Continuing To Discuss The Topic EU Funding For Startups ¦ When Is A Startup No Longer A Startup, Criteria – Corporate and Company Law

The criteria for determining when a startup is no longer
considered a startup, particularly for EU funding purposes, can
vary depending on the specific funding program or initiative you
are applying for. The European Union (EU) provides various funding
opportunities and grants to support businesses at different stages
of development. Here are some common criteria that may be used to
determine whether a startup is still eligible for EU funding:

Startups are typically associated with newly founded companies
in their early stages. As a general rule of thumb, a company that
has been in operation for more than five to seven years is often
considered to have transitioned out of the startup phase.

However, some EU funding programs specify a maximum age for
eligible startups. For example, the European Commission’s
Horizon 2020 program, which focused on research and innovation,
often had specific age criteria for applicants.

A startup that has achieved significant growth in terms of
revenue, customer base, and workforce may no longer be considered a
startup. Some funding programs may use the number of employees as a
criterion. If a startup has exceeded a certain employee count, it
may be deemed too large to be considered a startup. This count can
vary but is often in the range of 10 to 50 employees.

As a company grows, it typically develops more formal
organizational structures, hierarchies, and procedures. A startup
may be considered no longer a startup when it has adopted a more
traditional corporate structure, processes were standardized,
operating procedures and have adopted more formal communication
channels.

• Revenue and Financial Viability:

A startup may be considered no longer eligible if it has
achieved a certain level of revenue or financial stability. This
threshold can vary depending on the program but typically indicates
that the company has outgrown the early-stage startup phase.

A startup often relies on external funding, such as venture
capital, angel investment, or crowdfunding. If a company no longer
relies heavily on these forms of funding and is self-sustaining or
profitable, it may be seen as having graduated from the startup
phase.

• Product Development Stage:

A startup may transition to a more mature company when it moves
beyond the experimental and prototype phase, demonstrating a stable
product or service with proven market fit.

A startup that has already gained substantial market traction or
has a significant customer base may not be considered a startup in
the early stages anymore.

If a startup has been acquired by a larger company, gone public
with an IPO (Initial Public Offering), or achieved a significant
exit event, it may no longer be categorized as a startup.

It’s crucial to review the specific eligibility criteria
outlined in the guidelines of the EU funding program you’re
interested in. The criteria can differ from one program to another,
and they may evolve over time as well.

Additionally, the EU has several programs designed for
businesses at various stages of development, so even if a startup
is no longer eligible for funding under one program, it might still
qualify for support under a different program aimed at more
established companies or scale-ups. Always check the latest program
guidelines and consult with specialists for the most up-to-date
information on eligibility criteria for EU funding.

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The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.