What are the Different Types of Startups?

Avantika Shergil By Avantika Shergil  |  Sep 26, 2023  |  Startups
Top Startup Types to know about!

You might have heard the word ‘startup’ thrown around in business circles quite carelessly. The term is often misinterpreted and generalized into a vague definition; a business is considered a startup if and only if –

  • It has less than 30 employees
  • It is financed via loans, bootstrapping, external investors
  • They are not “financially mature” yet, i.e., they are yet to make a considerable amount of profit.

Another distinction of a startup happens to be a unique product or a service that the founders want to bring to the market. These companies generally start with high costs and limited revenue, which is why they look for capital from a variety of sources such as venture capitalists, loans, investors, and many more.

Types of Startups that are Leading World Innovation

Small business startups

A small business is usually defined as a privately owned company, partnership, or sole proprietorship that has fewer employees and less annual revenue than a corporation or regular-size business.

The difference between a startup and a small business is often vague. Perhaps that’s why many people use the terms interchangeably. Most startups have a scope of being bought out or receiving capital from investors. Small business startups are different.

These businesses are happy staying small and generating small revenue. They rarely have plans of scaling up even to a basic funding round. They might be interested in growth but only at their own pace. Such startups are often bootstrapped or self-funded, meaning that there’s less pressure to scale immediately or be pressured by the immediate needs of investors.

Top Technology Stacks to Lead Startup Enterprises

Buyable startups

Buyable startups are companies that were born to be sold i.e., flip or merge with larger, niche companies. Once they have kick-started their revenues and managed to turn themselves into a lucrative money-making company; they are ready to be bought and can be bought by a big group of companies.

Buyable startups are most commonly found in the mobile and software industry. One of the very famous examples of a buyable startup is Instagram and WhatsApp which was bought by Facebook. Mergers and acquisitions like this happen all the time.

Not all startups need to be profitable to be bought out (and many aren’t). There is a sizable risk for people who are investing their money, but an even larger risk for business owners who get stuck trying to sell off a company that’s bleeding money.

Non-profit startups

Non-profit startups are companies founded with the main goal of helping social, cultural, or environmental issues rather than creating income for stakeholders. Commonly, they are known as Non-Profit Organizations or NGOs.

Non-profits are not set up to make money for people or companies like for-profit businesses are. Any excess funds are reinvested in their objective rather than dispersed as profits.

Non-profit startups are the ones to find loopholes, explore all unmet demands of social concerns, and then work on those concerns to create creative responses. Some non-profit types of startups, with examples, are Oxfam, UNICEF, Care International, etc.

Scalable startups

The four magical words that are proven to be a quick hook of most venture capital investors is known as “highly scalable business models”. In short, scalability defines as the easy growth of the business.

A scalable startup takes a unique and creative idea and looks for a scalable and repeatable business model that will turn it into a lucrative revenue-generating company. Not just a big company but a huge company. It does that by entering a large market and taking share away from incumbents or by creating a new market and growing it instantaneously. One must follow a step-by-step guide to scale up your startup.

The Internet has created a digital space of new and innovative business models. But it comes with a limitation; not every business on the web can scale big. While the Internet has given birth to scalable Internet startups like Google and Facebook (now Meta), it has also created a much, much larger class of web-based small businesses that can’t or won’t scale to a large company. A few are in smaller markets run by founders who either don’t want to scale or can’t raise the capital or acquire the team.

Offshoot startups

As the name suggests Offshoot startups basically stem from bigger parent companies. The parent companies could have been introduced to break into a new market or disrupt a small competition. Because these startups act independently of their parent companies, they have the freedom to do business and experiment without drawing as much scrutiny.

Lifestyle startups

Love what you do and you won’t work a day in the life” – this is what most lifestyle startup entrepreneurs live by. Such entrepreneurs turn their hobbies and passion into smart, revenue-generating, lifestyle startups. They can make a living by doing what they love.

We can see a lot of examples of lifestyle startups –dancers, for instance. They actively open online dance schools to teach children and adults to dance and earn money this way.

Social startups

One often associates social startups with non-profit organizations that survive solely on charity. But the difference is each social startup has a different funding model. They crowdsource, accept donations, are start these startups despite the general belief that the main aim of all startups is to earn money. There are still companies designed to do good for other people, and they are called social startups.

Many startups fail within the first few years. That’s why this initial period is important. Entrepreneurs need to find startup funding, create a business model and plan ahead, hire key personnel, work out intricate details such as equity stakes for partners and investors, and collect experience for the long run.

Many of today’s most successful companies—Amazon, Apple, Facebook, (Now Meta), to name a few—began as startups and ended up becoming publicly traded companies. So, start building your dream company today!

Types of Startups Based on Industry

Based on industry startups can vary depending on what type of industry they are in. No matter their industry, software product development will be a major part of the goal.

Here are the industry-based types of startups that are most common today:

Technology startups

A technology startup is a firm that works to bring technology services to market to address a problem when the answer is not evident and success is not assured. The technology startups may vary depending on their aim and the type of model implemented.

The major difference between tech startups and non-tech businesses is that tech entrepreneurs generate technology improvements that their rivals still need. Tech startups often work on providing seamless tech experience with the aim of improving data security for their users.

Tech startups are also a type of offshoot startups. For example, the company Sidewalk Labs is a part of Google.

eCommerce startups

The next on the list of types of startups are eCommerce startups. Online shopping is just one of several industries that have rapidly expanded in recent years. Many retail shops plan to move their operations online to keep up with the current trend.

As a result, many firms offer their goods or services to clients over the Internet. With a good e-commerce approach, businesses may reach a worldwide audience while incurring little administrative expenditures. So, such a wide business range needs to focus on practices of data security for small businesses to avoid breaches.

Business-to-Business (B2B) and Business-to-Consumer (B2C) are the most frequent eCommerce business models. B2B vendors provide things other companies may need, while B2C sellers sell products to consumers (or the ultimate customer).

Fintech startups

Fintech startups are another type of startup business that uses technology to fulfill customer financial management requirements. They often seek to compete with or replace conventional financial service providers by providing a better experience or simply more efficient solutions to current challenges.

Fintech startups seek to increase efficiency, accessibility, and financial inclusion by harnessing technology and innovation. Fintech firms may create personalized financial solutions, optimize procedures, and save costs using data security practices and artificial intelligence.

Healthtech startups

Healthtech is the fastest-expanding segment of the healthcare industry. It encompasses any technology-enabled healthcare product or service that may be provided or consumed outside of a hospital or physician’s office—hospital and practice management software are prominent exceptions.

They aim to create novel technologies to enhance and prolong people health and well-being. They usually have shorter schedules than conventional tech businesses, which may lead to greater risk-taking. Moreover, as they contain sensitive patient records, they must prioritize data security and secure data of their customers.

SaaS startups

SaaS startups are another industry-based type of startups in entrepreneurship which have become quite popular. These startups offer software as a service, usually through a subscription basis, and often concentrate on providing a specialized software solution to a specific market.

While there are various SaaS firms, they all have the same aim in mind: to provide software that is simple to use and accessible to a large number of people. With the widespread use of SaaS solutions comes a heightened awareness of data security for enterprises.

Moreover, choosing an appropriate SaaS business model for your product is important as it decides how your customers will be attracted and increase sales. Some of the most common revenue models for B2B SaaS firms are Subscription and Freeminium.

Education startups

As the name implies, education startups develop creative, cost-effective, and user-friendly instructional solutions that tutors may use to improve student learning results. They will be responsible for bridging the classroom and online learning gap to make education more engaging and accessible.

They aim to create creative software solutions and platforms to assist students in learning and using technology in novel ways. For example, Unacademy, BYJU’S , etc. So, if you plan to get into an education startup, you can look for startup app developers to build one for your firm.

Also, this involves a lot of data management, so these startups need to focus on investments in data security to prevent any data loss and malpractices.

Hybrid startups

Following the pandemic, hybrid companies grew in popularity as they combined the benefits of in-person collaboration with the flexibility of remote work. They may provide the best of both worlds and new challenges and opportunities for entrepreneurs, labor, and customers.

A hybrid startup may also refer to a business that combines fixed parts and systems in its business model. Also, they may implement a business plan that blends for-profit and non-profit operations. However, no matter what model they use, prioritizing security for startups is important to ensure no data breaches or losses.

Avantika Shergil Avantika Shergil   |  Sep 26, 2023

An enthusiastic Operations Manager at TopDevelopers.co, coordinating and managing the technical and functional areas. She is an adventure lover, passionate traveler, an admirer of nature, who believes that a cup of coffee is the prime source to feel rejuvenated. Researching and writing about technology keeps her boosted and enhances her professional journeying.

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