How long is the startup age? Signs it’s time to move on

What business can be called a startup?

How to know whether a company is a startup? There are several factors that help you better understand startup business meaning.

• Age. Startups are young companies not more than 10 years old.
• Innovation. Startups often introduce new products, services, or business models to the market.
• Scalability. Startups have the potential to grow rapidly and expand their operations.
• Funding. Startups cannot exist without external funding from venture capital or angel investors. 
• High risks and rewards. Startups are very risky ventures but offer significant returns.
• Focus on growth. Startups choose growth and expansion instead of stability in the early stages.

The characteristics of early-stage startups can vary depending on industry, region, and specific circumstances.

Definition of a startup

A startup is a new business that is trying to grow quickly and fully relies on its innovative ideas or technology. It usually has limited resources but aims to conquer its niche and scale fast. Startups are more ambitious and high-risk than established businesses but need investors to help them grow. How do experts define startup?

• Investopedia: Startups are companies or ventures that are focused on a single product or service. These companies typically don't have a fully developed business model and, crucially, lack adequate capital to move on to the next phase of business.
• Eric Ries, the author of The Lean Startup: Startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.

Factors determining how long a company remains a startup

Timeframes for startup growth differ for various businesses. It depends on a startup's growth rate, financials, and market position. A startup may outgrow its early-stage status quickly if it attracts investors or scales rapidly. However, there’s no set timeline - each startup evolves at its own pace. Roughly, a startup remains in its early phase for 5 to 10 years. In some fast-paced industries, like tech, success can be achieved even in a few startup years.

Startup lifecycle stages

Every business goes through several important stages on its path from garage to unicorn. Let’s briefly review the startup growth phases:

• Pre-seed stage. This is the initial stage where the idea is validated. Key activities are market research, business plan development, and securing initial funding.
• Seed stage. In this stage, the startup develops its product, builds a team, and secures seed funding. The main goal is to create a minimum viable product (MVP) and test it in the market.
• Early stage. The main task is to raise capital through venture capital or angel investors to scale the business. The focus is on product-market fit, customer acquisition, and revenue generation.
• Growth stage. It is characterized by rapid expansion and scaling operations. The startup may raise additional funding to fuel growth and invest in marketing, sales, and product development.
• Maturity stage. At this stage, the startup has secured a strong position in the market and is consistently generating revenue. Now, it can consider IPO or acquisition to grow further or exit.
• Exit stage. The final stage, where the founders and investors can receive their returns. This can occur through an IPO, acquisition, or other liquidity event.

Different perspectives on startup status

There are different views as to when a startup is ready for its status upgrade. Here are some popular company scalability metrics:

• The 50-100-500 rule. Alex Wilhelm suggests that if a company hits any of these three markers, it has outgrown the startup phase:

  • $50 million in projected annual revenue;
  • 100 or more employees;
  • A valuation over $500 million.

• Startup funding stages. Startups need financial support during the early stages. Once they reach later-stage funding (Series C and beyond), they may explore IPO or acquisitions. This means that they will begin transitioning from a startup to a mature business.

Why the transition matters

The shift from startup to mature business is a crucial turning point. It's a time when a company moves from being a high-risk venture to a more stable, sustainable operation. This phase allows businesses to build long-term partnerships, attract investors, and strengthen their reputation. It improves efficiency, balances finances and also provides better job security for employees. The transition from startup to enterprise helps a company establish itself firmly in the market.

Signs a company is no longer a startup

There are several signs of business growth for startups that may signal you are losing the status of a startup:

• You have steady profits. If your business is consistently generating a profit, it is one of the main startup success indicators.
• You are hiring employees. Expanding your team shows growth beyond the initial entrepreneur stage.
• You survived the first year. It is a major milestone many startups don't reach.
• You have your market. Your business has captured some market share and established brand recognition.
• You can exist on your own. If your company can stand on its own without funding, you're no longer a startup.

Examples of companies that outgrew their startup status

These innovative startup companies are good examples of mature startups.

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  Shutterstock. This startup was founded in 2003 by Jon Oringer, a professional software developer and an amateur photographer. It was a stock photo service with 30,000 photos from Oringer's personal archive. Shutterstock went public in 2012, and its IPO raised $76 million. Since then, the company acquired Webdam for digital asset management, Rex Features for photo press agency services, and PremiumBeat for royalty-free music. In 2024, Shutterstock is one of the major players in the stock media industry, with a net worth of $1.17 billion.

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  SurveyMonkey was founded in 1999 by Ryan Finley. Initially, it was a simple online survey tool that allowed anyone to create surveys without programming knowledge. It managed to raise $100 million only in 2010 and went public in 2018. Today, it is a mature company that offers a wide range of products for businesses, including advanced analytics and artificial intelligence-powered solutions. The net worth of SurveyMonkey is $3.13 billion.

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  GitHub is a prime example of a company that outgrew its startup status. It was launched in 2008 as a platform for collaboration in software development. The company raised significant funding, including a $100 million Series A round in 2012. By 2018, Microsoft had acquired it for $7.5 billion, marking its transition from a startup to a major player in the tech industry.

How to sustain the startup mindset

Startups are always ready to experiment and are extremely flexible to adapt to the market. This is the main difference between small business vs startup. So, make sure not to lose these qualities when you scale. Don’t get stuck in the same routines. Stay open to change and keep your entrepreneurial spirit strong. Creativity and calculated risk-taking help maintain the drive that fuels growth and keeps the company innovative, no matter its size and development stage.

Conclusion

The journey from a startup to a mature business is long and full of challenges. Understanding when a company is no longer a startup is crucial to recognizing milestones in this journey. With the right strategies and resources, a startup can evolve into a larger, more successful company. This transition brings stability, increased credibility, and the ability to generate good profits. If you are a budding entrepreneur just working on your first pitch deck, you can increase your chances of success with DreamX. Let us help you add those missing nuances to help you move forward. Contact us for a talk!