5 Most Common Types of Startups

Businesses frequently use the term “startup” as a catch-all catchphrase. In a range of industries, there are five typical sorts of startups, each with a unique strategy for scaling. You will discover more about each in this manual:

    • startups of small businesses;
    • Investable startups;
    • Scalable businesses;
    • Offshoot businesses;
    • social enterprises.

Five Sorts of Startups

We’ve broken down the different startup types and how they scale into concrete examples below.

Small Businesses

Self-driven, independent startups with small staff make up small businesses.

According to the aforementioned standards, the typical startup is more like the typical mom-and-pop store than it is like Google or Apple.

Yes, there is some overlap between small businesses and startups. Maybe that’s why so many people conflate the two phrases.

The “larger” endpoint for most businesses is some form of acquisition or financial infusion.

Startups for small businesses are unique. These entrepreneurs, which range from sole proprietorships and partnerships to small teams, are content to remain startups as they market their goods and services.

They also develop at their own rate even though they are interested in progress. Since these firms are frequently self-funded or bootstrapped, there is less need to scale up right away or to satisfy the demands of investors right away.

Startups That Are Buyable: Companies Designed to Be Acquired

The idea is that small teams create a company from scratch and then sell it to a major player in their sector.

These startups are typically related to software and technology. You’ve probably read news articles about large companies like Amazon or Uber purchasing smaller firms. Similar mergers and acquisitions occur frequently.

Startups that Emerge from Larger Firms as Offshoots

Not every kind of startup is constructed from the ground up.

A startup that is an offshoot is rather self-explanatory. In a nutshell, they are start-ups that separate from their larger parent corporations to exist as independent businesses.

For instance, a larger corporation might create an offshoot business to enter a new market or to undercut a smaller rival. These startups have the opportunity to do business and explore without attracting as much notice or criticism because they operate independently of their parent corporations.

A notable example of one of these subsidiaries is Sidewalk Labs, a division of Alphabet, the parent company of Google, as noted by Investopedia.

Social Startups: Charity Organizations and Nonprofits

Startups have a reputation for being greedy for cash and preoccupied with growth.

Having said that, some startups are made with excellent intentions in mind. Scaling social startups—which include organizations and charities—is done for philanthropic reasons. They function like any other company would, but they receive funding from grants and donors.

Code.org is a perfect example of a social company. This group has raised close to $60 million from companies like Google and Facebook to help students get chances in the field of computer science.