What’s the difference between a “startup” and just a new company?
In: Economics
It’s mostly branding these days but a start up is typically a tech company that is funded by investors and intends to lose money for a few years while doing something innovative, risky, and new. Often a start-up isn’t designed to be profitable ever but instead get purchased by a larger company.
So, if you just open a store (online or not) selling t-shirts or candles or whatever, it’d be a small business. It’s not a new concept and you want to make a profit from day one.
If you invent some cool new tech but the business model isn’t clear, you’d be more of a start up. An example of that might be if you came up with a new way to detect SPAM. Is it a business? Not really. But investors see it could have value if Google, Microsoft, etc. see the potential. So, it’s a start up. You (and your investors) eventually want to make money but maybe the end-game is being bought by a bigger company interested in your technology or patents rather than just selling a product to consumers.
That being said, “start-up” became a trendy term and every company looking for investment said they were one. So, the distinction is blurry nowadays.
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