A startup is an early-stage company that seeks to develop a business model focused on solving an observable problem in society, but this problem must be both achievable and profitable. These companies are always looking to meet market needs in a disruptive way and with high potential. Does that mean that every company just starting out is a startup? No. That’s why we created this blog, so you can truly understand the meaning of the term and the characteristics behind this business model.
What does it mean to be a startup?
The startup concept encompasses young companies with repeatable and scalable business models . Furthermore, these companies aim to develop and offer products or services that often aim to innovate in a scenario of uncertainty and non-existent solutions . Although popular belief equates startups with digital businesses (such as social media and other businesses caught up in the internet bubble), companies created under this business model can reach different sectors. However, it is true that a startup needs to be closely linked to technology, both due to the innovation factor and to avoid being classified as companies with traditional models.
Startups are typically young companies with lean, agile teams seeking rapid growth and market share . They are also known for their ability to adapt quickly to market and societal changes. Furthermore, startups are also recognized for their financing model, which often involves raising funds from external investors, such as investment funds, accelerators, and angel investors.
Startups are present in a variety of sectors, from information and communication technology to biotechnology and energy. They have contributed significantly to the development of new technologies and products, as well as to job creation and improving people’s quality of life.
A company VS a startup
A company is an established organization with a defined business model, a target audience, a consolidated product or service, and a well-established organizational structure. Its objective is to generate profit and grow sustainably over the long term.
On the other hand, a startup is an early-stage company seeking to develop an innovative and disruptive business model, usually in a market that’s still largely unexplored. Finding a workable and scalable business plan with the capacity to expand quickly and increase market share is the aim.
Main characteristics of a Startup
Business model
A plan focuses on the strategies and details for achieving goals, for example. A startup’s business model focuses on solving “customer pain points” in a profitable and creative way. They focus on the value and profitability of the product or service to maximize growth potential . The biggest challenge with this model is creating something new, or even adapting a business model from one sector to another, where the same model isn’t commonly applied. In this case, startups focus on adapting and structuring processes using more generic and modifiable characteristics, so that value generation and solutions are as achievable as they are for the sector in which the model was created.
Repeatable and scalable
These are essential foundations for a startup to function, and without them, the business quickly becomes unsustainable . For startup entrepreneurs , the outlook will always be adverse. Therefore, offering a repeatable and scalable product or service provides direct benefits and advantages over traditional business models. After all, its premise is to reach a vast number of customers profitably and quickly . But what do these two words mean? Well, a repeatable business is one capable of delivering the same product or service on a potentially unlimited scale. Therefore, the entrepreneur must avoid adaptations and deviations throughout production, as they compromise this foundation.
Scenario of uncertainty and competitiveness in startups
The core idea is to offer new products or services that break away from the traditional— that is, to adopt a disruptive approach to generate profits . It’s unlikely that any startup will follow its path without uncertainty or adversity. There’s no way to strategically follow a path when no one has yet followed it . Therefore, product and service planning and compliance ensure better-informed decisions and lower risks. This is where competitiveness comes in. After all, startups are run with limited capital and tight deadlines . Any other financially healthy player that decides to pursue the same business proposition can become a critical competitor.
Types of Startups
See the information below:
B2B Model
In this “business-to-business” model , the startup is a company whose customers are other businesses, not the end consumer of the product or service. It’s common for customers to use the services or products in a “corporate” format.
B2C Model
Startups that create and sell a service or product directly to customers are referred to as business-to-consumer (B2C). In these cases, all market intelligence, communication, and interface of the product offered are based on the consumer and their experience. Other corporations emerge in this strategy much more as partners than actual customers.
B2B2C format
In “business to business to consumer,” a company (client) uses a startup to offer its services, such as sales, to the end consumer. These include mobility apps, recruitment processes, delivery , etc. In these cases, the interface through which the client views and operates their activities is different from that used by the end consumer.
How important are Startups?
The greatest importance of startups is to act as the “ideal vehicle” for validating innovative, disruptive ideas. It is through this accelerated innovation, which increasingly seeks mass impact, that startups end up transforming the daily lives of many people. After all, something innovative is, above all, a new and improved vision to address an existing problem. Startups exist to replace rigid processes and revolutionize the market through process adaptation. And to make this work, there are Incubators or Accelerators, which are spaces dedicated to fostering the assertive birth and growth of startups. Through mentoring, credit, access to cutting-edge technologies, and real-world examples, these spaces pave a scripted path for young entrepreneurs to reach profitability more quickly and collaboratively.
Examples of successful Startups
Today, there are companies with global recognition, astronomical revenues and a robust, top-notch workforce. And within this segment of the market, there are some that emerged with the startup business model. When an organization created under this model achieves rapid and significant growth, its economic valuation places it in the “unicorn” category. These startups are valued at US$1 billion or more. With this in mind, we’ve selected successful startups to help you better understand the scale and possibilities of this business model. Three are international and three are national. Check them out:
The world’s current largest technology company emerged as a startup. When the company was founded, other, more well-known players, such as Yahoo and Altavista, were dominant. Seeking to disrupt the market and significantly contribute to the competition, Google ‘s founders , Larry Page and Sergey Brin , proposed generating profits through search. This was a game-changer, as at the time, Google didn’t offer the best results and couldn’t compete equally with other search engines. The idea was a resounding success; today, the company is one of the largest in the world, boasts a stratospheric economic valuation, and sets the standard for innovation in search technology.
Netflix
Founded in 1997, during the golden age of video rental stores, the idea of offering a DVD delivery service was more than contradictory; it was unrealistic. After three years in operation, the brand’s founders attempted to sell the business to the then-dominant and giant Blockbuster, which declined, seeing neither the capacity nor the need for the proposal. With the market’s largest player’s rejection, Netflix adapted its business model to embrace and invest in emerging technologies. Its breakthrough was streaming, which made the company globally renowned and a leading reference point for innovation in audiovisual entertainment.
Uber
A leading provider of one of the most well-known and widely used services today, Uber has decentralized travel for short and medium distances. The difficulty of finding and calling a taxi company, the payment methods, and the exorbitant prices led the startup, which offered a similar service with affordable rates and just a few clicks, to take the world by storm. Furthermore, Uber now employs millions of drivers and is a part of the daily lives of people in different countries.