Startup or a Growth Company?
The discussion of a startup company definition with beta.startups.lt teams motivated me to make a small research on the subject.
There are many variation for growth company definition, most of which impose constraints on company employee number (e.x. more than 20), employee number growth (e.x. more than 20% per year), turnover growth (e.x. 20-80% per year) and years from founding. Interestingly the later definition is published, the more strict requirements are used. 3 most recent definitions:
- High growth in staff numbers of at least 15% per year over five years or 20 employees within five years after founding. [US National Commission on entrepreneurship, 2001]
- Increase in the turnover of at least 30% or increase in staff numbers of at least 20% in the three preceding years [Kauffman Foundation, 2003]
- Yearly growth of turnover of at least 80% over three successive years [Barringer/Neubaum/Jones , 2005]
Startup definition is even more fuzzy. It was interesting to find that there is no proper solid definition. Finally I’ve given up and decided to define startup by what it is not. Talking about quantitative criterions, startups can be distinguished from a traditional SME by high growth expectation, but as a company startup may not yet exhibit growth company characteristics. To my mind, the development of innovative product or service may also be the distinctive feature of a startup.