David-You make a very good point regarding the 500,000 stat. That would be interesting to find out. The even greater inference you make is to be careful of quoting statistics as generalizations used as a wide sweeping brush. I don't think anyone will dispute entrepreneurship is challenging as is raising funding. BUT, out of 500,000 how many actually put together a solid plan, solid team (There are hundreds of other elements that play into the success or failure of raising funds)? I certainly wouldn't want someone to evaluate their fate on the fate of another who perhaps was not as prepared, and from what I have seen anyway, many are in fact greatly unprepared when reaching out for funding.
Regarding defining a startup, I could care less what someone wants to label the entity. Call it a bottle of ketchup if it makes you happy. However, my deeper point was in the structure. Most startups I see do in fact have employees if only one. They often have a product or a service they are selling trial stage or not. Personally, I am going to consider it a business from the second I turn an idea into an actionable pursuit in a startup, because I'm going to treat it like a business starting with the legal formation of the entity. Aside from the literal definition of a start up being "a new business" I just don't see the logic behind suggesting it is not a business.
As for revenue, out of curiosity I googled and found advice to transition away from the label of start up after $20M in yearly revenue. I think we can all see the can of subjective worms that is. But if success or proven revenue leads a startup to being a business in one's mind, I think the question is, "does failure and losses lead to retracting the term business" and the answer is no. In a down year, yahoo did not state they were no longer a business because they were not proven in that year. So again, trying to be philosophical in suggesting a start up is not a business just makes little sense. But hey...a person has to do their thing.
Considering the literal definition of a startup is in fact "a business" I can't say I agree with a startup not being a business. It is, 100%. The question was properly addressed to the startup "idea" which is not a business until it is turned into a startup. And once it is, you should treat as a business in all regards including legal.
Years ago, I created an opportunity evaluation that I use. It basically goes through various questions and components of the business plan that gives a decent review of risks vs. rewards. I am sure you can find plenty if you google as well.
Certainly you want to do your research and put some serious time and thought into evaluating the full process. VC's in most cases are looking at businesses, not evaluating initial ideas.
At the 10,000 foot level, if you have two that you evaluate will both be rewarding, go with the one that inspires you the most.
I don’t know how much it is semantics as opposed to an incorrect use of the term. A startup is a business. Now, will your business evolve as a startup? Of course it will the same as it will with an established business that wants to stay current. Within that we can get philosophical about when a startup is no longer referred to a startup. That was not the question.
But if I have an idea that I decide to pursue, I then decide my legal structure. If I choose an LLC or C or S-Corp etc, I am doing so because I project some form of value in the business and I want to shield myself from liabilities among many other reasons. That structure can be very temporary or very permanent depending on how the business evolves. I will say it is a startup, but it is a business. Nothing semantic about it. Legally it is recognized. And if your startup is not structured legally in a manner to limit liability, proceed at your own risk. And structure is one of the many points to evaluate when considering moving forward on an idea.
As for the stats, we don’t know that the individual asking the question even needs VC funding. They may do fine with a small business loan, private investor…it could be a service that he can bankroll. Yes statistically you have more of a chance of getting struck by lightening under pool than raising VC money, as one VC put it. But if the entrepreneur does need a VC and applies those odds to his chance of success chances are being an entrepreneur is the wrong route in the first place. I do agree though that the needed financing is a pivotal element to evaluate when moving forward with an idea.