Startups

When a startup is stopped being referred as a startup?

Kishor Parmar SEO Manager at Herbal Remedy India (HerbalRemedy.in)

October 1st, 2016

It is quite intriguing for me that Flipkart (with estimated valuation $11 billion) is still considered as a startup. When do industry experts treat a startup as well established business.

Kaustubh Prasad

October 1st, 2016

Interesting question. A question that precedes this is "What is the definition of a startup?" Since you have asked it in the context of an Indian business, let's try and look at it from an Indian perspective.

The Government of India actually has come up with its own definition of a startup, which is: 

http://dipp.nic.in/English/Investor/startupindia/Definition_Startup_GazetteNotification.pdf

"To bring uniformity in the identified enterprises, an entity shall be considered as a 'startup'- 

a) Up to five years from the date of its incorporation/registration, 

b) If its turnover for any of the financial years has not exceeded Rupees 25 crore, and 

c) It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property; 

Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a 'startup';"

Going by the above, Flipkart, and many other so-called startups, have ceased to be startups. However, the word is considered cool - especially in India - where people talk about the startup culture like it's the hippest thing to be a part of. They would perhaps always like to think of themselves as startups, as long as it is considered cool and fashionable to do so, and as long as they can attract talent and eyeballs. When a cooler term comes around, they might adopt it too. 

Honestly, nothing wrong with it, as long as you don't read too much into all the words thrown around these days. 

Dimitry Rotstein Founder at Miranor

October 1st, 2016

As I understand it, startup stops being a startup after the exit (IPO, merger or acquisition).

Chris Owens

October 1st, 2016

The best definition I've encountered on this is based on well known author Steve Blank's description of what a startup is.  He says:

"A startup is not just a smaller version of a large company, a startup is a temporary organization in search of a business model." 

In working out your own business model, I recommend looking into the "Business Model Canvas".

Based on that, I would say that once a successful business model has been established in terms of price, who your customer segments are, etc and all that is figured out, and you are ready to just pour on the coals and scale the business, you have moved out of being a "startup".

I would not agree that a merger or acquisition would necessarily mean you are no longer a startup.  Many startups get acquired very early while still working out their business model.  As far as an IPO, you probably graduated out of being a startup LONG before you were ready for IPO. That's how you GOT to be ready for an IPO - because you figured out a successful business model and executed on it.

Arthur Lipper Chairman of British Far East Holdings Ltd.

October 1st, 2016

Professional investors tend to think of companies which are cash flow positive and profitable as being established. "Start Up" is not a derogatory or demeaning term. It is a term intended to reflect the objectives of a relatively newly formed company have yet to be achieved. Arthur

Irwin Stein Very experienced (40 years) corporate,securities and real estate attorney.

October 1st, 2016

Generally a company is a startup until it is operating profitably and self sustaining. Most startups fail and fail quickly so they are not difficult to identify. The confusion comes from the idea that companies like FlipKart are actually worth $11 billion or that Uber is worth $50 billion. 

Chicke Fitzgerald

October 1st, 2016

I like @Irwin's approach.  I consider my company early stage, as our MVP has been market tested for a full year in a pilot account.  We are essentially pre-revenue, but we are not a startup.