Startup

A young company designed to grow very quickly by searching for a repeatable, scalable business model under significant uncertainty.

Example

A software company losing money each month while growing revenue 15% a month.

Important

A startup is not simply a small business; it is judged by whether it could become very large.

Related terms

  • Product-Market Fit — The point at which a product clearly satisfies strong demand from a defined group of customers, shown by retention, organic growth and willingness to pay.
  • Power-law distribution — An outcome pattern in which a very small number of results account for most of the total, rather than results clustering around an average.

Lessons that explain it

  • A startup is a search for a business model, not a small company running one — A startup is designed to grow very fast by finding a repeatable, scalable business under deep uncertainty. That purpose is why it behaves, fails and is valued so differently from an ordinary small business. (9 min)

All 578 terms in the Investing glossary