Why Scale-Ups not Start-Ups are where the action is

23 Oct 2017

The tech media and its surrounding ecosystem have been obsessed with start-ups over the last few years. Everybody loves a new idea and a new brand. But increasingly the smart observers and investors have been looking towards the scale-up market for the more interesting action.

Scale-ups are a massively growing sector and particularly important to the UK’s growth. The Scale Up Institute claims that these type of companies will create 150,000 additional jobs by 2034.Not only that, they claim that they will contribute £225bn towards the national economy.

Scale-Ups are companies at a particularly interesting point in their evolution. Tech City define the moment you are ready to scale up as when a business has just completed Series A or equivalent funding or a company has £500K revenues if bootstrapped.

They have already proved the worth of their product and understand their market and their place in it. They have worked out a revenue model that has potential to scale and will be sustainable.

A scaleup’s biggest task is to continue in that upward direction. Think of it this way: Start-ups invest money to learn, experiment and find proof of concept. Scaleups invest money and accelerate growth once they know that putting the right money into the right areas will provide the right returns.

There are other differences to note as well.

The leadership skills and traits that work well with a start-up can be very different from the leadership required by a scale-up. The skills needed to hire, train and mentor your growing team can do not always translate into skills needed to take your business to the next level.In many cases, the leadership required for a start-up is entirely different than the leadership for a scaleup. The leadership skills can often evolve with this, and sometimes the leadership expands to also move into more specialized roles. This can often require bringing in a new skill set from outside, with experience running this bigger, more grown-up type of company. This is something we have been involved with at Propel London when we have placed candidates from consultancy backgrounds into high growth businesses.

It’s also important to look at the type of hires you will be making as well. In start-ups, by necessity, you will be employing generalists as everybody has to turn their hand to a variety of tasks. Start-up employees can achieve a lot with a little, and they allow the business to get started and keep growing with a smaller team. As the organization grows, however, one person can no longer “do it all,” or do it as well as a specialist. This can often be a testing time for a business. Shifting your generalists to a narrower focus or bringing in a new team to sit beneath generalists can be a painful process, but it’s one of the most important processes involved in moving from start-up to scale-up.

If this sounds like your business at the moment, or the sort of business you or your company invest in then we would like to hear from you. This is a topic which we’ve been involved with over many years and have helped many of our clients as they entered the scale-up phase and then built their teams up as they continued to grow.

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