What is a startup?

December 2, 2024 by Federico Amodeo

📌 WHAT IS A STARTUP IN ITALY?

Even though the definition is widely debated on, when we say startup we can say we generally mean a young, innovative company with high growth potential, created to solve a problem or satisfy a need through an original product or service. It is characterized by the use of advanced technologies and a scalable business model.

🎓 LEGALLY SPEAKING

To be defined as a startup, a company must meet some requirements. The necessary conditions are the following:

1. Be newly founded or less than 5 years old.
2. Have its main office in Italy or an EU member state.
3. Not exceed 5.000.000€ in annual turnover.
4. It does not distribute and has not distributed profits
5. Focus on developing, producing, or commercializing innovative products or services with high technological value.
6. Fulfill at least one of these criteria:
   • Invest at least 15% of total expenses in research and development.
   • Have a team where at least 1/3 are PhD holders, PhD candidates, or researchers.
   • Own a patent or intellectual property.

💡KEY CONCEPTS OF STARTUPPING

1. Idea validation: Test the idea with potential customers to ensure it solves a real problem.
2. Business model: Develop a sustainable and scalable business model.
3. Team: Build a team with complementary skills and a shared vision.
4. Funding: Secure financial resources, be it through business angels or corporate venture capitalists, or through processes such as bootstrapping and crowdfunding.
5. Iteration: Adjust the product or service based on market feedback

📚 BOOK RECOMMENDATIONS

1. The Lean Startup by Eric Ries – A guide to building innovative startups using the Lean method.
2. Zero to One by Peter Thiel – A book exploring how to create something unique and impactful.

Article by Federico Amodeo, edited by Andrea Stramondo