What Is a Startup?

A startup company is not just a simple company; it is an engine for developing the country that creates jobs, creates economic growth, drains the brain, and attracts finance institutions. The economic advancement of a nation can often be gauged by the maturity and robustness of its startup ecosystem, alongside the level of governmental investment and support provided to startups. This research aims to examine the definition and conceptualization of the term “startup”, identify established criteria for classifying a startup, and determine whether explicit legal provisions exist that differentiate startups from newly established companies with a focus on Europe.To achieve these objectives, the research includes analysis methods, focusing on secondary data and official institutional data. This approach facilitated a thorough examination of existing definitions, legal frameworks, and institutional practices regarding the identification and registration of startups across various European nations. The findings reveal a significant discrepancy within Europe concerning legislative clarity on startups. Although many European countries exhibit a well-developed startup ecosystem, not many countries possess formal legislative frameworks that explicitly define a startup and delineate its distinguishing characteristics from those of other newly founded businesses. Notably, according to the Global Startup Index 2024, countries such as Sweden, Germany, France, and the Netherlands rank highest in terms of favourable conditions for startup development. Even of high rankings and developed ecosystems, Germany and Sweden have lack of legal framework and definitions of startups, instead relying primarily on individual programs and ad-hoc initiatives to support entrepreneurial ventures like France and the Netherlands do.The research identified that some European countries, Lithuania, Estonia, Spain, Latvia, and France, have adopted legal regulations that formally define and make differences from startups to other companies, outlining clear criteria and benefits associated with startup status. In contrast, analysis of the former Yugoslavian countries, specifically Slovenia, Croatia, Bosnia and Herzegovina, Macedonia, and Montenegro, except Serbia, indicates a conspicuous absence of clear definitions, formal criteria, or legal frameworks distinguishing startups from newly established businesses. These nations lack provisions within their legislative frameworks explicitly addressing the identification and registration of startup companies, resulting in ambiguity and inconsistency in classification and support measures.Results from this research underscore the necessity for clearer, standardized definitions and robust legal frameworks to effectively support and foster startup ecosystems. It provides a foundation for policymakers and stakeholders within the startup ecosystem to enhance clarity in legislation, facilitate targeted support, and promote sustainable economic growth through innovative entrepreneurial activities.