Are top US startups really startups?

Pitchbook, a data research company has come up with a list of top 14 most valuable startups in the United States. There are no real surprises — they are all ranked by valuation and they all are valued at north of $4 billion. They are all household names – barring Outcome Health and Samumed.

And they have been around forever. They have thousands of employees and many have billions in revenue. What they are not is liquid on public markets. They have not IPO’d. In a different Silicon Valley, they will all be public companies and they won’t be deemed startups. Revenue, growth, relative size, market share – pick a metric (except for lack of profits in many cases) and you know they aren’t really startups.

So can we stop calling them startups — and instead maybe call them VC-backed private companies — otherwise the label startup loses its meaning.

Alex Wilhelm, writing for TechCrunch, came up with a nice way to measure when a startup is not a startup.

I think that we can instead rely on the 50, 100 or 500 rule, which I just made up. Here’s the term sheet: If your company has, or is any of the following, you have to hang up your Startup Uniform, and realize that you are just another technology company either hunting for or actively avoiding an IPO:

$50 million revenue run rate (forward 12 months);
100 or more employees;
Worth more than $500 million, on paper or otherwise.

Finally, who thought that a company with a valuation of $40 billion could be a startup? The normal definitions of public companies’ various sizes are as follows:

Small cap: $300 million to $2 billion.
Mid cap: $2 billion to $10 billion.
Large cap: More than $10 billion.

Louis Gray had his say on this topic about three years ago.

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