The Agni
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Entrepreneurship

December 20th, 2011

What is a startup?

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Written by: Balaji
startup

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:

 A startup is a 1-5 year old company that has a potential to grow up its enterprise value by 50X within the next 5 years and has a business that can scale up quite easily.

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).



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About the Author

Balaji
+Balaji heads a consultancy firm - Agni Innovation Labs - that helps small businesses, law firms and political campaigners launch their brand successfully. The services include blogging, press releases, social media strategy development and email campaigning. Contact the author: balaji [at] theagni [dot] com for more details.




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