By: Menno van Dijk
Experienced leadership, a concept designed for scalability and timing, is the most important factor influencing fast-growing startups, also known as scale-ups. Only 1 out of 200 startups become a scale-up valued over $10 million within 5 years. THNK and Deloitte conducted quantitative research to analyze the dynamics and characteristics of 400.000 startups.
Scale-ups are new enterprises with innovative products, services or business models that grow on to become large corporations. Valued at over $10 million within their first 5 years of existence, these enterprises garner a huge amount of employment while they scale. They demonstrate spectacular growth and expansion, and revolutionize industries with new business models. Coming out of nowhere, they topple incumbents with fresh outlooks on technology – think Facebook, Google, and Uber.
Contrary to popular belief, almost all scale-ups are led by experienced entrepreneurs. In addition, more than half of all scale-ups in the database were founded by teams, not by individuals, all rich in expertise and with diverse backgrounds. Menno van Dijk, THNK Co-founder and Managing Director explains, “Founding an enterprise requires a combination of having the needed experience and right mentality. Also, determination and the capacity to inspire others are important qualities. These qualities are developed through years of corporate or entrepreneurial experience. This explains why scale-up founders are often in their late thirties or young forties.”
The right timing and design for scalability
Many startups want to launch a product and realize a proft margin as soon as possible. A scale-up distinguishes itself by getting the market timing right. Scale-up launches often coincide with (technological) market trends. The THNK and Deloitte Fast Ventures data-analysis shows that timing between establishment and eventual market entry timing is almost twice as long for scale-ups than for startups. “Scale-ups have the stamina to do all necessary preparation and wait until the conditions are right for market entry, allowing for exponential scaling,” says Gideon Mogendorff, senior manager at Deloitte Fast Ventures. “We found that only 25% of startups were designed to scale. Meanwhile, 85% of scale-ups have scalable products that address larger markets and are well suited for international roll-outs.”
Download the report: Scale up the experience game
About the research
Assembling a database with 400.000 startups from 24 countries, THNK and Deloitte Fast Ventures analyzed financial figures, business dimensions, and leadership characteristics. Through quantitative data analysis, we looked for commonalities and patterns that would help answer what improves new enterprises’ chances of becoming a scale-up.
THNK supports entrepreneurs, corporations, and institutions to become innovation leaders through capability building, new business creation, and culture development. Deloitte Fast Ventures connects fast growing technology startups with corporates through data-analysis.The Scale-up Research links to both topics.
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Main image: Startup business plan from Shutterstock.com