOVA

ZCOVA is the most reputable diamond company in Malaysia. They modernise the way diamonds and gemstones are purchased, allowing you to create the perfect jewellery anytime, anywhere. They take out the middlemen so you don’t have to pay more than you have to in the retail stores. The jewellery experts with excellent and extensive knowledge of jewellery will assist you, from picking the best diamond to the insurance handling on your delivery. ZCOVA has the ZCOVA 3-Point Check to verify all diamonds graded by GIA.

ZCOVA diamonds and gemstones are ethically-sourced through the largest suppliers in the world who adhere to the Kimberley Process. The diamonds are evaluated by the most respected and leading gemological laboratories such as the Gemological Institute of America (GIA) and HRD. Their jewellery is handcrafted by our experienced jewellers in Malaysia.

Conclusion

As you can see, there are numerous prospects for all types of companies at various stages of development. However, it is becoming increasingly clear that IT-related businesses attract greater interest from a larger range of investors, even at an early stage. What this indicates is that in this digital age, you should get digital!

Startups are "ideal" vehicles for validating and bringing novel products to market. Particularly disruptive developments. Startups embody all but the most important aspects of what it takes to create new ideas with the least amount of "wasted resources" and the greatest amount of passion and motivation.

Startup companies are responsible for the majority of new job creation, as well as attracting international talent and foreign direct investment. Almost all private sector jobs have been created in the previous twenty-five years by enterprises that are less than five years old. In all but eight of the years between 1988 and 2011, businesses older than five years destroyed more employment than they generated.

References

Types of Startups

Understanding Startups

Related Posts

Subscribe for more right in your inbox!

Thousands of subscribers cannot be wrong! Get Startup insights right in your inbox. 
We will only use your email to send you insights once a month - no spam!
Subscribe To Our Startup Insights

Written by Meerat Qureshi

How useful was this post?

Click on a star to rate it!

Average rating / 5. Vote count:

No votes so far! Be the first to rate this post.

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe To Our Startup Insights
© COPYRIGHT NEXEA, ALL RIGHTS RESERVED. PRIVACY POLICY. TERMS OF USE.
Early Or Growth Stage Startup Looking For Funding?
Join The Corporate Accelerator!