The following is a list of common attributes associated with a startup company.
- A startup company is a company with a limited operating history.
- It may effectively cease to be a startup as it passes various milestones, such as becoming profitable, or becoming publically traded in an IPO, or ceasing to exist as an independent entity via a merger or acquisition.
- Most startups fail.
- Startups are distinguished by their risk/reward profile and scalability.
- Compared to established businesses, startups must have lower bootstrapping costs, higher risk, and higher potential return on investment, since their cost of capital is high.
- 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.
- Venture capital firms and angel investors may help startup companies begin operations, exchanging cash for an equity stake.
- Financing may also be in the form of a loan, often cast as a convertible bond or warrant.
- In practice, many startups begin modestly funded in a "friends and family" round of investment, or simply self-funded by the founders.