# Definition of startup company **URL:** \ **Category:** Factual Questions\ **Created:** [February 1, 2019, 3:13am UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764 "2019-02-01T03:13:20Z")\ **Posts on this page:** 10\ **Page:** 1
**Author:** ![boffking](https://avatars.discourse-cdn.com/v4/letter/b/858c86/32.png) [@boffking](https://boards.straightdope.com/u/boffking)\ **Post date:** [February 1, 2019, 3:13am UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/1 "2019-02-01T03:13:20Z")
What makes a new company a startup, and when does it stop being one? You often hear this description applied to tech companies, but I have never seen a clear definition. Also, does a company have to sell certain products to be considered a “startup”? Even on its opening day, people would not call a business like a car dealership or restaurant a startup. ---
**Author:** ![nightshadea](https://avatars.discourse-cdn.com/v4/letter/n/7ba0ec/32.png) [@nightshadea](https://boards.straightdope.com/u/nightshadea)\ **Post date:** [February 1, 2019, 4:05am UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/2 "2019-02-01T04:05:01Z")
what they mean by “startup” is 3 or 4 people in their garage whos looking for an investor ………and I think its usually after surviving 3 or 4 years and/or capturing a major amount of the market they’re after And occasionally turning a profit in a short amount of time ---
**Author:** ![nearwildheaven](https://avatars.discourse-cdn.com/v4/letter/n/90db22/32.png) [@nearwildheaven](https://boards.straightdope.com/u/nearwildheaven)\ **Post date:** [February 1, 2019, 4:38am UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/3 "2019-02-01T04:38:28Z")
I definitely worked for a startup in 2011; it was a closed-door (not open to the public) pharmacy that serviced nursing homes, and the phones and computer systems were constantly malfunctioning, we never knew when we would leave work (and the nature of the work required that we all stay until it was done), paychecks were unreliable, etc. etc. etc. I worked for them through a temp agency, and am still on Facebook with a couple of people from there and can’t believe the state hasn’t shut them down. ---
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [February 1, 2019, 1:14pm UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/4 "2019-02-01T13:14:22Z")
One dividing line is when the startup goes public or gets sold off to a big company. But a company that stays privately owned by the founders will also stop being a startup once it is reliably producing products and maintaining a revenue stream. ---
**Author:** ![Telemark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/telemark/32/372_2.png) [@Telemark](https://boards.straightdope.com/u/Telemark)\ **Post date:** [February 1, 2019, 1:36pm UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/5 "2019-02-01T13:36:12Z")
From Wiki [Startup company - Wikipedia](https://en.wikipedia.org/wiki/Startup_company) > [@](#): > > A startup or start-up is started by individual founders or entrepreneurs to search for a repeatable and scalable business model. More specifically, a startup is a newly emerged business venture that aims to develop a viable business model to meet a marketplace need or problem. A car dealership or restaurant typically wouldn’t qualify under this definition. The business model for a car dealership or restaurant is already well established. ---
**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\ **Post date:** [February 1, 2019, 3:20pm UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/6 "2019-02-01T15:20:14Z")
When I wrote business plans for startup companies, the “startup” phase was typically until the company could fully fund its operating expenses and begin paying back investors. ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [February 1, 2019, 8:15pm UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/7 "2019-02-01T20:15:28Z")
I don’t know if it defines a ‘startup’ company, but many Federal & state laws (like minimum wage, overtime pay, etc.) don’t apply to businesses below a small number of employees. ---
**Author:** ![Ramira](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ramira/32/344_2.png) [@Ramira](https://boards.straightdope.com/u/Ramira)\ **Post date:** [February 1, 2019, 9:47pm UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/8 "2019-02-01T21:47:33Z")
As the answers here indicate, there is no single definition and different people mean different things. But it is typical in the venture financing arm of where i work and with the European policy for when they are defining special “start-up” support frameworks to refer to companies with less than the five years of the operations. the other definitions here are mixing in what the venture financing calls the “high growth potential” start ups as the venture funds seek not just young companies but also ones with the potential for becoming major companies. A totally different subject is the SME - the Small & Medium Sized Enterprises that are defined not by the age but by the number of the employees and the revenues and the capital structure. At least for the EU but also for the international development banks. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [February 1, 2019, 10:20pm UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/9 "2019-02-01T22:20:07Z")
Perhaps best to define what is NOT a startup, based on the answers above - “you may not be a startup if…” If you are one of a dozen or more companies doing pretty much the same thing - Not a Startup If you are making decent money and can start paying back a significant rate of return on investors - NaS. If you have dozens (nay, hundreds!) of employees and are meeting payroll - NaS If the product is fairly well defined and works well, your product or service is being widely used - NaS If you have more than one accountant to handle your books - NaS If the CEO wears a suit to the office - NaS If your employees are not all under 25 - NaS If you’ve been at it for more than 3 years and are still squeaking by, having trouble meeting bills - NaS You can have a lot of fun with this… ---
**Author:** ![leahcim](https://avatars.discourse-cdn.com/v4/letter/l/b4bc9f/32.png) [@leahcim](https://boards.straightdope.com/u/leahcim)\ **Post date:** [February 1, 2019, 10:31pm UTC](https://boards.straightdope.com/t/definition-of-startup-company/828764/10 "2019-02-01T22:31:48Z")
> [@md2000](#): > > If you are one of a dozen or more companies doing pretty much the same thing - Not a Startup I disagree with this one. Have you seen how many blockchain startups there are?