The 6 Types of Startups
Contrary to popular belief, not all startups are tech companies in Silicon Valley. From lifestyle startups to social and environmentally impactful organizations, there are many types of startup possibilities. At its origin, a startup is not a permanent business model but rather a crucial beginning stage of a business’s life.
In general, the purpose of a startup company is to create a product that targets an untapped market or improves on existing options. The first step to launching a startup of your own is understanding the six types of startups and which is right for your business’s goals:
Startup Type 1: Scalable Startups
Scalable startups take an idea or concept — typically in the tech sphere — and work to rapidly grow the company’s top-end revenue to achieve the highest return on investment (ROI) possible. This type of startup requires thorough market research to identify exploitable market opportunities. Two of the most relevant examples of scalable startups are Google and Facebook. Both of these companies started with the intent to dominate their industry through a scalable startup model and were successful in doing so.
A Scalable Startup May Be Right for You If:
- Your startup idea has an extensive market available and vast growth potential.
- You’re an innovator ready to challenge the status quo.
- You want to be the leader of an industry.
Startup Type 2: Large Company Startups
With technology, customer interest, and markets changing every day, large companies need to adapt their business model to survive. This is where large company startups come in. Backed by the support and capital of the already successful company, these offshoot startups aim to reach new audiences, diversify product offerings, and keep large companies tapped into the ever-changing market.
A Large Company Startup May Be Right for You If:
- You already own a large, successful company.
- You’re looking to diversify or tap into a new market that isn’t in your company’s current wheelhouse.
- You need a way to compete with new businesses and keep up with the changing market.
Startup Type 3: Small Business Startups
The priority of small business startups is longevity instead of scalability. These small startup companies are built to provide enough capital for financial stability by catering to a small target market. Common types of small business startups are family-owned and operated barbershops, grocery stores, and retail shops.
A Small Business Startup May Be Right for You If:
- You plan to hire locals and family to operate your business.
- You want to focus on adding to your community.
- Creating a sustainable, long-lasting business is your main focus, rather than pure profit.
Startup Type 4: Social Entrepreneurship Startups
Unlike other types of startups, social startups are not created to gain wealth for the founders; they are created to make a positive social or environmental change. Social entrepreneurs shouldn’t expect a big payout from their startup; however, it is possible to make money with this startup model if it is not a nonprofit organization.
A Social Entrepreneurship Startup May Be Right for You If:
- You want to build a company that will make a positive social or environmental impact.
- You aren’t interested in starting a company for the profit.
- You have an idea that can solve a widespread problem, specifically for disadvantaged communities.
Startup Type 5: Lifestyle Startups
Lifestyle startups are born out of passion and desire for independence, with the founders putting their time and energy toward making a business out of their favorite hobby or activity. This can range from an avid traveler starting a tour guide business to a web developer starting a freelance coding business.
A Lifestyle Startup May Be Right for You If:
- You have a hobby you could do all day, every day.
- You’re self-motivated and disciplined enough to be your own boss.
- You’re passionate and creative.
Startup Type 6: Buyable Startups
Unlike other startups, buyable startups are not built to become billion-dollar companies; alternatively, they are built to be sold to a larger company for millions of dollars. Buyable startups are commonly tech-focused, and many of them are specifically in the app development industry.
A Buyable Startup May Be Right for You If:
- You want to build a company but not commit to operating it long-term.
- You have a startup idea with tremendous growth potential.
- You’re a “serial entrepreneur.”
Startup Types Summary
The startup world is home to more than Silicon Valley tech companies, and there are various startup types for every kind of entrepreneur and business idea. Whether you’re interested in starting a charitable organization, diversifying your current company, or creating a small business in your community — launching a startup is an exciting, beginning stage toward your entrepreneurial goals.