Stealth mode start-ups are those that keep their true agenda hidden for as long as possible. While other new companies purposely seek exposure or attention, specific information about a start-up in stealth mode is near-impossible to find.
Understanding stealth mode start-ups
A stealth mode start-up is one that operates in relative secrecy until launch.
What does this look like in practice? Here are a few general characteristics of such a company:
- Does not disclose its products or services.
- Does not make public statements.
- May mislead the public as to its true intentions.
- Does not disclose its key personnel or location on its website.
- Does not openly seek endorsement, and
- Discreetly attracts investors and funding.
While information about a stealth mode start-up tends to be lacking, there are always clues to their presence.
The most obvious example is a company that has secured funding with an obscure name or website that lacks detail.
These companies can also show up in the portfolios of VC firms that are obliged to disclose their investments.
Why do start-ups run in stealth mode?
Why should a start-up operate in secrecy? There are three core reasons:
- The company has a unique idea for a product or service that could disrupt the market. The intention here is to protect intellectual property to the greatest extent possible.
- The company is improving an existing product or service and does not want to alert its competitors, and
- The product development process is complex and time-intensive. This enables the start-up to focus solely on the product or service without having to deal with other variables such as public relations and branding.
Stealth mode start-up examples
English company Lumirithmic was in stealth mode for two years before it launched its portable 3D facial appearance scanning technology in July 2022.
Global News Wire reported that the product was “poised to disrupt the metaverse, film, gaming, ad-tech, beauty-tech and skincare industries.”
While the company was in stealth mode, it also closed two seed rounds from financial and tech investors such as Michael Bronstein, Steven Mail, and Munish Gupta.
In June 2018, Israeli unicorn Hailo Technologies exited stealth mode with three similar start-ups by announcing a significant funding round.
The company, which develops AI chips for the automotive industry, secured a $12.5 million Series A round of funding from a crowdfunding platform and several angel investors.
Ultima Genomics emerged from a five-year stealth-mode period when it announced $600 million in funding from backers such as Andreesen Horowitz, D1 Capital, General Atlantic, and Marius Nacht.
Ultima spent its stealth time developing a fundamentally new genomic sequencing architecture to scale beyond conventional approaches.
With enhancements to machine learning, cell engineering, and sequencing chemistry, the company believes it can lower the cost of genomic information.
- A stealth mode start-up is one that operates in relative secrecy until launch. While information about a stealth mode start-up tends to be lacking, there are always clues to their presence
- Some start-ups operate in secrecy because they have a new product or service that could disrupt the market, while others may have improvements to an existing product or want to focus resources on product development.
- Three examples of start-up companies that have emerged from stealth mode include English 3D tech company Lumirithmic, Israeli AI chip maker Hailo, and genome sequencing provider Ultima.