What is a startup and why are they relevant?

Startups are at the forefront of change in many businesses, which are driven to adapt to digital innovation in order to stay afloat within the competitive business marketplace.

Find out what they are all about and why they can be relevant as a large-scale marketing proposition for your business.

What is a startup and why are they relevant
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What is a startup?

The term startup is used to identify emerging companies or ventures recently created for the commercialization of products and services through ICT’s or information and communication technologies.

It is a scalable business model, with rapid growth and that can be sustained for a long time, thanks to its technological component, which is less costly compared to that used in traditional companies.

Startups are characterized by allowing the development of innovative businesses, with minimal costs and rapid growth. 

They can be financed by private investors without requiring large amounts of capital, since the intensive use of the technologies available to them allows them to generate an economy of scale, which substantially increases their income. 

Their main tool is marketing through the Internet, with which they manage to make their brand known and place special emphasis on their customer service department, for which they employ highly qualified and constantly evolving workers.

Therefore, they can be defined as a human organization with a great capacity for change.

Business people with startup rocket
Business start up and idea

Importance of startups

Startups stay up to date with market trends and provide quick innovative solutions to meet the needs of a certain group of users with certain consumer habits. They keep in close contact with their customers and offer them a direct and personalized service.

As an entrepreneur you should know that a traditional company is less permeable to change, but competition forces it to evolve from one day to the next if it wishes to continue generating income that will allow it to remain operational. In this sense, startups bring talent and provide the necessary technologies to favor their digitization.

In other words, there is a close collaborative relationship between startups and companies that have a common goal, which is to quickly climb the business ladder. 

Each startup has an underlying idea through which it seeks to reduce processes and simplify complicated tasks in an innovative way in order to meet the needs of users, with whom it maintains a continuous and open communication, resulting in a massive orientation towards their sales.

What is the difference between a startup and a company?

Startups are businesses whose operation is innovative, develop technologies and design web processes. 

They are venture capital companies or companies designed to work in environments with extreme uncertainty. They have different objectives that are achieved digitally, while a company corresponds to an entity structured to execute a certain business model previously defined.

In short, while there are different types of startup, it is an agile venture designed to find a business model oriented to the preferences of a certain group of customers, the company follows a pattern of operation previously established during its creation.

What are some famous startups?

Currently, there are many valuable startups in the world that have reached the coveted and competitive position of “unicorn” awarded to those companies whose market valuation exceeds one billion dollars. 

Countless entrepreneurs compete in the business world through startups with truly innovative products and services to conquer consumers, although their risk is also higher than that assumed by other types of businesses, currently the following stand out among the most famous:

It is worth mentioning that this ranking is led by Bytedance, a startup that is also the parent company of TikTok, a prestigious social networking app that attracts millions of followers every minute, as it allows them to record, edit and share short looping videos, in addition to other possibilities.

This shows that for some time now Chinese companies have been taking over the top positions in the startup top, which was previously occupied by American companies.

At the same time, it is fair to mention that among the big players in this sector are companies with different objectives, such as the British home delivery company Deliveroo, the American aerospace transport spaceX, and the Swedish fintech Klarna, focused on banking activities.

Young woman losing money after failed campaign

Why do startups fail?

The creation of a startup goes through many pitfalls despite the fact that there are hundreds of magazines and bookstores specialized in the path that must be followed for an idea to become a reality in the form of a venture. 

Many startups fail and this has been analyzed by specialists in the field, who have come to the conclusion that the reason is simply not offering the product or service that is currently in demand in the market. 

It is possible that a startup has been created after hard innovative work and backed by previous market research, but if it does not solve a user need, the user will not reward them with a purchase. 

An example of this is the closure of Intronet, a startup that competed with Linkedln for three years and that, according to one of its founders, its failure was due to the fact that they were not able to offer what the market was demanding at the time of its creation. 

After the analysis of several startups that closed, it has been determined that the main reasons stated by the founders of these companies are the following:

There are several factors that influence the success or failure of a startup, but they are undoubtedly business models with great potential, if they are oriented to cover market trends and consumer needs of people in a creative and innovative way, always attached to the close and direct contact with each of its customers.

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