A stealth startup is a type of

startup company A startup or start-up is a company or project undertaken by an Entrepreneurship, entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship includes all new businesses including self-employment and businesses tha ...

that operates quietly and in silence to outsiders, avoiding public attention. This may be done to hide information from competitors (which may include

non-disclosure agreements A non-disclosure agreement (NDA), also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement (SA), is a legal contract or part of a contract between at le ...

), or as part of a

marketing strategy Marketing strategy refers to efforts undertaken by an Organizational structure, organization to increase its sales and achieve competitive advantage. In other words, it is the method of advertising a company's products to the public through an est ...

to manage public image and generate expectations and interest from potential clients. A stealth startup normally operates only in

stealth mode In business, stealth mode is a company's temporary state of secretiveness, either in total stealth mode when everything about the company is kept secret, or in-company stealth mode which is usually undertaken to avoid alerting competitors to a pen ...

for its first few years. The phenomenon is well known in the

venture capital Venture capital (VC) is a form of private equity financing provided by firms or funds to start-up company, startup, early-stage, and emerging companies, that have been deemed to have high growth potential or that have demonstrated high growth in ...

(VC) community. Since investors may have to disclose funding a stealth startup, their names are made public; but often, only a general summary description is known about the company.

Model

Startups operating in "stealth mode" often do so to protect new ideas and intellectual property. If a startup is working on a revolutionary product that would be easy to replicate, operating as a stealth startup and not publicizing product details decreases the risk of the product being copied by other companies, as does having their employees execute NDAs. While this risk can be mitigated by patents, applying for a patent is a lengthy and expensive process, which is often not a viable option for a startup.

References

* {{Private equity and venture capital Entrepreneurship