When does a startup stop being a startup?

The most inspiring dream of a startup is to create a business capable of scaling. The stage where a business idea is beyond trying to figure out what sells for the customer and establishes a niche for itself. The initial stages of a startup are the most important ones because this has the highest probability of failure. Once you go through the initial hurdles of creating a product, you’re no longer a startup. (Related: Why startups Fail)

You might have different goals in terms of revenue or number of the startup company size. However, you’re no longer a startup once you start thinking of widening the scale of your product.

When does a startup stop being a startup

If you recall the definition of a startup – it is all about scale. If not for scale, you can easily classify yourself as a small business. The sooner you move out of this startup phase, the more attractive you are to the next stage investors such as venture capitalists, private equity firms etc. These institutional investors mainly look for

• Whether you have an established product which understands the product market fit
• Number of customers to classify that your solution is a wider market niche rather than select few customers only
• Your solution can be expanded by infusing additional funds to replicate success and grow the business

These steps are clear indicators to answer your question – when does a startup stop being a startup?

How long is the startup phase?

The startup phase can range anywhere between 5-10 years. Some companies can take a longer lead time to cease being called a startup. The most important thing to differentiate is between a startup and a small business. Although they both might grow, the startup is more focused on expansion.

As a founder, you’d like to move on from the startup phase as soon as possible. This means that the types of challenges you face are different. In the initial stages of a startup, it is all about understanding the customer and developing a product-market fit. However, once you’ve achieved that, the next step is all about scale, growth and increasing the size of the business.

In other words, your startup has stopped being a startup and is in the scaling-up stage. In this stage, your product or services will focus on expanding their reach to a wider customer base. In the world of a startup curve, you’re beyond the exponential dip and all ready to grow immensely. (Reference: Startup J Curve)

Startup Company Size

This might be a bit contentious. However, the most common definitions of startup company size are:

• $50 Million Revenue
• >100 Employees
• Company worth of >$500Million

If your company is under the bracket of the above three considerations, you can be classified as a startup. These are significant figures to reach – however there are plenty of good examples of startups that have achieved these numbers quickly. It depends on the type of your business.

I’d argue that a lean business might not fall under these categories quite easily but the moment it moves away from the product-market fit stage, you’re ready to grow. In such an instance, you can answer the question of when does a startup stop being a startup with a NOW.