The Glossary | Startups
Take a closer look at our list of ever-evolving startup terms and definitions.
Startup — A technology-enabled business that is less than 10 years old. Steve Blank defines a startup as a “temporary organization in search for a repeatable and scalable business model.” We use this definition to look across sectors and sub-sectors, including software, hardware, health, energy, and others, and we use these parameters for data collection purposes.
Startup Ecosystem — A shared pool of resources, generally located within a 60-mile (100-kilometer) radius around a center point in a given region, with a few exceptions based on local reality. Resources typically include policymakers, accelerators, incubators, coworking spaces, educational institutions, and funding groups.
Startup Ecosystem Development — Purposely investing time and resources into bolstering startup founders and companies to facilitate the creation of new jobs and economic prosperity.
Global Startup Economy — The global economic value created by tech startups. In data terms, Startup Genome measures this as the sum of tech startup valuations and exits in the world over a two-and-a-half-year time period.
Ecosystem Value — A measure of economic impact that we update each year. It is currently calculated as the value of exits and startup valuations.
Software Startup Output — The number of software startups in an ecosystem, calculated using the MSE (Multiple System Estimation) method.
Funding Growth Index — An index of growth in early-stage funding (Seed and Series A) in tech startups in the ecosystem year over year. Measured on a scale of 1 to 10, where 10 is the highest tier of growth observed and 1 is the lowest.
Output Growth Index — An index of growth in total startup creation in the ecosystem, calculated in an annualized growth rate. Measured on a scale of 1 to 10, where 10 is the highest tier of growth observed and 1 is the lowest.
Exit Growth Index — An index of growth in tech startup exits in the ecosystem year over year. Measured on a scale of 1 to 10, where 10 is the highest tier of growth observed and 1 is the lowest.
Infrastructure — A measure of accelerators and incubators, research grants, and R&D anchors in a startup ecosystem. Examples of Life Sciences-focused infrastructure include top research hospitals and R&D corporate labs.
Funding — Startups securing money to enable scalable growth.
Bootstrapping — Founders using their own money to pay for expenses until the business is funded by its own revenue from customers.
Venture Capital — An investment in exchange for equity. Startups often raise money from individuals and investment firms to fund their growth.
Exit — When an investor, typically a venture capitalist, sells their equity in a startup to cash in on gains or assume a loss.
Unicorn — A company with a valuation of more than $1 billion.
Ecosystem Performance — A combination of leading, lagging, and current indicators that capture economic outcomes in a startup ecosystem. Startup Genome analyzes Ecosystem Value, Exits, Software Startup Output, Growth-Stage Success, Speed to Exit, and Early-Stage Success to quantify a startup ecosystem’s performance.
Startup Sub-Sector — A vertical or specific technology specialty. Sub-sectors are not mutually exclusive. We define Deep Tech-related sub-sectors as Artificial Intelligence (AI), Blockchain, Life Sciences, Advanced Manufacturing & Robotics, Agtech & New Food, and Cleantech. Other tech sub-sectors include Fintech, Cybersecurity, Edtech, Gaming, Adtech, Digital Media. The 2019 Global Startup Ecosystem Report notes the top four startup sub-sectors with the highest growth are Advanced Manufacturing & Robotics (#1), Blockchain (#2), Agtech & New Food (#3), and Artificial Intelligence (#4).
Startup Phases — Startup ecosystems develop through four phases, each with a different set of characteristics, challenges, and objectives. Read about these phases below.
Activation Phase — A startup phase for an ecosystem with limited Startup Experience (founder know-how, experienced investors, advisors/mentors, and community behaviors that support startup success), low Startup Output of around 1,000 or fewer startups, and challenges like resource leakages to later-stage ecosystems that make it difficult to grow.
Globalization Phase — A startup ecosystem enters this phase from Activation once increased Startup Experience has led to the production of a series of regionally impressive “Triggers.” Triggers include achieving more than $100 million exits (higher in leading nations), an Output of 800 to 1,200 startups has been reached (depending on population), and a series of exits trigger national (or regional) resource attraction (startups, entrepreneurs, talent, investors) from earlier-phase ecosystems, but still leaks resources to top global ecosystems.
Attraction Phase — A startup ecosystem enters this phase from Globalization once there are more than 2,000 local startups (depending on population), a series of globally impressive unicorns and exits above $1 billion (higher in leading nations) producing Global Resource Attraction, and very few Success Factor gaps remain.
Integration Phase — A startup ecosystem enters this phase from Attraction once there are more than 3,000 startups and Global Resource Attraction produces a high and self-sustainable degree of Global Connectedness and flow of knowledge into the ecosystem. This attraction and information access keeps startups integrated in the global fabric of knowledge and able to produce leading business models with the skills necessary to achieve high Global Market Reach.
Success Factors — Startup Genome’s principal analytical tool. This measures different dimensions of what supports the performance of local startups. We look at nine factors for our rankings: one measuring actual performance, with eight Success Factors associated with performance, each comprised of sub-factors and metrics.
Premature Scaling — Creating a successful startup is a balancing act among many variables simultaneously in uncertain and volatile environments. One of the most important balancing acts is between the Inner Dimensions and the Outer Dimensions of a startup. The Outer Dimensions are most succinctly summarized by Traction — [Users, Customers, Product Usage, and Revenue]. The Inner Dimensions are five fold: Customer Relationship, Product, Team, Finance, and Legal. Startup Science discovered that the primary reason startups fail is that their Inner Dimensions get ahead of their Outer Dimensions, called Premature Scaling.
Ranking Score — The ranking is primarily driven by one question: In which ecosystems does an early-stage startup have the best chance of building a global success?
