Skip to content

KickStartup Series: What is a Startup?

A startup is a fast-growth company that is using technology to disrupt a market. Startups have the potential for high growth, fuelled by investors and external funding to raise capital. Unlike traditional businesses where funding comes from banks and loans, startups rely on professional investors (or sophisticated investors) to provide funds. They view startups as potentially generating high returns, while at the same time recognising the high risk of failure.

Innovation and disruption are also an important part of a startup’s DNA. By either reshaping the way entire industries work or using technology to solve a problem in an industry, startups aim to displace existing competitors.

Startups v Small Businesses

According to Fair Work Australia, a small business is one that employs fewer than fifteen employees while the Australian Bureau of Statistics defines it as fewer than 20 people. The Australian Taxation Office defines a small business as one that has an annual revenue turnover of less than $2 million. Meanwhile, the Australian Securities and Investments Commission defines a small business as one that satisfies two of these three characteristics:

  • an annual revenue of less than $25 million
  • fewer than 50 employees at the end of the financial year, and
  • consolidated gross assets of less than $12.5 million at the end of the financial year.

While all startups can be small businesses, not all small businesses are startups. Small businesses are generally considered to sell less differentiated products and services. Moreover, they are likely to be trading in a confined geographical space. However, startups can often scale quickly, enabling them to grow much more quickly.

Leveraging Technology

Many startups also use technology as an enabler of growth. The most common industries include engineering, hardware, software and biotechnology. The proliferation of Internet has greatly assisted the reach of startups, particularly due to its lower levels of capital investment. Many industries are now being disrupted by online business models (including LegalVision), providing unprecedented opportunity to maximise efficiency and create economic growth.

Continue reading this article below the form
Loading form

Unicorns exist!

A unicorn in the startup space refers to a startup that has grown tremendously quickly without a formal exit (an IPO, merger or acquisition or liquidity event). It must have a market capitalisation of $1 billion or more. These startups are rare and hence the unicorn label. In Australia, startups that have achieved unicorn status include Atlassian and Campaign Monitor.

How do I start a startup?

Once you have you idea, a team and a prototype, this would be a good time to consider the legal documents you need to register the company. As soon as your startup has more than one owner, you will need a shareholders’ agreement. A shareholders’ agreement will govern how decisions are made and how investors can buy shares in your company. You may also require company secretarial documents such as the share certificates and transfer forms. This is set out in the Corporations Act 2001 (Cth). If you are dealing with sensitive information, a confidentiality agreement (or nondisclosure agreement) is necessary. Intellectual property protection, such as a trade mark, should also be considered.

If you are bringing on interns, employees or contractors, an employment contract is required. An employment contract sets out more than just employment details – rather, it deals with intellectual property assignment and leave entitlements. Finally, if you want to plan your tax liability and maximise your asset protection, a family trust deed should be considered.

Conclusion

LegalVision can assist you with all the legal documents required for a startup, as well as capital raising advice and registering a trade mark. Contact us through the form on this page or give our Client Care team a call – we’d be delighted to set up your startup to become the next Australian startup unicorn!

Register for our free webinars

ACCC Merger Reforms: Key Takeaways for Executives and Legal Counsel

Online
Understand how the ACCC’s merger reforms impact your legal strategy. Register for our free webinar.
Register Now

Ask an Employment Lawyer: Contracts, Performance and Navigating Dismissals

Online
Ask an employment lawyer your contract, performance and dismissal questions in our free webinar. Register today.
Register Now

Stop Chasing Unpaid Invoices: Payment Terms That Actually Work

Online
Stop chasing late payments with stronger terms and protections. Register for our free webinar.
Register Now

Managing Psychosocial Risks: Employer and Legal Counsel Responsibilities

Online
Protect your business by managing workplace psychosocial risks. Register for our free webinar.
Register Now
See more webinars >
Anthony Lieu

Anthony Lieu

As Head of Marketing at LegalVision, Anthony leads a team responsible for breaking down barriers to accessible legal services.​ ​The firm’s innovative model and digital marketing strategy have transformed how businesses engage lawyers across Australia, the UK and New Zealand.

Read all articles by Anthony

About LegalVision

LegalVision is an innovative commercial law firm that provides businesses with affordable, unlimited and ongoing legal assistance through our membership. We operate in Australia, the United Kingdom and New Zealand.

Learn more

We’re an award-winning law firm

  • Award

    2025 Future of Legal Services Innovation Finalist - Legal Innovation Awards

  • Award

    2025 Employer of Choice - Australasian Lawyer

  • Award

    2024 Law Company of the Year Finalist - The Lawyer Awards

  • Award

    2024 Law Firm of the Year Finalist - Modern Law Private Client Awards

  • Award

    2022 Law Firm of the Year - Australasian Law Awards