8 Types of Startups to Know (And How to Build Yours)

Have you ever considered becoming an entrepreneur?

There are several types of startups you can create when you take the plunge.

This article reveals the different startups you can launch and actionable steps you can take to start building yours today.

What Is a Startup?

A startup is a newly established business that brings innovative solutions to market, sometimes using a business model that can disrupt traditional industries.

These companies typically have high growth potential and are led by entrepreneurs who sometimes bring new technologies to the mainstream.

Most people think of the technology sector when talking about startups.

While it’s true that many newsworthy startup companies have roots in computer science, startups can take numerous forms.

Typical Startup Industries

Startups aren’t limited to the software industry. Other sectors where you’ll find startups include:

• Healthcare
• Finance
• Real estate
• Renewable energy
• Space industry
• Education
• Lab-grown meat
• Insurance

Many of the startups in the above industries use cutting-edge technology like artificial intelligence and machine learning in their day-to-day operations.

8 Types of Startups You Can Launch

The commonest startups budding entrepreneurs like you can launch include:

1. Scalable Startup

Scalable startups are those with the potential to grow fast and exponentially.

These companies are among the most successful startups you’ll hear about due to how they’re funded.

The scalability part of their name comes from their aim of attaining rapid growth while keeping their initial costs in check.

Tech businesses tend to fall into this startup category.

More often than not, a scalable startup needs to secure outside funding to feed its hunger for growth.

This makes its founders the likeliest to seek venture capital backers and angel investors.

To position themselves, founders of successful, scalable startups point to potential returns on investment investors can expect.

They also highlight the possibility of the company going public.

Examples of Scalable Startups

• Uber
• Flipkart
• Netflix
• Facebook
• Amazon
• Beyond Meat

2. Small Business Startup

Small business startups are new companies with small-scale operations.

This startup type typically has a handful of staff members and targets a smaller segment of a larger market.

Compared to other startups (scalable ones, for example), small business startups don’t aim to grow rapidly.

In part due to the limited resources at their disposal, their priorities lie with attaining stability and turning a profit.

Unlike other startups, these companies don’t need huge amounts of capital to launch. This quality makes them ideal for anyone who wants to run a small business.

Another key distinction between small business startups and other types is their modus operandi.

While a scalable startup may upturn popularly-held business conventions on their heads, a small business startup won’t rock the boat.

Rather, the latter startup strives to operate within an established industry.

Examples of Small Business Startups

• Family-owned diners
• Local craft brewers
• Indie bookstores
• Town bakeries
• Small lawn care businesses

3. Serial Entrepreneurship Startup

Serial entrepreneurship startups are companies led by founders of multiple businesses (known as serial entrepreneurs).

This startup type shares many similarities with scalable startups in that they both strive toward rapid growth.

It’s not uncommon for the founders of these companies to run them until they go through an initial public offering (IPO).

Once the IPO concludes, a serial entrepreneur may then hand over the leadership reins to someone else and move on to the next business opportunity.

The key difference between these startups and others on this list is that their founders have a track record of success.

This quality gives them an edge over competitors because their leadership can secure resources and funding more quickly and has an existing network in place.

This startup type is the route to take for anyone who’s interested in entrepreneurship.

Examples of Serial Entrepreneurship Startup Founders

• Jack Dorsey (founder of Twitter and co-founder of Square)
• Elon Musk (founder of SpaceX, The Boring Company, and CEO of Tesla)
• Peter Thiel (PayPal co-founder and Palantir founder)

4. Lifestyle Startup

A lifestyle startup is a business that’s built around the founder’s lifestyle, passions, or hobbies.

The idea behind this startup type is work-life balance: the founder wants to run a business that lets them pursue their passions.

For the above reason, lifestyle startups operate on a small scale and don’t pursue growth or expansion the way other startups do.

Common characteristics lifestyle startups have include flexible work schedules and telecommuting/remote workplaces.

The aim of these businesses is to give the people involved in running them enough free time to engage in more fulfilling pursuits.

Yes, the aim is still to turn a profit, but the owners of a lifestyle startup won’t neglect their well-being.

Examples of Lifestyle Startups

• e-Commerce operations
• Fitness coaching businesses
• Print-on-demand brands
• Handicraft companies

5. Social Entrepreneurship Startup

Social startups are built to create positive social change.

These businesses aim to tackle societal problems while turning a profit to remain a going concern.

However, they place greater emphasis on their cause than the company’s bottom line.

Some of the societal issues these startups address include inequality, poverty, and environmental sustainability.

Another distinguishing quality social entrepreneurship startups have is their business models.

These companies don’t generate revenue in the traditional sense, instead opting for strategies like impact investing and social enterprises.

Also, it’s not uncommon for social startups to reinvest their profits to further their cause and bring about a positive environmental impact.

Examples of Social Startups

• TOMS (Shoe company)
• Books to Prisoners
• Benny and Jerry’s

6. College Offshoot Startup

College/University offshoot startups are businesses created by educational institutions (typically universities).

The founder(s) of this business type are either the school’s staff members or students, and the enterprise stems from academic research.

Using available information, data, and intellectual property, the founders of these startups create goods or services.

These startups involve collaboration among multiple individuals and organizations.

In many cases, the collaboration results in a novel product or market.

They also give students their first experience with the working world as well as mentorship opportunities.

Examples of College/University Upshoot Startups

• Google
• Nanosys
• Oculus VR

7. Corporate Startup

A corporate startup is a business initiative that grows within an already established company.

It’s also called a large company startup or intrapreneurship. The aim of these initiatives is to drive innovation among a company’s employees.

Thus, the company may encourage its employees to develop new products using its resources and assets.

To incentivize the creation of large company startups, companies may allocate funding and time blocks their human resources can use to experiment and pursue ideas.

Additionally, the company may give its employees a degree of autonomy with the understanding that what the employees come up with will be to its benefit.

In some instances, the company employee may pitch their ideas before getting the go-ahead to work on them.

Examples of Corporate Startups

• 3M (Post-It Notes)
• Google (Google Glass, Project Loon, etc.)
• Frito-Lay (Cheetos)
• McDonald’s (Happy Meal)

8. Nonprofit Startup

Nonprofit startups are similar to social entrepreneurship startups in that both tackle societal needs.

The similarity ends with the pursuit of profits or lack thereof in the nonprofit startup’s case.

They try to make a positive impact on society without chasing profits. Instead, these startups leverage volunteers, partnerships, and donations.

Although they forego profits, these companies still receive the income necessary to keep their doors open.

Some of the income sources they rely on include government grants, sponsorships, fundraising events, and so on.

Examples of Nonprofit Startups

• Khan Academy
• Impact Guru
• Mayo Clinic
• Baby2Baby

How to Create a Startup in 6 Steps

Here are six steps you can take to launch a successful startup company:

Step 1: Validate Demand

Before launching a startup company, you need to confirm that you have a viable business idea. This step entails looking into whether:

• Customers could potentially buy your product or service (if your startup will innovate)
• There’s existing demand for your proposed product or service (if your startup is entering an existing market)
• There are customer needs your competitors aren’t serving; or
• There are more efficient ways to serve an existing market

The reason this step is crucial is because it’ll determine whether your startup succeeds or fails.

You need to know that a substantial amount of people will patronize your business when it launches and continue to do so for the foreseeable future.

Also, you have to be aware of what your competitors are doing if you plan to compete against them or upend their established business models.

Step 2: Create a Business Plan

Once you’re satisfied with the financial viability of your proposed startup, the next step is to create a business plan.

Your plan will serve as a roadmap to reaching your business goals.

When writing it, you’ll need to set out your business model, business strategy, the financial resources needed to launch and remain a going concern, and so on.

You’ll also note down your thoughts on the market you plan to enter, your customers, competitors, perceived threats, etc.

Take this step seriously. If you plan to finance your startup through debt or equity, lenders and investors will ask for your business plan.

Step 3: Get Capital

With a business plan on hand, it’s time to raise money for your startup. You’ll need this capital to meet startup costs like employee wages and equipment.

You have several options, including seeking investment capital, venture capital or going the self-funded route.

Your startup’s complexity will determine the one you choose. Ditto for how much capital you’ll need to raise.

Keep in mind that no one outside of friends and family will provide financing without something in return.

In the case of venture capitalists and angel investors, you’ll have to give up a percentage of ownership in your company (equity).

If you borrow from the bank, expect to pay interest on the loan.

Step 4: Build a Team

Very few startups get built alone, which means you’ll need a team behind you.

These people will make up for the skills and expertise you lack and will be instrumental to realizing your vision.

Examples of professionals you’ll need include lawyers, accountants, human resources people, and so on.

Also, you’ll need a freelance digital marketer and web developer to help you build an online presence.

Depending on the nature of your startup, you might have to get these team members onboard before you start looking for funding.

Step 5: Develop a Web Presence

As you begin your startup’s operations, you’ll need to let customers know that you exist.

In the Internet Age, the step entails commissioning a website and doing digital marketing.

The former action is straightforward: instruct your web developer on the look and feel you want your website to have.

Put them in touch with your content people beforehand.

As for spreading the word via digital marketing, it can be more complex.

Internet marketing involves everything from paid ads on an online platform like Facebook, search engine optimization, and so on.

In a nutshell, it’s fighting for your customer’s headspace.

Step 6: Run Your Operations

Once your business gains traction among customers, you’ll need to guide your team to ensure they keep it running smoothly.

Depending on your startup, this step will tell everything from inventory management to maintaining cash flow and paying taxes.

Final Thoughts

There are several startup types you can launch depending on factors like your passions and environment.

If you decide to take the plunge, consider following the steps outlined in the article to put your startup on the right track.

To recap, validate demand, create a business plan, and seek funding as a start.

Then, build a team and establish a web presence before starting operations.