{"id":46391,"date":"2021-02-01T15:00:50","date_gmt":"2021-02-01T15:00:50","guid":{"rendered":"\/us\/en\/blog\/?p=46391"},"modified":"2025-07-14T06:03:34","modified_gmt":"2025-07-14T13:03:34","slug":"types-of-startups","status":"publish","type":"post","link":"\/us\/en\/blog\/types-of-startups\/","title":{"rendered":"What is a startup? 5 common types | RingCentral"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">\u201cStartup\u201d is often treated as a catch-all buzzword among businesses.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But despite popular belief, the term isn\u2019t just reserved for scrappy tech companies in Silicon Valley.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, what constitutes a startup? In short, they\u2019re typically companies that tick the following boxes:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Comprised of &lt; 30 employees<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Financed via bootstrapping, outside investors, or loans<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They\u2019re not considered corporations or \u201cmature\u201d yet; they\u2019re typically not ready to be bought out and are either anticipating or in the midst of hockey stick growth<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">There are five common types of startups across a variety of industries, all of which have different approaches to scaling. In this guide, you\u2019ll learn about each one:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"#sms\"><span style=\"font-weight: 400;\">Small business startups<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"#buyable\"><span style=\"font-weight: 400;\">Buyable startups<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"#scalable\"><span style=\"font-weight: 400;\">Scalable startups<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"#offshoot\"><span style=\"font-weight: 400;\">Offshoot startups<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"#social\"><span style=\"font-weight: 400;\">Social startups<\/span><\/a><\/li>\n<\/ol>\n<hr \/>\n<p class=\"p1\">\ud83d\udc40 <strong>What are the 4 key components of a successful startup?<\/strong><\/p>\n<p class=\"p1\">\n<div class=\"download-form-widget standart-download-form\" data-url=\"http:\/\/netstorage.ringcentral.com\/ebook\/smb_startup.pdf\" data-id=\"6a07ea6a82d87\" id=\"6a07ea6a82d87\">\n\t\t<button tabindex=\"on\"  on=\"tap:6a07ea6a82d87.toggleClass(class='open')\" class=\"open-modal-download-action download-form-button\" type=\"submit\">\ud83c\udf1f Find out here<\/button><\/p>\n<div class=\"download-form-modal\">\n<div class=\"download-form-modal-body\">\n<div class=\"download-form-modal-content\">\n<div class=\"download-form-modal-title\">Learn to bake success into the DNA of your startup<\/div>\n<form class=\"download-form SMB\" method=\"post\">\n<div class=\"download-form-part\">\n\t\t\t\t\t\t\t<input class=\"download-form-input\" aria-label=\"Full Name\" aria-required=\"true\" aria-invalid=\"false\" type=\"text\" name=\"fullname\" placeholder=\"Full Name\" data-dl-events-hover=\"true\" data-dl-element=\"text\" data-dl-additional-info=\"download form\">\n\t\t\t\t\t\t<\/div>\n<div class=\"download-form-part\">\n\t\t\t\t\t\t\t<input class=\"download-form-input\" aria-label=\"Email (please enter a work email address)\" aria-required=\"true\" aria-invalid=\"false\" type=\"email\" autocomplete=\"on\" name=\"email\" placeholder=\"Email (please enter a work email address)\" data-dl-events-hover=\"true\" data-dl-element=\"email\" data-dl-additional-info=\"download form\">\n\t\t\t\t\t\t<\/div>\n<div>\n\t\t\t\t\t\t\t<input type=\"hidden\" name=\"popup_form\" value=\"1\">\n\t\t\t\t\t\t<\/div>\n<div><input type=\"hidden\" name=\"Asset_ID__c\" value=\"ODAM-01423\" class=\"download-form-input\"><\/div>\n<div>\n\t\t\t\t\t\t\t<input type=\"hidden\" name=\"Lead_Entry_Source__c\" value=\"RC Blog\" class=\"download-form-input\"\/>\n\t\t\t\t\t\t<\/div>\n<div class=\"download-form-part\">\n\t\t\t\t\t\t\t<button class=\"download-form-submit\" type=\"submit\" data-dl-element=\"button\" data-no-auto-dl=\"true\" data-dl-additional-info=\"download form\" data-dl-name=\"Get it now\">Get it now<\/button>\n\t\t\t\t\t\t<\/div>\n<\/p><\/form>\n<p> \t\t\t\t\t<button on=\"tap:6a07ea6a82d87.toggleClass(class='open')\" role=\"button\" tabindex=\"0\"  class=\"download-form-modal-close\"><\/button>\n\t\t\t\t<\/div>\n<div class=\"download-form-modal-thank\">Happy launching!<\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p>\n<hr \/>\n<h2><span style=\"font-weight: 400;\">What are 5 types of startups? How are they different?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Below we\u2019ve broken down real-world examples of the various startup types and how they scale.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\"><a id=\"sms\"><\/a><br \/>\n1. Small business startups: Self-starter, indie companies with small teams<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Using the criteria above, the average startup has more in common with your average mom and pop shop than it does with Google or Apple.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And yes, the distinction between a startup and a small business is kind of fuzzy. Perhaps that\u2019s why so many people use the terms interchangeably.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Most startups have some sort of \u201cbigger\u201d endgame of being bought out or receiving an injection of cash.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Small business startups are different. From solo businesses and partnerships to small teams, these startups are happy <\/span><i><span style=\"font-weight: 400;\">staying<\/span><\/i><span style=\"font-weight: 400;\"> startups as they sell their products and services.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And while they\u2019re interested in growth, they grow at their own pace. Such startups are often bootstrapped or self-funded, meaning that there\u2019s less pressure to scale ASAP or be beholden to the immediate needs of investors.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">24 Hour Tees<\/span><span style=\"font-weight: 400;\"> is a prime example of one of these types of startups. They think of their workplace as a family, while also running a successful, scalable business. And, they&#8217;re proof that you don&#8217;t have to be a tech startup to benefit from tech.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even if you&#8217;re a startup that designs T-shirts, you can still save a ton of time and money simply by having an interest in and awareness of technology. Unlike old-school small businesses that get stuck in their ways, companies like <\/span><a href=\"https:\/\/www.ringcentral.com\/us\/en\/blog\/24-hour-tees-customer-story\/\"><span style=\"font-weight: 400;\">24 Hour Tees<\/span><\/a><span style=\"font-weight: 400;\"> invest in tools and automations to level up their business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">RingCentral is part of that equation, providing tools for more comprehensive customer and internal communication. Whether through an efficient <a href=\"https:\/\/www.ringcentral.com\/contact-center.html\">contact center<\/a> or a <a href=\"https:\/\/www.ringcentral.com\/solutions\/office\/call.html\">cloud-based phone system<\/a> RingCentral can help to simplify all areas of business communication. In short, our solution helps small businesses like 24 Hour Tees provide stellar customer service while keeping up with high demand. You can see more of their story below:<\/span><\/p>\n<div class=\"rc_custom_video\"><a class=\"rc_custom_video__link\" href=\"https:\/\/www.youtu.be\/UU19J4s6r_c\">\n\t\t            <picture><source srcset=\"https:\/\/i.ytimg.com\/vi_webp\/UU19J4s6r_c\/maxresdefault.webp\" type=\"image\/webp\"><img decoding=\"async\" class=\"rc_custom_video__media\" src=\"https:\/\/i.ytimg.com\/vi\/UU19J4s6r_c\/maxresdefault.jpg\" alt=\"\">\n\t\t            <\/picture>\n\t\t        <\/a><br \/>\n\t\t        <button class=\"rc_custom_video__button\" aria-label=\"Play video\"><svg width=\"68\" height=\"48\" viewBox=\"0 0 68 48\"><path class=\"rc_custom_video__button-shape\" d=\"M66.52,7.74c-0.78-2.93-2.49-5.41-5.42-6.19C55.79,.13,34,0,34,0S12.21,.13,6.9,1.55 C3.97,2.33,2.27,4.81,1.48,7.74C0.06,13.05,0,24,0,24s0.06,10.95,1.48,16.26c0.78,2.93,2.49,5.41,5.42,6.19 C12.21,47.87,34,48,34,48s21.79-0.13,27.1-1.55c2.93-0.78,4.64-3.26,5.42-6.19C67.94,34.95,68,24,68,24S67.94,13.05,66.52,7.74z\"><\/path><path class=\"rc_custom_video__button-icon\" d=\"M 45,24 27,14 27,34\"><\/path><\/svg><br \/>\n\t\t        <\/button>\n\t\t    <\/div>\n<h3><span style=\"font-weight: 400;\"><a id=\"buyable\"><\/a><br \/>\n2. Buyable startups: Businesses built to be bought out<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The concept here: small teams build a business from scratch and sell it to a bigger player in their industry.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These types of startups are usually associated with software and tech. Chances are you\u2019ve seen headlines about giants like Amazon or Uber buying out smaller startups. Mergers and acquisitions<\/span><span style=\"font-weight: 400;\"> like this <a href=\"https:\/\/techcrunch.com\/tag\/mergers-and-acquisitions\/\">happen all the time<\/a>.<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-46392\" src=\"\/us\/en\/blog\/wp-content\/uploads\/2021\/02\/startups-being-bought-out-e1611773954828.png\" alt=\"startups being bought out\" width=\"900\" height=\"344\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Getting bought out seems like a pretty sweet deal, right?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, building something worth being acquired for millions (or billions) is easier said than done.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Consider first that competition is absolutely fierce in any given software industry. Heck, there are thousands of startups<\/span><span style=\"font-weight: 400;\"> to contend with in B2B SaaS alone.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Keep in mind that startups don\u2019t necessarily need to be profitable to be bought out (and many aren\u2019t). This represents a sizable risk for investors, but an even larger risk for business owners stuck trying to sell off a company that\u2019s bleeding money. Look no further than the unfortunate fate of WeWork<\/span><span style=\"font-weight: 400;\"> as evidence of how messy this process can be.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That said, there are plenty of independent app-makers and small teams that spend a few years on a business (or even a side hustle) that gets sold to a larger company. The takeaway? Building a buyable business doesn\u2019t necessarily have to mean \u201cgo big or go home.\u201d<\/span><\/p>\n<h3><span style=\"font-weight: 400;\"><a id=\"scalable\"><\/a><br \/>\n3. Scalable startups: Companies that seek capital (or scale themselves)<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The common thread between all types of startups is the need to scale.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This rings true whether you\u2019re a business with dozens of employees or a duo working out of your parents\u2019 garage (hint: RingCentral\u2019s office suite is fair game regardless of how big or small your startup is).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But some startups are easier to scale than others. Most consumer and business apps are examples of scalable startups: once they\u2019ve built buzz and a user-base, it becomes easier to acquire new customers. It\u2019s a sort of snowball effect.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Scalable startups do this by raising capital from outside investors (think: angel investors, venture capitalists, business partners, friends, family). With newfound cash, they can support growth initiatives to score more customers and eventually grab the attention of folks willing to buy them out.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are startups, however, that can continuously scale themselves without a traditional exit strategy. ConvertKit is a great example of this. The company <a href=\"https:\/\/www.crunchbase.com\/organization\/convertkit\">has received funding<\/a><\/span><span style=\"font-weight: 400;\"> in the past, but recently crossed <\/span><a href=\"https:\/\/nathanbarry.com\/15-lessons-15-million\/\"><span style=\"font-weight: 400;\">$15 million ARR<\/span><\/a><span style=\"font-weight: 400;\"> and intends to maintain its sort of \u201cstartup\u201d status:<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-46393\" src=\"\/us\/en\/blog\/wp-content\/uploads\/2021\/02\/convertkit-startup-mrr-e1611773996146.png\" alt=\"convertkit startup mrr\" width=\"900\" height=\"320\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Also, companies that scale and seek capital don\u2019t necessarily have to resort to millionaires or billionaires to make it happen. In fact, there are plenty of startups such as Oculus that actually managed to grow <a href=\"https:\/\/www.uschamber.com\/co\/start\/startup\/successful-crowdfunded-startups\">via crowdfunding<\/a><\/span><span style=\"font-weight: 400;\"> from eager, prospective customers.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\"><a id=\"offshoot\"><\/a><br \/>\n4. Offshoot startups: Companies that branch off from bigger corporations<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Not all types of startups are built from the ground up.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An offshoot startup is fairly self-explanatory. Simply put, they are startups that branch off from larger parent companies to become their own entities.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, an offshoot business might be established in an effort for a bigger company to enter a new market or disrupt a smaller competitor. Because these startups act independently of their parent companies, they have freedom to do business and experiment without drawing as much attention or scrutiny.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As <a href=\"https:\/\/www.investopedia.com\/terms\/s\/subsidiary.asp\">highlighted by Investopedia<\/a>,<\/span><span style=\"font-weight: 400;\"> a company like Sidewalk Labs (an offshoot of Google\u2019s parent company Alphabet) is a good example of such a subsidiary.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\"><a id=\"social\"><\/a><br \/>\n5. Social startups: Nonprofits and charitable companies<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Startups are sometimes stereotyped as being growth-obsessed and money-hungry.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That said, some startups are specifically designed to do good. Social startups, which include charities and nonprofits, scale for the sake of philanthropy. They operate similarly to any other startup, but do so with the help of grants and donors.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A shining example of a social startup is Code.org,<\/span><span style=\"font-weight: 400;\"> an organization that\u2019s managed to <a href=\"https:\/\/www.crunchbase.com\/organization\/code-org\/company_financials\">raise nearly $60 million<\/a><\/span><span style=\"font-weight: 400;\"> (from the likes of Google and Facebook) to help give students opportunities in the field of computer science.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What are the most common types of startups industry-wise?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">To wrap things up, here\u2019s a quick breakdown of the most common types of startups by industry. Although most of them are indeed tech-related, there are definitely startup opportunities in more \u201cnontraditional\u201d fields as well.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Software (SaaS) and technology<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Marketing and advertising<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Healthcare<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">IT<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Insurance\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Education<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Real estate<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Environmental and energy<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Retail and ecommerce<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Blockchain and cryptocurrencies<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Which type of startup are <em>you<\/em> capable of building?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Startups aren\u2019t as one-size-fits-all as many people assume.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hopefully this guide provides a better sense of the types of startups out there and how they grow.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And remember: no matter which sort of business you\u2019re looking to build, <\/span><a href=\"https:\/\/go.ringcentral.com\/startup-company.html\"><span style=\"font-weight: 400;\">RingCentral\u2019s solutions for startups <\/span><\/a><span style=\"font-weight: 400;\">can help you stay connected with customers as you scale. With small <a href=\"https:\/\/www.ringcentral.com\/solutions\/small-business.html\">business phone systems, <\/a>\u00a0<a href=\"https:\/\/www.ringcentral.com\/us\/en\/blog\/what-is-an-omnichannel-cloud-contact-center\/\">omnichannel contact center<\/a> software, and more, we have the solutions to help streamline communication.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cStartup\u201d is often treated as a catch-all buzzword among businesses. But despite popular belief, the term isn\u2019t just reserved for scrappy tech companies in Silicon Valley. So, what constitutes a startup? In short, they\u2019re typically companies that tick the following boxes: Comprised of &lt; 30 employees Financed via bootstrapping, outside investors, or loans They\u2019re not &#8230;<\/p>\n","protected":false},"author":1131,"featured_media":46395,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17901,18669,18722],"tags":[],"class_list":["post-46391","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-leadership","category-verticals","category-startups"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v19.3 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What&#039;s a Startup &amp; 5 Types You Should Know<\/title>\n<meta name=\"description\" content=\"Startups aren&#039;t just tech ventures. 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