When it comes to telling the difference between a startup and a scaleup, there may not appear to be many differences between the two - with startups being new to market and scaleups often being a few years old. There are some other differentiators, as outlined below.

The number of employees the business has

Typically, one of the best ways to tell whether a company is a startup or a scaleup is by how many employees the company has. When a business is founded, it is classified as a startup, and usually only has a couple of employees. This will include the founder and potentially one or two more team members who are prepared to take on a number of roles.

The roles of the employees

When a business has just opened, and it doesn't have many employees, each employee will likely have to take on a number of roles to ensure the company gets off the ground. This means that the first employees within a startup are usually happy to wear many hats and have a wide variety of responsibilities. When the company scales up slightly, there are usually more employees who each have more specific job roles and can focus on specific areas of the business.

Which funding round the business is at

Some startups borrow money through more formal institutions such as banks, VCs and private lenders - whereas others very modestly use their own savings or financial support from family and friends. 

If a business is completing funding rounds to help get the company off the ground, you might be able to tell what stage it is at. Startup companies are usually completing a pre seed or seed funding round, which are the first and second rounds they can complete. Scaleups, on the other hand, are usually completing series A, B or C rounds as they are slightly more established.

How long the company has been running for

Startups and scaleups are at different stages of development. As a startup is a business in its early stages, it has usually only been operating for under five years. Scaleups, however, have usually been running for more than five years. This means that they usually have a clearer idea of where the company is heading and what they need to focus on, with a business plan in place which clearly defines their plans for the coming years alongside what theyc an achieve.

To conclude: What is a startup?

A startup is a business which has only been operating for a short time, is usually completing funding rounds to secure capital, and doesn't have a large number of employees. This means the company is not as advanced as a scaleup and still has time to develop.