There is often confusion between a technology firm and a technology company. Often the two are used interchangeably with no distinction whatsoever being made. In fact, the term technology can mean many things to many different people. In this article I will define each term separately and then explain how they relate to startups.
A tech startup is simply a new business in the guise of a conventional enterprise, often in the form of an incubator, a startup company or franchise. A startup or tech startup may seek to develop a technology product that is not yet commercially available or one that is highly experimental in nature. Often these new technologies are ones that have been around for decades but have never found a way into the commercial market. They typically seek to solve problems that are either not easily solved or are not effectively addressed by existing products and services.
A tech startup company usually seeks capital and partners to grow its business. The startup companies may seek venture capital as well as angel investors. This financing is used to invest in staffing, sales, office space, technology infrastructure and related areas. Sometimes these companies are co-founded by a large corporation that has an interest in these types of technologies and who wishes to support their development. Other times, tech startup companies are created by an individual with an innovative idea and an ability to market it.
A tech startup company may not employ a development team. A typical startup will have a number of employees, most of whom are full-time although some will work as contractors. The development team is responsible for building and maintaining the software application(s) and supporting the applications through the various stages of development. These may include securing patents, collaborating with customers, developing test code and testing application performance and functionality. Often the team is also responsible for building the company’s supply chain management system.
The primary difference between the two methods is that the later method incorporates development first. The developers create and code the solution to meet the requirements of customers. The goal is to have a minimal viable product (MVP) that can be successfully sold to customers. For tech startup companies, the goal is to have a product or service that is released to customers for revenue generation. The developers then use the MVP to build additional applications and services that extend the original concept.
In conclusion, the tech startup industry is evolving quickly and rapidly adapting to new markets and customer demands. As a result, many companies have recently pivoted from being primarily software companies to creating both hardware and software solutions. The shift can be successful for companies that recognize the risks involved but also those that have the ability to build scalable business model that will provide a foundation for future growth.