What Is a Startup Business? Definition & Examples

The Definition of a Startup

A startup is a newly established company designed to grow fast and scale rapidly. Startups offer an innovative product, service, or technology, often introducing a new product that can transform the market or create an entirely new one. The most successful startups become unicorns: private companies valued at over $1 billion.

Unlike small businesses, startups typically require significant outside funding before becoming profitable, often from venture capital or angel investors who bet on their potential. By definition, a startup business also accepts higher risks in exchange for the opportunity to scale quickly and cash out.

The startup path is uncertain and requires flexibility. You might pivot your strategy multiple times as you figure out what works, because startup business models need to not only scale smoothly from 10 customers to 10,000 and beyond, but also provide returns to your investors.

Types of Startup Companies

Certain industries are hotbeds of startup innovation. Let's look at three major types of startup companies that are changing the way we live and work.

Technology Startups

Tech startups come in two types: software and hardware. Software startups build apps, platforms, and digital solutions like FinTech tools and AI systems. Hardware tech startups create physical products that solve real-world problems, from construction robotics to clean energy systems. Both types blend technology with real-world applications to tackle challenges like automation and climate change.

E-commerce Startups

The e-commerce world includes everything from online marketplaces like Etsy and Shopify to subscription boxes and direct-to-consumer (D2C) brands. While you might think of D2C brands that focus on clothing or cosmetics, there are also some great startup examples that create engineered products. These companies build everything from smart e-scooters to electric jet skis and advanced outdoor gear. They use engineering and smart design to make everyday products better, whether through improved materials, battery technology, or integrated software.

Healthcare Startups

Healthcare startups range from digital platforms that connect patients with doctors to companies creating physical medical devices. Some combine both approaches, for example, a medical device that collects patient data paired with software that remotely analyzes it. This mix of physical products and digital solutions is driving the healthcare industry forward.

Successful Startup Business Examples

To better understand the definition of a startup, let’s look at some real-world examples. Everybody knows about Airbnb, Uber, Netflix, and Spotify. We want to talk about some lesser-known startup company examples that are creating innovative hardware solutions.

Winter Innovations

Winter Innovations’ mission statement is simple: “Developing simple tools for overlooked areas in surgery.” Founded by a passionate team of biomedical engineers and orthopedic experts who were inspired by their own experiences, the company has one powerful goal: improve outcomes for patients. Winter Innovations holds several patents and has won many startup competitions, including being named as the Society of Entrepreneurs’ “Next Big Thing.”

Inovonics

Inovonics set out to make wireless security systems for commercial buildings like hospitals and manufacturing plants. They soon developed commercial-grade wireless tech that became the industry standard. The company's success caught the attention of Roper Industries Inc., who acquired them in 2005 – making them a classic example of a startup that identified a market need, developed solid technology, and cashed out big.

Powerflex

Twenty-five years ago, Powerflex was an Italian startup that spotted a gap in the market for transport solutions for sensitive electronics. They created shock-absorption and vibration-control systems and soon expanded to medical equipment, aerospace components, and defense hardware. They remain a private company, but have grown steadily and become an industry leader.

OtO Lawn Sprinkler

OtO, founded in 2020, created an automated sprinkler system that adapts to yard conditions and weather patterns. Since launch, they've expanded their market presence and earned recognition from home improvement experts by using modern design tools and digital twin technology to reduce development costs. They represent a new wave of hardware startups that use advanced technology to improve everyday products.

How to Start a Startup Business

Ready to move beyond the startup business definition and start turning your idea into reality? You can find a full list of what to do next in our Essential Guide to Launching a Hardware Startup. Here's a brief overview of what you need to know in order to succeed.

Building the Right Business Model

Your startup business model, along with a solid business plan, is how you'll create and deliver value to your customers – and how you’ll make money. For technology and hardware startups, common models include:

• Direct-to-consumer: Sell your products straight to customers through your website or app
• Business-to-business: Provide solutions to other companies
• Subscription-based: Offer ongoing services or regular product shipments
• Hybrid: Combine hardware sales with software services or maintenance plans

Pick a model that matches your product, target market, and growth goals. And remember – you can adapt your model as you learn what works best.

Tips for Startup Success

The true meaning of a startup company is different for everyone, but you’ll always want to stay flexible and keep learning as you grow. Here's what successful startups do right:

• Start with a clear problem to solve, not just a cool product or business idea
• Plan a funding strategy, whether it's bootstrapping, investors, or grants
• Talk to potential customers early and often
• Test and validate your ideas before spending too much on development
• Build a strong team with the right mix of technical and business skills
• Look for mentors who have built hardware or technology companies before
• Protect your intellectual property from the start
• Use modern tools like cloud-based design software

When it comes to software, it’s smart to look for programs that help startups keep costs down. For example, we offer our industry-leading CAD software free to qualifying startups. Check out the SOLIDWORKS for Startups Program to learn more.