What’s a Stealth Mode Startup, and When Should You Consider Launching One (2024)

The startup world is incredibly competitive. Sometimes, to protect a new product and to set their own pace for development, people decide to launch a startup operating in a temporary state of secrecy. This state is called stealth mode. In this mode, the #startup aims to avoid the spotlight until it's ready to become public, usually when the product is already developed and ready to launch.

In this week's newsletter, we will explain how it works, the reasons behind going into #stealthmode, and the benefits of operating this way.

What is a stealth mode startup?

A stealth startup is a startup company operating in silent mode, in other words, avoiding public attention and announcements about its products.

The secrecy requirement also applies to the employees and other people connected to the project—many companies working this way have non-disclosure agreements and other rules to protect the technology and ideas.

There are two types of stealth mode: total stealth mode and in-company stealth mode.

A total stealth mode startup is a new company that starts and operates in secrecy until the launch. Some companies would even go as far as not having any website or public profile during this stage. In contrast, other stealth startups simply avoid public announcements about their products and media attention.

The term "in-company stealth mode" describes an existing business developing a new idea or product in secret. In this case, companies take various measures to keep that project a secret like dedicating human resources specifically to that project or using codenames for the new products. Another difference between this and total stealth mode is that sometimes the development of a new product is also concealed internally, not only hidden from the public and the media.

Finding stealth mode startups with Coresignal

Although stealth startups stay away from the media, finding them is still possible. One of the best tools for that is ourfirmographic data. We offer fresh and high-quality #data, allowing investors to spot signals about new companies they care about, including those in stealth mode.

Reasons behind launching a stealth startup

Here are common reasons why some people decide to launch a stealth startup:

• They have a unique idea that will disrupt the market. Therefore, they want to protect intellectual property as much as possible.
• The company is creating a solution or an upgrade to an existing product or service; therefore it doesn't need to find a market fit and doesn't want to alert the competitors.
• Product development is complicated and will take a lot of time.

The main difference between regular startups and stealth mode startups is the commitment to secrecy. Being a new company, a typical startup usually wants to be visible, build its reputation from the start, run marketing campaigns, see what reactions the product and the company is getting, and then look for funding opportunities.

In comparison, most of these things are what a stealth mode company avoids in the project's early stages.

Stealth mode startup benefits

• Intellectual property protection. The main benefit of business operating in stealth mode is protecting intellectual property, which is especially important to those working with unique new projects. Not having too much public information about the product prevents the idea from being copied and keeps it secret from the competitors.
• Focus on the product. Stealth mode allows companies to set their own pace and launch when they are ready, without pressure from the outside. Disclosing information about the project in the very early stages can also result in a premature dismissal of a good idea.
• Control of public relations. When the startup is eventually ready to launch, it can start with a strategic campaign, manage its public image and build its reputation from scratch without a negative trail of public failures from the early stages of the project affecting it.

Stealth startup examples

Operating in stealth mode still doesn't guarantee that the business will remain secret. This year, Apple filed a lawsuit against a "stealth startup" for attempting to steal its chip technology secrets.

Stealth mode startup is not a new concept, and while it's not the right choice for every company, many startups find value in starting their journey this way.

While some projects exiting stealth mode are relatively new and have just begun raising funding, others go from being secret to announcing their unicorn status. Ultima Genomics , a California-based biotechnology company, exited stealth mode after operating in a temporary state of secrecy for 5 years. The company came out of stealth mode with a unicorn valuation.

Want to learn more about stealth mode #startups and their challenges? Check out our blog post. 👇

Coresignal is a leading public business data provider in the web data sphere with an extensive focus on firmographic data and public employee profiles. Leveraging data of 623M professional profiles and 93M company records enables companies to build data-driven products and generate actionable insights. Coresignal is exceptional in terms of data freshness, with 291M records updated monthly for unprecedented accuracy and relevance.