Not every new business is a startup. Discover what truly defines a startup. Such as innovation and scalability to speed and tech-driven growth.
At its core, a startup is a young company built to solve a problem in a scalable way, often through technology. Startups are not just small businesses. While small businesses are usually built to sustain an owner and serve a local market, startups aim to grow rapidly, impact global markets, and disrupt the status quo.
Paul Graham, co-founder of Y Combinator, defines a startup as "a company designed to grow fast.” That growth might come through product-market fit, a breakthrough technology, or a brand new model that redefines how people interact with a service or system.
But what exactly sets startups apart from traditional businesses? Let’s explore the defining characteristics that make up a startup.
The Core Characteristics of a Startup
Innovation is at the Core
Startups usually begin with an innovative idea. Either a brand new solution or a better, faster, cheaper way to solve an existing problem. Whether it’s through technology, business model innovation, or user experience, startups disrupt the ordinary.
Example: Airbnb turned empty homes into hotels. Bitnob is turning stablecoins into cross-border payments in seconds.
Scalability
Startups are designed to scale, that is, grow exponentially without a matching exponential rise in cost. Think of a SaaS product serving a million users with little more infrastructure than it needed to serve its first 1,000.
Fast-Paced and Agile
Startups are built to move fast, break things, and iterate. The team is often small but driven, able to respond to market shifts in real-time. Agility allows startups to experiment, fail forward, and learn fast.
Funding-Driven Growth
Unlike traditional businesses that grow through profit reinvestment, startups often raise capital through angel investors, venture capital, or accelerators. This funding fuels aggressive growth goals.
- According to CB Insights, global startup funding reached $415.1 billion in 2022. However, only about 1 in 10 startups go on to succeed long-term.
Uncertainty is the Norm
There’s no playbook for success. Startups thrive in ambiguity. Figuring out pricing, product fit, customer acquisition, and even their target market along the way. Risk tolerance is high, but so is potential reward.
Technology-Driven (Often)
While not all startups are tech startups, most successful ones today use technology as a foundation to scale faster, reduce friction, and reach users globally.
Startups in fintech are particularly prominent, transforming how people save, spend, and send money across borders. In our previous piece [Building Fintech Products with Bitnob’s API], we explored how startups can integrate powerful APIs to create seamless digital wallets, virtual card products, and cross-border transfer solutions without starting from scratch.
Examples of Startup Models
- Marketplace Startups – e.g., Uber, Airbnb
- SaaS Startups – e.g., Slack, Notion
- Fintech Startups – e.g., Bitnob, Brails
- Direct-to-Consumer (DTC) – e.g., Glossier
The Startup Spirit: Passion Meets Execution
At the heart of every startup is an ambitious team with a bold idea. They’re not just building a product, they’re chasing impact, obsessing over user experience, and constantly solving new challenges.
It’s why passionate student founders organize hackathons. It’s why African fintech startups like Bitnob are leapfrogging infrastructure barriers with digital-first solutions. The startup spirit is relentless.
And although only a small percentage make it to unicorn status, every startup story–successful or not are pushing the boundaries of what’s possible.
So, Is Every New Business a Startup?
No. A hair salon, corner store, or restaurant can be brand new and exciting, but that doesn’t automatically make it a startup. If the goal is to grow steadily, serve a local market, and stay consistent, it’s likely a small business (and that’s perfectly okay).
Startups, on the other hand, are temporary experiments looking for scalable business models. They aim to grow into companies that can reshape industries.
Final Thoughts
A startup isn’t just a company. It’s a mindset. A way of solving problems at scale, embracing risk, and building for the future. Whether you're a founder or just curious about the space, understanding what makes a startup unique is the first step to thinking like one. Found this insightful? Share on X.