Questions

Start-up companies can come in all forms, but the phrase “start-up company" is often associated with high growth, technology-oriented companies, many of which seek to disrupt an existing market or to create a new market. Investors are generally most attracted to those new companies distinguished by their risk/reward profile and scalability. Venture capital firms and angel investors may help start-up companies begin operations, exchanging cash for an equity stake. The newsmagazine The Economist estimated that up to 75% of the value of US public companies is now based on their intellectual property. Often, 100% of a small start-up company's value is based on its intellectual property. As such, it is important for technology-oriented start-up companies to develop a sound strategy for protecting their intellectual capital as early as possible. Start-up companies, particularly those associated with new technology, sometimes produce huge returns to their creators and investors – a recent example of such was Google, whose creators are now billionaires through their share ownership. However, the failure rate of start-up companies is very high.

While there are start-up businesses created in all types of businesses, and all over the world, some locations and business sectors are particularly associated with start-up companies. The Internet bubble of the late 1990s was associated with huge numbers of internet start-up companies, some selling the technology to provide internet access, others using the internet to provide services. A company may cease to be a start-up as it passes various milestones, such as becoming profitable, or becoming publicly traded in an IPO, or ceasing to exist as an independent entity via a merger or acquisition. Companies may also fail and cease to operate altogether. Recently the patent assets of these failed start-up companies are being purchased by what are derogatorily known as "Patent trolls" who then take the patents from the companies and assert those patents against companies that might be infringing the technology covered by the patent.


Answered 3 years ago

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