Evolution of a Startup company

Startup companies can come in all forms, but the phrase “startup company" is often associated with high growth, technology-oriented companies, many of which seek to disrupt an existing market or to create a new market. Investors are generally most attracted to those new companies distinguished by their risk/reward profile and scalability.93png

That is, they have lower bootstrapping costs, higher risk, and higher potential return on investment. Successful startups are typically more scalable than an established business, in the sense that they can potentially grow rapidly with limited investment of capital, labor or land. Startups encounter several unique options for funding. Venture capital firms and angel investors may help startup companies begin operations, exchanging cash for an equity stake. In practice though, many startups are initially funded by the founders themselves. Factoring is another option, though not unique to startups. Some new funding opportunities are also developing in crowd funding.



Startup companies, particularly those associated with new technology, sometimes produce huge returns to their creators and investors – a recent example of such was Google, whose creators are now billionaires through their share ownership. However, the failure rate of startup companies is very high.95png



A company may cease to be a startup as it passes various milestones, such as becoming profitable, or becoming publicly traded in an IPO, or ceasing to exist as an independent entity via a merger or acquisition. Companies may also fail and cease to operate altogether. Recently the patent assets of these failed startup companies are being purchased by what are derogatorily known as "Patent trolls" who then take the patents from the companies and assert those patents against companies that might be infringing the technology covered by the patent.