The word “startup” can get tossed around frequently, and sometimes even be overused when the company in question is truly just a private company beyond the startup stage. Historically, there have been criteria that made the line between startup and mature company clear. However, with the macroeconomic conditions of startups changing, and as startups are staying private longer, does the definition of startup also need to change? In this blog, explore the question “when is a startup no longer a startup?” and learn more about the criteria that define a company’s growth stage.

When is a Startup No Longer a Startup?

Historically, startup was generally defined as a new company. It was in the beginning stages of operations, and being a startup was just a temporary phase. Some of the general criteria that have been used to define a startup include:

• Age: Usually less than 5-10 years old
• Size: Less than 500 people
• Capital: Not making a profit, living on investor money
• Exit Plan: Working towards a company sale or IPO

Going public was often the big finish line for startups. It was after the point of an IPO that many companies were no longer considered a startup.

Why These Old Metrics Don’t Work Now for Startups

As the years have gone on, the dynamics surrounding startups has been shifting, making these old metrics no longer apply as cleanly as they once did.

Startup Access to Private Capital

As democratization of startup investments has grown, startups now have more options to obtain capital and don’t feel the same pressure to go public. With the enablement of crowdfunding and the rise of access to venture capital and late-stage private equity, startups no longer have to rush to the public markets in order to secure funding. There is more capital available privately, reducing the need for an exit and allowing companies to scale, innovate, and delay IPOs without sacrificing their growth.

The “Stay Private Longer” Trend

Research from the University of Florida found that from 1980 to 2007, the median age of a startup at IPO was 5-9 years. This number had grown to 13.5 years in 2024, almost tripling the low end of the previous median age.[1] And even now, some still refer to SpaceX as a startup, despite its founding in March 2002, giving SpaceX an age of almost 24 years old. Despite this, SpaceX and other late-stage private companies still cling to the “startup” description by culturally and operationally still operating with a startup mindset.

With the abundance of private capital allowing for startups to not need to turn to the public markets as quickly, the word “startup” is now being used for companies that are older, larger, and generating revenue with no plans of pursuing an initial public offering.

Why Would an Older Company still want to be called a Startup?

With companies beyond the generalized criteria for a startup still championing the startup title, why might they be clinging on to this descriptor? There are a few potential reasons:

Culture

The company may want to cling to startup culture: fast-paced work, innovative ideas, industry disruption, and a rejection of all things “corporate”. A private company may think using the word “startup” can help direct the tone of its culture to employees.

Hiring

Some companies may use the word “startup” for hiring marketing. In competitive hiring markets, the startup image can appeal to mission-driven candidates who want to make an impact, wear multiple hats, and avoid corporate rigidity. It can sound exciting to work for a startup, and it can set the tone for workplace expectations by using it in job descriptions.

Image

Being seen as a startup may suggest disruptor status to those viewing the startup from outside. Private companies may also hold fast to this image, challenging competitors and rewriting industry rules. This narrative can be helpful for marketing, partnerships, and customer loyalty, even if the company is well-established.

Freedom from Pressure

Public companies are typically watched closely every quarter and scrutinized through earnings reports. A private “startup” can say that it is focused on long-term growth opportunities, not next quarter’s profit.

Redefining a “Startup”

If age, size, and IPO desires no longer define a startup, what does? As we look to the future, best practice may be to shift the definition of a startup from quantitative milestones and look towards qualitative metrics. Some of the following characteristics may be better suited for the startups of today.

Mindset Over Metrics

It may be beneficial to define a startup by a culture of experimentation, rapid iteration, and a willingness to pivot. If a private company is prioritizing learning and adapting over following a fixed playbook, it may still be able to claim startup status.

Growth Trajectory, not just Stage

If a private company is experiencing hypergrowth, whether in users, revenue, or market expansion, they may be operating under a startup mentality, regardless of the company’s age or number of employees.

Innovation as a Core Function

Innovation has long been considered a central component to startups. If a private company embeds innovation into their operations, continuously seeking to disrupt themselves before other competitors do, they may be able to claim the startup title.

So, When is a Startup No Longer a Startup?

If the definition of a startup has shifted with the times, at what point is a startup no longer a startup? Not every company should strive to be a startup forever. The transition from a private company to a public company is still a good generalized indicator that the company is beyond a “startup”, even if they are still operating under the startup principles of innovation, disruption, and mindset.

It’s possible that a better way to look at startup is by looking at their stage of development and considering early-stage startups vs late-stage startups. While there is still a large category of startups that are in their earliest days, iterating product-market fit and attempting to raise first rounds of capital, there is also now a large category of more established startups. These startups typically are generating revenue, have adequate funding, and operate under the startup mentality, despite the lack of IPO plans.

Final Thoughts

What was previously a relatively defined set of criteria describing a startup appears to no longer be accurate or relevant to the startups of 2026. The definition of a startup has evolved over time and the same criteria does not apply to every situation. No longer focusing on factors like age, size, stage of revenue generation, and exit plans and instead focusing on qualitative factors such as culture, processes, hiring expectations, and disruption capabilities may be a better way to consider if a startup is truly a startup.

Are you ready to invest in startups? Sign up for a MicroVentures account to start investing!

Want to learn more about investing in startups? Check out the following MicroVentures blogs to learn more:

• Evaluating Go-To-Market Strategy
• Going Public: Direct Listing vs IPO vs SPAC
• Understanding Voting vs Non-Voting Shares
• Developing Your Investment Thesis

 

[1] https://site.warrington.ufl.edu/ritter/files/IPO-Statistics.pdf

*****

The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.