What is a startup?

Introduction

Uber, AirBnB and WhatsApp are examples highly successful companies that once started as startups. Startups are young companies with an innovative idea, usually using new technology. The companies have the potential to grow at lightning speed and turn a million-dollar turnover in no time. So not every young company is a startup, because the goal of startups is clear: to conquer the world with their innovative product.

1. Meaning startup: what is a startup?

There is no set definition for a startup, but there are some characteristics that characterize a startup:

1. A startup is a young company, no more than five years old.
2. A startup has an innovative idea that solves a problem or fills a gap in the market. This often involves the use of new technology. A company that markets an existing product in an innovative way can also be a startup. A good example is Uber: the principle of the cab already existed, but Uber has turned it into a whole new business model.
3. Startups have ambitious goals. They want to grow at lightning speed, change the lives of their customers and eventually turn a multi-million dollar profit.
4. To grow so quickly, it is important for startups to offer a scalable product that can basically be used around the world. That is one of the reasons startups often use technology and online applications, which can also be rolled out internationally. Growth is unlimited, which is not the case with, say, a retail formula or restaurant chain.
5. Startups are strong at marketing and propagating their distinctive brand identity. Their target audience and the media quickly know of the existence of their innovative product, which contributes to their rapid growth.

What is a startup not?

A startup is not a a legal form. You cannot register a startup at KVK. In this respect, the same applies to freelancers: they register their company as a sole proprietorship instead of as a freelancer. As a startup you usually register your company as BV, a private limited company. Furthermore, there is a big difference between a startup and a startup company. If you start working as a freelance accountant or open a store, you are not a startup, but a startup company. The idea behind your business must be truly innovative.

How many startups are there in the Netherlands?

The numbers vary, depending on the source, but according to Techleap, the Netherlands had 11,000 startups in early 2022, with 19,000 founders and 145,000 employees. That's a lot: the Netherlands thus has 2.6 times as many startups per million inhabitants as the European average. Still, starting a startup is certainly no guarantee of success: only 21% of all startups grow into scale-ups.

2. Funding & investors in startups

Financing a startup

Making a success of a startup requires a lot of money. It is expensive to develop a product, market it and hire the right employees to do so. A good startup capital is necessary, and chances are that more money will be needed as the company grows. With many startups, it simply takes time before real profits are made. If you want to start a startup, make a good business planand a financing plan for the different growth phases of your business. Often an entrepreneur starts his startup with his own money, supplemented by donations or loans from family or friends. Crowdfunding is another funding method.

Professional investors in startups

If more money is needed, the key is to seek investors, such as angel investors. These are individuals and entrepreneurs with a lot of money and specific knowledge, who are eager to help promising startups move forward. It is also possible to get funding from venture capital firms, which invest in high-risk startups. Investors often do not issue loans, but buy shares. As shareholders, they share in the profits once the startup becomes successful.

3. What is a unicorn startup?

A unicorn startup is a private startup worth 1 billion euros. It is called a unicorn for a reason, because these startups are extremely rare. Unicorns are often innovative tech startups. Examples include SpaceX, Deliveroo and WhatsApp. These companies have long since ceased to be startups, but tech giants that are impossible to imagine our world without.

4. What is a scale-up?

A scale-up is a startup that has survived the first five years of its existence and is turning over at least ten million euros in revenue. The business model is established and can be scaled up: the scale-up is ready for further growth. Furthermore, the company must have at least ten employees and have grown 20% for three consecutive years.

5. The lean startup method: the way to grow fast

Startups want to grow as quickly as possible. To do so, they often use the lean startup method. This innovation method (The Lean Startup) was devised by Internet entrepreneur Eric Ries. It involves a company quickly learning what works and what doesn't. A lean startup works differently from other companies, which first work out an idea in detail on paper. A lean startup quickly creates simple prototypes of an idea and goes to market with them. In this way, the product reaches the target market even before it is worked out in detail. That way, the startup can test the product directly with the target group and develop it further based on feedback. This has the advantages of learning quickly, losing less time and being able to innovate more cheaply. In addition, the company can continuously improve its product or service and create something that fits exactly what the customer needs.

6. Examples of startups

Examples of successful startups

Internationally, there are countless examples of successful startups that have changed the lives of their users in some way. Facebook, Twitter and LinkedIn once started as startups and they have become part of many people's lives. WhatsApp, Skype Uber and AirBnB are also good examples. Tesla began as a successful startup in the automotive industry. Examples of Dutch companies that started as startups include online supermarket Picnic, delivery service Thuisbezorgd.nl and the now publicly traded Adyen, which developed an innovative online payment system. Also explore Brandio's section for "own business startup ideas" and successful startups company name ideas and company name examples.

Examples of 5 fun company names startups

For innovation and originality, in recent years we have been looking mostly to the start-up scene. They are bursting with innovation not only on a technical level, but also when it comes to names. We list a few fun company names for you:

Brandless

Genius, a Brandless brand! Brandless sells all kinds of consumer products, from soap to can openers. High quality products at a low price because the whole branding and marketing strategy has been taken out of the equation. And so Brandless very cleverly becomes a brand in its own right after all.

Lemonade

The domain lemonade.com does not belong to a soft drink manufacturer, but to an insurance company! Lemonade is a start-up looking to shake up the insurance industry and has already managed to get several big investors on board. So a nice fresh name for a company with fresh ideas.

Gladly

Most people do not immediately have positive associations when it comes to corporate customer service. Gladly wants to change that with software that collects complaints from various platforms so that companies can respond to them more easily. A friendly and positive approach, to which this fun company name fits perfectly.

Nucleus

Nucleus is the Latin word for "nucleus. Of course, you can go in many directions with that, but in this case it is the name of a new kind of intercom. Nucleus thus aims to become the center of communication. Both within the house, but also to the outside.

Bulb

By now you will have noticed that many start-ups choose nice and short company names. So does Bulb, a start-up in the energy sector. This supplier offers customers 100% "renewable energy" and is also 20% cheaper than the big 6 suppliers from the UK.