Startup: What are they and why are they important

Startup or start-up is a company or project initiated by an entrepreneur to seek than develop and or validate a scalable business model. These businesses are created to grow beyond their original owners from the get-go. They are a risky form of business because there is a high chance of failure for them since there is a likely chance that they might not get enough capital or investors. However, in recent years there has been a number of startup companies that have enjoyed much success.

Types of Startups 

  • LifeStyle

The idea behind the business is inspired by somebody’s hobby or lifestyle

  • Small Business

Business is small and only hire family members or locals. Not meant to be scaled larger. The idea behind it is that the business is owned by one person or a family and earns enough to “feed the family”.

  • Silicon Valley

Very much scaleable and is usually found in locations that attract innovators in large amounts, like Shanghai or Silicon valley and etc. these businesses are in the minority but because the return in investment for the successful versions is so high they bring in a large number of risk-takers and investors.


  • Be sold quickly

This type of business is a short term company. They are meant to drum up enough business and recognition so that they may sell the company to larger organizations for a profit. Usually, these types of companies sell for somewhere around 5 to 50 million dollars.


  • Large Business

Either large companies make smaller sub-companies that are under their names or they buy startups related to their field. The main idea is that they sell new and innovative products that are in trend.


  • Social/Charitable 

Not scalable but these were not created to be so. The Center of these companies is to raise awareness about certain topics and help affected persons to the best of their abilities.


Why do they fail?

  • Market Failure

Issues arise from being too small or there not being a market for the newly created product.


  • Business Model Failure 

The product’s built cost is higher than the selling price thus the model fails. For the business is not scalable enough thus the profit margin stays too low.


  • Poor Management

Most of these companies start with friends and family thus business-related communications are too poor thus problems crop up too frequently.


  • Cash Flow Issues

If the product is not enticing enough it won’t be able to gather enough investors which will lead to cash running out before the company reaches a proper milestone

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