We have been talking about startups for so long, but a lot of you have asked a questions – how to do you define a startup. Do all young companies come under the startup tag? Or does it include on the tech companies? There has been considerable debate on this in the startup world.

Wikipedia defines startups as: A startup company or startup is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets.

However, this definition doesn’t sufficiently sit with the common assumptions about startups. So, here is my definition:

This would filter out all the usual suspects Facebook, Twitter, 37 signals, while keeping Path, Instagram and all the YC funded companies. It would also cut out the new neighborhood bookstore, most service businesses and that sweet home business. Also it would cut out companies that have already reached $1-2bn in valuation (as they cannot realistically grow to become $100bn companies in 5 years).