A startup is a newly formed company that is searching for a repeatable and scalable business model, typically by building a new product or service while resources and certainty are limited.
Why it matters
The word describes a stage and a goal, not just age or size. A startup tests assumptions quickly, tracks a few key numbers and tries to grow faster than its costs. Knowing the term helps you read funding news, job listings and product advice that assume this stage.
Example
A two-person team builds an invoicing app for freelancers. They launch a basic version in eight weeks, talk to 20 users, change the pricing page twice and measure how many trials become paid accounts. They are still looking for a model that works, which is what makes them a startup rather than a small established shop.
Common misconceptions
- Assuming every new small business is a startup; a local shop with a known model usually is not.
- Assuming a startup must raise outside money. Many are self-funded.
- Scaling spending before the model has been validated.
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