Scaleup company
{{Short description|A profitable and scalable business in its growth phase}}
{{disputed|date=May 2017}}
File:Figure 3- Stages in the Advanced Biofuels Scale-Up Process (30647611444).jpg
A scaleup company or just scaleup is a company that already has a profitable and scalable business model and grows above 20% in either turnover or number of employees over a three-year period.{{Cite web|url=https://www.santander.com/en/stories/startups-vs-scaleups|title=The differences between startups and scaleups|website=www.santander.com}} A scaleup can be identified as being in the "growth phase" life-cycle in the Millers and Friesen life cycle theorem,{{Cite journal|last1=Miller|first1=Danny|last2=Friesen|first2=Peter H.|date=1984-10-01|title=A Longitudinal Study of the Corporate Life Cycle |url=http://pubsonline.informs.org/doi/abs/10.1287/mnsc.30.10.1161|journal=Management Science|volume=30|issue=10|pages=1161–1183|doi=10.1287/mnsc.30.10.1161|issn=0025-1909|url-access=subscription}} or the "Direction phase" in the Greiner growth curve.
Concept
A key difference between a startup and a scaleup is the main challenges faced.{{cite web |title=Marco Marinucci (2014), Scaleup Metrics |url=http://blog.mindthebridge.org/scaleup-metrics/ |work=mindthebridge.org}} While a startup's main challenge is to find a repeatable scalable business model, a scaleup's main challenge is growth of the already identified business model while maintaining operational controls.{{Cite web |url=http://mba.tuck.dartmouth.edu/pdf/2002-5-0007.pdf |title=Dartmouth defines scaleup process |access-date=2014-09-19 |archive-date=2016-06-11 |archive-url=https://web.archive.org/web/20160611100531/http://mba.tuck.dartmouth.edu/pdf/2002-5-0007.pdf |url-status=dead }}
It is reported that one out of ten venture capital-funded startups successfully transitions to this stage.{{Cite web |last1=Gauthier |first1=Romain |last2=Malik |first2=Samar |date=September 26, 2023 |title=SAP BrandVoice: Scaleup For Growth: Will Your ERP Help Or Hinder? |url=https://www.forbes.com/sites/sap/2023/09/26/scaleup-for-growth-will-your-erp-help-or-hinder/ |access-date=2023-10-14 |website=Forbes |language=en}} A 2018 study showed that only 0.4 percent of all startups scale, reaching more than 10 million revenues within 5 years.{{Cite web|url=https://scaleupnation.com/wp-content/uploads/2021/02/The-Art-of-Scaling-3.1.pdf|title=The Art of Scaling, ScaleUpNation (2018)}} The remainder stabilizes or grows at a much lower rate. A scaleup, once successful, obtains the unicorn status.
= Evolution =
One way of looking at the evolution of a startup into a scaleup is that scaleups evolve from startups as they cross the (so called) "growth chasm" {{cite web|url=http://startupeuropepartnership.eu/scaleups-when-does-a-startup-turn-into-a-scaleup/|title=Growth Chasm illustration|work=startupeuropepartnership.eu|date=29 July 2014 }} that is, once they solve the startup challenges of market research, development, and identifying a repeatable, scalable business model. This can be identified by a significant sustained repetition of critical mass{{cite web|url=https://twitter.com/SEP_EU/status/491480359432097792|title=SEP reports critical mass as key factor|work=twitter.com}} in a particular startup's most significant metric – generally, this metric is revenue, number of employees,{{Cite web|url=http://www.oecd.org/std/business-stats/eurostat-oecdmanualonbusinessdemographystatistics.htm|title=Eurostat-OECD Manual on Business Demography Statistics - OECD|website=www.oecd.org|access-date=2017-06-20}} number of active users, number of active customers, or effective reach, relative to funds raised.{{cite web|url=http://blog.mindthebridge.org/scaleup-metrics/|title=Mind The Bridge Foundation take on Scaleup metrics|work=mindthebridge.org}} Once scaleup company employs at least 10 people, then it is considered within its growth phase life cycle.{{Cite book |last=Gusdorf |first=Florent |title=New Words Lycée. Lexique thématique du vocabulaire contemporain anglais-français (Conforme aux nouveaux programmes) |publisher=Editions Ellipses |year=2020 |isbn=978-2-340-04146-2 |location=Paris |language=en}}
Importance of scaleups
The importance of scaleups and the rise of their terminology according to the World Economic Forum is that, although not all startups make it big, the ones that do greatly impact society by means of new technology, services and increased employment.{{Cite web| title=The Bold Ones – High-impact Entrepreneurs Who Transform Industries | date=September 2014 | url=http://www3.weforum.org/docs/AMNC14/WEF_AMNC14_Report_TheBoldOnes.pdf | archive-url=https://web.archive.org/web/20141113230311/http://www3.weforum.org:80/docs/AMNC14/WEF_AMNC14_Report_TheBoldOnes.pdf | archive-date=2014-11-13}}{{Cite book |last1=Santos |first1=Eleonora |last2=Lisboa |first2=Inês |last3=Moreira |first3=Jacinta |last4=Ribeiro |first4=Neuza |chapter=Regional Competitiveness and the Productivity Performance of Gazelles in Cultural Tourism |date=2021 |editor-last=Abreu |editor-first=António |editor2-last=Liberato |editor2-first=Dália |editor3-last=González |editor3-first=Elisa Alén |editor4-last=Garcia Ojeda |editor4-first=Juan Carlos |title=Advances in Tourism, Technology and Systems |chapter-url=https://link.springer.com/chapter/10.1007/978-981-33-4260-6_11 |series=Smart Innovation, Systems and Technologies |volume=209 |language=en |location=Singapore |publisher=Springer |pages=114–124 |doi=10.1007/978-981-33-4260-6_11 |isbn=978-981-334-260-6}}
To aid this rise, instead of large startup incubators, policy makers are more and more focusing on scaleups since they are the ones that add value.
One commonly used definition of 'scaleup' is the OECD-Eurostat definition relating to 'gazelles' or High Growth Firms: "All enterprises with average annualised growth greater than 20% per annum, over a three year period should be considered as high-growth enterprises. Growth can be measured by the number of employees or by turnover."{{cite web |title=OECD Eurostat-OECD Manual on Business Demography Statistics |url=http://www.oecd.org/std/business-stats/eurostat-oecdmanualonbusinessdemographystatistics.htm |work=Eurostat-OECD}}
Endeavor published a study reporting that scaleups create most of Southeast Asia's new jobs.{{cite web|url=http://www.ecosysteminsights.org/scaleup-companies-create-most-of-southeast-asias-new-jobs/|title=Scaleup Companies Create Most of Southeast Asia's New Jobs|work=ecosysteminsights.org}} Endeavor founder/CEO Linda Rottenberg published the scaleup petition to further elevate the movement around scaleups.