Having a start-up to call your own sounds incredibly sexy, but what is a start-up? And what kind of start-ups? Nowadays, it feels as if any and every business that someone starts is called a start-up. But is it really?
Today at Swedish App Scene, we explore the 6 different types of start-ups, as defined by Steve Blank.
Lifestyle Business: Work to Live their Passion
“This is when their work is their passion, literally. Think of surfers or divers who have a surfing or diving business so that they can surf or dive more.”
In the corporate context, these people are disguised under the title of freelancers, ranging from photographers to UI designers. You will find these entrepreneurs mostly working from home, in cafes, or in co-working spaces.
Small Business: Work to Feed the Family
“This is anyone who runs his/her own business, usually family-owned. They are not designed for scale and mostly earn enough to support their family.”
For instance, your neighbourhood supermarket or store. These businesses are part of our daily lives due to the geographical proximity, and sometimes building upon the social fabric as well.
Scalable Start-up: Born to be Big
“From day one, the founders believe that their vision can change the world. Their interest is not in earning a living, but to create equity in a company that eventually will become publicly traded or acquired, generating in a multi-million-dollar payoff.”
One of Sweden’s first unicorn, Skype has taken over the world by storm, setting the stage for many more Swedish power start-ups to come.
Buyable Start-up: Born to Flip
“Their goal is not to build a billion-dollar business, but to be sold to a larger company for $5-50M.”
Just like how Swedish payment-services company Bambora was sold for an enterprise value of €1.5 billion to a French payments specialist, Ingenico Group.
Large Company: Innovate or Evaporate
Surprise, surprise: large companies do have finite life cycles, as shown from the fall of Nokia.
“Most companies grow through sustaining innovation, offering new products that are variants around their core products.”
Swedish Giant IKEA has constantly been innovating throughout the years, as shown in our previous article.
Social Entrepreneur: Driven to Make a Difference
“Their goal is to make the world a better place, not to take market share or create wealth for the founders.”
Winner of Best Newcomer Startup in Sweden, Ari.farm you can buy & own animals such as goats, sheep, chickens or camels through your phone. This, in turn, help support the livelihoods of people in Somalia. You will also gain equity as the animals are reared and sold for a higher price.
Why is it important to know what type of Start-up you are?
Each of these different types of start-ups requires radically different “ecosystems, educational tools, economic incentives, incubators and risk capital”. This means that it is also unfair to expect the same type of results from each startup as a measurement of their success. By extension, this means that the type of rules and regulations of these start-ups should also be different.
This is important, especially for governments to create a suitable program to support the start-up scene. This will then have a more substantive effect on innovation, jobs or the gross domestic product.