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Types of Startups

Recently the word “Startup” is taking a greater impact, and perhaps for marketing issues, or a something that is happening globally. While technology companies and social media networks like Facebook, Google, Apple or Twitter are having their good years in the market, new businesses are emerging. Startups have a fashionable  rise in recent years. However, to think that the only companies that exist are technological, this can be categorized as a mistake.

Making some online research, I found that there are different classifications for startups. In several places numbers can be found more or less types of Startups in business, but here I present some types of startups that are more representative.

Purposes of Startups

According to Professor Myles Bassell from Brooklyn College entrepreneurship is the process of creating something new and assuming the risks and rewards. Entrepreneurship is the dynamic process of creating wealth. 

He also explains the entrepreneurial process and overall the types of startups that exist. As well, Renderforest show the 6 types of startups that exist. 

1. Big Business Startups

Created to innovate

2. Social Entrepreneurship Startups

Built To Make A Difference

3. Buyable Startups

Created to be acquired

4. Scalable Startups

Built to grow tremendously

5. Small and Medium Sized Enterprise Startups

Created to meet the founder's needs

6. Lifestyle Startups

Built to work on what you love

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1. Big Business Startups

Companies with large capital and presence in different markets are recognized for what they have offered for years. However, in order to be more profitable and create new revenue that large companies have to innovate in new business models that help them meet those goals. Any new business developed by some of these companies fall within the category.

2. Social Entrepreneurship Startups

There are entrepreneurs who are creating non-profit organizations, or a combination of the search profit, but especially its ultimate objective is to improve their environment. The main goal of social entrepreneurs is to make the world a better place. Not for the fact that their company or organization does not seek profitability as main goal, we shouldn’t consider them as a startup. They are also starting a path to wealth creation, in order to create a better world. 

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3. Buyable Startups

The ability of software developers is increasing, and we are seeing more apps on the market. Perhaps the creators aim is to generate something new, but at some point end up being acquired by a tech giant. As an example we have Instagram that was acquired by Facebook.

4. Scalable Startups

In this category fall the ones that we probably hear more, the Tech Startups. Technology companies have a huge potential to grow due to the nature that allows access to a global market. To be scalable goes beyond technology, to be scalable is the potential of a newly established company to obtain financing from investors and grow to a worldwide presence.

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5. Small and Medium Sized Enterprise Startups:

The description of a SMEs can be ambiguous, because these types of businesses can be classified either by their size in people or by the amount of revenure they have. What they have in common is that these businesses start with the ideal of a founder or group of founders to solve one of their needs. The SMEs in their founder’s phase don’t need to be very sophisticated companies to be considered startups. The traditional way of creating wealth is to start new businesses with proven business models.

6. Lifestyle Startups

For hobby lovers that work on their real passion may be listed under this type of startups. They are usually people who want to satisfy their needs by being in activities that are entirely on what they like. For example, music lovers who decide to open a music school to spend more time around this environment.

Certainly there may be more types of Startups in Business, but what is interesting is to see how entrepreneurship around the world is taking an important development role in countries.

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What kind of startups are successful?

Startups can be easily thought to be classified as those who are technological startups which have the ease to become repeatable scalable business model startups.

But as we have seen, there can be considered some other types of startups according to their business idea.

Success is a subjective concept that can be set in different perspectives.

As a Big Business startup with its angel investors might consider success those new ventures who were able to have the return on the investment in less time, a lifestyle startup might consider success to just achieve the life the entrepreneur had regardless the amount of money.

In this case, both can be successful in their own terms

A business idea that started with an entrepreneur vision and it was able to be consolidated, that can be a successful startup.

Not all businesses have the same goals.

Therefore, to consider which of the previously mentioned types of startups is more successful than the other, then it would be a matter of fact to ask the entrepreneur, have you achieved the goal that you established when working on your business idea.

Local small business startups can’t be compared with a high tech small business, since the first one might have the objective to serve the owners and local needs, while the other is focused on starting small but with the objective of becoming a global firm.

And there are already stories about large company startups that have received support from angel investors and the first years have reported only losses, until they reach profit.

The first years could be considered to be when a startup fails, but the process is what matters and if they reach their goal in 3 or 4 more years, then they turn the perspective.

Which types of startups are most often profitable?

High tech small business startups who begin from the ground and make their way up don’t have the pressure of working with angel investors and venture capital firms who need their return on investment. 

As small businesses make their way up, they can also have better control of the expenses that are required to keep operating.

Certainly, large company startups have the back and support of an already established business, where their initial investment helps out to set a budget.

But in comparison, high tech small businesses who are building up themselves and are relying on their revenue streams are more likely to seek out faster ways to become more profitable and have a better control on their expenses.

Frequently Asked Questions

The different types of startups are:

  1. Big Business Startups
  2. Social Entrepreneurship Startups
  3. Buyable Startups
  4. Scalable Startups
  5. SMEs Startups
  6. Lifestyle Startups

To choose a startup idea to develop on your entrepreneurial journey, it is recommended to choose an industry you love to work in.

Creating a business is a marathon run, not a sprint one, therefore you should really enjoy what are you going to create.

Of course there are some industries that have higher growth potential, but if you don’t really like being at a certain type of business, it won’t work.

One recommended way to choose a startup idea is to do a keyword reasearch in a related topic that you love. This will help to find if your topic is relevant to the market.

If you already know your market and know what are their pain point, that will make easier your path on developing your business idea.

A startup is a young company founded by one or more entrepreneurs to develop a unique product or service and bring it to market. By its nature, the typical startup tends to be a shoestring operation, with initial funding from the founders or their friends and families.