When you tell people you are doing a start-up it is deeply implied you're doing something with the hopes of hitting it big. Because if it wasn't you would just tell them you "run a roofing company" or are "an electrician" or "sell stationary on the internet"
A start-up, even to non-technicals, connotes an attempt to hit it big.
I've worked for two tech companies doing fairly cutting-edge R&D that were definitely "start-ups" in every sense of the word, called themselves such, but were never developed with the intention of getting a bunch of VC money then making a big exit. These are much more common than you probably realize, even within the tech sector.
Getting really big then exiting basically necessitates that you have to be in a mass-market business. But do only mass-market businesses get to call themselves start-ups? Is there no place for start-ups in specialized fields with significant revenue potential but without the kind of universal applicability that makes VC's wet their pants?
It's interesting how nomenclature changes your perception of a business. It is acceptable for a tech startup, for example, to pursue try to increase adoption rate by giving away a service for free in the hopes of securing investment. It would not be nearly as acceptable for a restaurant to give away free food to get more diners in an effort to lure investors.
A slight distinction is that no restaurant would make it an ongoing policy to give away free food to every customer who walked in the door. Rather, restaurants will have a buy one get one free promo, or a free dessert with entree purchase to lure more paying customers.
I'm currently developing SaaS for a certain service industry in Sweden.
I wouldn't say this is hitting it small, nor is it batting for the major leagues. It's a decent sized chunk of project that will build the skills and capital needed for our next level-up sometime in the future.