There are so many definitions/descriptions of the word “startup”. It is almost an enigma, something that cannot be clearly defined or understood. Neil Blumenthal, co-founder and co-CEO of Warby Parker defined a startup as a company working to solve a problem where the solution is not apparent and success is not guaranteed.. The American Heritage Dictionary suggests it is “a business or undertaking that has recently begun operation.” The business dictionary says it is the stage in the life cycle of an enterprise where the entrepreneur moves from the idea stage to securing financing, laying down the basis structure of the business, and initiating operations or trading. According to Wikipedia, a startup is a newly emerged business venture that aims to develop a viable business model to meet a marketplace need or problem. Founders design startups to effectively develop and validate a scalable business model.
From all this definitions, we can see that a startup is a new business which is focused on growth and solving problems. The term “startup” is relatively new in our society and the recent nosedive of the economy which led to mass job losses, also led to an increase in the number of startups that has emerged.
Speaking about the economy, it is important to note that startups can do a world of good to the improvement of the general economy of a nation. They create more jobs which translates to more employment, and more employment translates to an improved economy. Not only that, startups can also contribute to economic dynamism by spurring innovation. Most of the products we now use as well as the recent strides in technology are results of startups. Alibaba, Google, Microsoft, Facebook, all started small, but as they grew, they transformed the economies in the cities they operated in. They also improved employment patterns providing job opportunities to both experienced and young professionals. This led to surge in inflow of graduates, relocation of experienced professionals from different cities and the attraction of investors.
Startups also boost the economy with revolutionary technology and they have the potential to create new industries over time. They can become money-making engines for not just the owners but also for the employees and shareholders. Thousands of Google employees became worth more than five million dollars when they went public. On the other hand, Alibaba single-handedly transformed the trade scene for SMEs in China, a country that was at that time infamous for its innumerable trade entry barriers. Often times, these same new millionaires put their money towards the businesses of friends and business partners, starting a virtuous circle.
Startups can and will do great things to the economy. This is why The Ken Saro-Wiwa Innovation Hub is committed to being an incubation centre for startups geared towards using technology to solve societal problems and contribute to the economic and socio-economic development of the Niger Delta and Nigeria.
Citation: https://www.startupgrind.com/blog/role-of-startups-in-economic-prosperity/
