When Does a Start-up Stop Being a Start-up?

Start-ups are a world unto themselves. From speaking with founders for the past few months, it’s clear that you need a particular mindset to stay in the game – and clearer still is that there are not many mental health supports for founders today. For many on the outside, there’s a mystery – a mythical cachet, even – to the idea of the start-up world (something some have attempted to demystify). Heck, billion-dollar tech companies are called unicorns. But, one of the questions that seems almost impossible for many to completely agree on is: when does a start-up stop being a start-up?

We all have an idea of what a start-up is. The Start-up Lexicon, describes it as ‘a new company or recently created business looking for a business model that is repeatable and scalable.’ It’s a great definition, but it does beg the question at what point a start-up becomes a scale-up, or whether length of time, number of milestones, amount of employees, or total amount raised should determine how long you are a start-up for. 

“I’ve a different view of it. I can’t see it as being a start-up. You have to look at it as being a business. There’s a culture around start-ups which is about ‘you just raise money and you do loads of stuff, don’t worry about customers and build stuff, and everyone has a great time. At the end of the day, you’re building a business number one, and your start-up phase is more about doing customer discovery and really fleshing out the problem, talking to customers, understanding the problem, and building the product, but once you get even your first customer, you’re a business” Brian D’Arcy, CEO, of Luna Connect recently told me.

Another answered similarly by explaining that a start-up stops being a start-up as soon as the company has taken on their first paying customer – let alone having developed a reliable business model.

It’s something that was echoed by a few founders when I spoke to them – so, it seems that the focus and goals of a company are what can often define a company’s categorization, and the mentality of that company’s founders are what can often determine how many of their goals and milestones they achieve, and luck has a big role to play in all of that, too.

At what point does a start-up stop being a start-up?

“Resilience has a big part to play in the whole founder journey – when you reach your first funding round, when you make your first hires, how you adapt to roadblocks. That can determine quite significantly what your definition is – how long you remain a start-up, at what point you start to scale, or even if you’re bound by restrictions of your category. A lot of it comes down to resilience,” another founder said.

For some, the term start-up means little more than simply ‘we’re a new company’, but there’s the flipside to that, too.

There is undoubtedly a certain subsection of founders who believe that no matter if a start-up has developed into a scale-up, the ‘start-up’ tag remains – and more to the point, the mentality remains, to defy the odds and challenge the big folks in your industry. Being disruptive, being innovative, and thinking outside the box is all part of the start-up culture – because start-ups don’t have legacy systems and they are going in fresh to solve problems and untangle webs of complexity to make processes easier.

Some will see the start-up definition as black-and-white – words on a page that translate to ‘a company that is attempting to solve a problem in new ways’ or ‘a scalable business model’. Others will see the definition as nothing more than a blinkered way to view your fabulous big idea.

It depends on your outlook as a founder, but what’s clear is that there are lots of different perspectives on when a start-up sheds its skin to grow into something else; after all, start-ups are founded and led by innovators who like to challenge the status quo, so it’s only right that there are so many opinions on what a start-up truly is.

By Trevor Murray

Content Marketing Specialist at the PorterShed
Email: trevor@portershed.com | LinkedIn | Twitter