While checking the LinkedIn news feed I noticed that a connection was referring to his business as still in the start-up phase. Now, I know that the company in question (who will be nameless) – has been around for about three years, and is still claiming to be a UK startup!
Dinner later that evening a with a friend sparked the conversation of business , as it usually does – and I mentioned it to him. He believed that by practice, a company is no longer in startup phase once it has received its first round of funding. This makes sense, but it is correct?
Usually funding is sought when activities for growth have been outlined, but are not able to be executed due to insufficient resources. A UK startup might seek investment from external sources, and in some case internally depending on the ownership structure, such as directors lending the UK entity more funding. After funding has been released to the company, then the activities can begin whether growth of the sales force, infrastructure changes, new product development or leveraging the marketing mix.
So, post funding – the operation is either in growth, or if you are in trouble – decline stage.