Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in January 11, 2012 on MarkEvansTech.com.
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This may be a question of semantics but here’s a question for you: When does a startup stop being a startup? At what point does a startup become a small company or a plain and simple company?
It’s an interesting question because it’s easy – and probably lazy – to describe less established high-tech companies as startups. As well, the word “startup” is lot sexier and appealing than “small business”.
So how should a startup be defined? Does it have to do with the evolution and life-cycle of its product? Is it the number of employees? Is it linked to revenue? Does it have to do with how long a company has been around? Can a startup have 10s of thousands of customers even if none of them actually pay for a service?
For example, is Freshbooks a startup despite the fact it has been around for several years, it has 80 employees and sales of about $10-million give or take a few million dollars? It’s sometimes called a startup but it’s more accurate to call it a small company.
For the sake of argument, here are some possible criteria for startups:
- Less than 20 employees. Once you get more than this number of employees, a company starts to have “departments”
- A product still in development (pre-launch) or in market as a beta for less than six months.
- No sales or sales of less than $1-million, which means it’s a mini-business as opposed to a small business.
- It’s less than a year old, although there are companies that do go from zero to sixty in less than 364 days.
- No customers or only a handful of customers, who may or may not be significant clients dollars-wise.
- It has raised more than $5-million in venture capital. With this kind of cash, a company can support having a large team.
For more thoughts, check out this Q&A on Quora, as well as a recent blog post on Business Insider.
Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in January 11, 2012 on MarkEvansTech.com.