In this blog I talk about seed-stage businesses as a particular class of enterprise, a subset of the startup world but distinct from later-stage startups. There’s no one, commonly-agreed definition of seed-stage (or of startups, for that matter), but when I use the term I mean a business that satisfies the following three criteria:
1. It is entrepreneurial, as opposed to being a division of a larger company.
2. It has the theoretical potential for substantial growth. In many cases this means the business is focused on the development or application of cutting-edge technologies (the classic “tech” startup), but technology isn’t a requirement. What this criterion excludes, though, are businesses such as non-chain shops and solitary crafts, where the proprietor may earn a good living but is not aiming to create the degree of value that would interest investors and policy-makers.
3. It has not yet taken meaningful steps toward turning its idea into a reality. This may mean it’s nothing more than a small team that’s still hashing out the basics over a pint, but it also covers businesses that are beginning to make progress on a prototype/minimum viable product and have even taken a little bit of initial funding. Once the business is in a position to generate revenues or seek significant investment from the VC world, it is no longer at seed-stage and becomes instead a “later-stage startup.”
As with everything on this blog, this definition is open to comment and criticism, and if you think I’ve missed the mark in how I’ve drawn the line around seed-stage businesses, please say so.
