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When do you stop calling yourself a startup?

Meghna Agarwawl
13th Mar 2018
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The word ‘startup’ doesn’t simply mean a company that is taking off the ground. It is that nascent stage of a registered business which is a very risky stage in the entire business lifecycle.

The trend of startups has skyrocketed in India over the last few years and is only expected to get more competitive in the coming years with government-backed initiatives such as Make in India and Startup India along with skill development centres in major cities including Bengaluru, Pune, Mumbai, Chennai, and Delhi-NCR. According to a recent report by NASSCOM, India stands as the third largest startup hub in the world with a lot of action happening in Bengaluru, also known as the Silicon Valley of India.

Bengaluru is home to numerous startups; currently hosting over 2,000 active tech startups according to the Global Startup Ecosystem Report 2017 by Startup Genome, thus becoming world's second fastest growing startup ecosystem. This can be attributed to Bengaluru's diverse heritage and multi-ethnic people who come to the city every year to pursue their dreams. Bengaluru is the ideal city to start your dream venture, especially in the vicinity of Koramangala, HSR Layout, and Indiranagar.

What is a startup?

Startups have an overall different perception in the industry. They have been considered as a more creative place to work than a company, which to many, may sound boring.

People have been correlating startups to hustling environments while companies have been related to having a corporate feel in them.

The Indian Ministry of Commerce and Industry has recently published the official definition of a startup on its portal. Accordingly, startup means an entity, incorporated or registered in India:

  • Not prior to seven years, however for biotechnology startups not prior to ten years
  • With annual turnover not exceeding Rs 25 crore in any preceding financial year, and
  • Working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential for employment generation or wealth creation.

While this definition sounds complex, I feel growth should be considered as a differentiator while defining a startup. In the current competitive business scenario, the word ‘startup’ doesn’t simply mean a company that is taking off the ground. It represents a business that is technology-oriented and has high growth potential. A startup is that nascent stage of a registered business which is a very risky stage in the entire business lifecycle.

When to stop calling yourself a startup?

When you are in the startup stage of a business, you will be mostly working from home or a small garage, slowing making your way to coworking spaces and then plunging into dedicated, professionally managed workspaces with more number of employees and better investment. However, you cannot attain this growth overnight.

The exact phase when you can stop calling yourself a startup depends on a few qualitative and quantitative factors that enable teams to take independent decisions, thus influencing a startup to outgrow into a well-established business.

The quantitative factors are:

The size of the team. This is one of the most important factors that influence the growth of your company. You reach the first milestone when you hire 20 people and then move ahead to 50, 100, and so on, entering the corporate culture and changing the communication style.

Terms of investment. The lifeline of every business, investment, is very crucial in your startup’s growth, and the increase in the cash flow into the company directly results in its growth rate.

The qualitative factors are:

Recognition from your peer group. Your brand should start speaking for itself. Having gained recognition in the industry, you should no longer need to sell your startup among your peer groups. The fact that everybody knows it uplifts the company's growth.

Changing your perspectives. Your company's perspective matters a lot to retain and attract employees while creating the aura of willingness and loyalty among them. This is a very important qualitative factor that influences the growth. A strong employer brand is important to stand out from your competitors, thus enabling you to attract top talent within your industry. This can be achieved by giving a personal touch to the organisation management.

Having considered the above-given factors, I believe that you should stop calling yourself a startup when your company has achieved a sustainable long-term goal and reached a defensible position, both financially and in the marketplace.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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