Hey Buddy entrepreneur! Wanted to know different types of startups?
Yes, it is important for a future entrepreneur like you before starting with an idea. We all know that the word startup is booming all around the globe. Yet, it is hard to accept that some of the startups may prone to failure at the early stages.
You might have brilliant ideas. But choosing the right one is a crucial thing. Based on the industry, size of the market, investment, and growth potential, there are 6 different types of startups in entrepreneurship. Knowing all these types of startups helps to select a viable business for you.
Let’s find out in this article…
What Is A Startup? – Definition
A Startup is a new business created with an innovative idea to solve the problem which provides a unique product or service to the market.
One or more entrepreneurs get involved in finding a perfect solution to the existing problem and combine to work to change the idea into the business.
Initially, it may start with the single Founder, but then joining with other co-founders and team members, it finds significant opportunities for growth in the market, especially in an uncertain situation.
Different Types Of Startups In Entrepreneurship
A lifestyle startup is a type of startup company, in which the founders create a profitable business through his/her passion. This type of company involves a co-founder and team who have similar interests like the founder. It is associated with some of the lifestyle activities like sports, music, tourism, entertainment, etc…
This is an unconventional type of business, where the number of employees is less and operates virtually. Unlike other businesses, it may not have any fixed time of working hours. Most probably this would be a service business like consulting, teaching, and advisory according to the owner’s hobby and interest. Meanwhile, the chance of making a high profit is less when compared to other types.
Scalable Startup Company is a real startup that has huge growth prospects with its disruptive innovation. It attracts a pool of investments from angel investors and venture capital firms that makes the business viable to yield a high return on investment.
It has the potential to expand its market globally via different stages of the development process. In its development process, it gets series of funds via an accelerator program that makes it scale even bigger and become famous in the world.
Some type of startups, unlike the other, are not determined to be scalable in the future. Instead, they are purposely started for Buyout – i.e. acquired by other giant startup companies after some time. Although some companies are built with an intent to develop a large-scale company, but fail for some reasons, even for the lack of funds and management.
Most of these types of startups are web development or software application startup that will be sold to a corporate IT firm for a good profit. Since it is developed for the buyout, it would be operated by crowdfunding methods or angel investor funds, without seeking help from venture capital. The risk is low, being said that it must be valuable to acquiring firms.
Small And Medium Scale Startups
Small and Medium Scale startups are visible for everyone in their locality which targets only a small group of population. It is easy to start where the investment would be low and it could be funded through the bootstrapping method.
Meanwhile, the risk associated with this type is low when compared to the others startups. Because it does not follow any innovative idea, instead it adopts traditional business that uses recent technologies for marketing and other purposes. Having said that it is traditional, it involves few persons like family members to manage the business and the operating cost would be low.
Large Scale Startups
Large scale startup is literally owned by a giant corporate company. A new startup company is built by corporate, if wants to expand its market in a new location with an irrelevant niche or to introduce new technology with its sub-brand. Large companies always try to dominate the industry by acquiring an existing company via buyout or merger.
Social startups are built for the purpose to bring changes in society. The founders of these types are not focused to create a billion-dollar business. It does not mean to be created for the social service.
Social startups are the hybrid model that combines to work with non-profit organizations and earns a good return and makes the business to be a sustainable one. The mainstream focus is to create a social value, especially to the backward community and underdeveloped nations.
Let us know if we missed out on anything in this article types of startups in entrepreneurship and share your thoughts in the comment section.