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Scaleups, a Scaleup company or Scaleup is a business looking to grow/expand in terms of: market access, revenues, added value or number of employees – in particular, identifying and realizing win-win opportunities for collaboration between market leaders and market disruptors... According to a different, performance-based approach, a scaleup is a company that has identified its product/market fit and has reached notable proofs of market traction. The term has become more popular due to acknowledgement of the emerging trend by various organizations and people. Digital scaleups that use growth hacking techniques from product concept have an added advantage of being able to grow exponentially as described in the growth hacking methods.
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Evolution of a scaleup company
Scaleups evolve from startups as they cross the growth chasm; 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 in a particular startup’s most significant metric – generally, this metric is revenue, number of active users, number of active customers, or effective reach, relative to funds raised.
The differentiating factor that makes a startup graduate into a scaleup is the main challenge faced. 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 in place. The scaleup movement focuses on the growth of scaleups through established organizations: some experts put with a focus on job creation, while others consider market traction criteria such as monthly recurring revenues (for SAAS B2B companies) or monthly unique visitors (for B2C online companies). According to this view, identifying the right product setup, target the most appropriate customer segment, defining the best channel to serve the market (go-to-market strategy) are key steps to enter the scaleup phase.
Scaleup metrics
Within the scaleup movement, various individuals and organizations are establishing entrepreneurial ecosystems for job growth. Some include the Startup Europe Partnership, Endeavor, Blackstone Entrepreneur Network, Scaleup Milwaukee, and ScaleIT. They generally have internal metrics in use for their operations. There is an ongoing discussion attempting to normalize and standardize scaleup metrics.
Brad Feld describes this as follows: "In a discussion with my long time friend Paul Kedrosky, we talked about a paper he’s writing about the number of "important companies" that get to $100 million in revenue. Our discussion shifted to the magic number – was $100m the right number for ‘important’, or was it $50m, or $25m, or even $10m. At some point we both realized it wasn’t about a magic number, but about the concept of "scaling up" a business once it had started up."
Because numerical business measurements such as current revenue and number of employees are at times undisclosed or unclear (especially in various industries such as the shared economy where gray areas exist on who the employee is) typically scaleups can be measured on public proxies such as capital raised
Startup Europe Partnership (SEP)
SEP is a pan-European startup ecosystem established by the European Commission in January 2014 under the EU Startup Europe initiative during the World Economic Forum – Mind The Bridge Foundation (MTB) leads SEP. Its founding partners include BBVA, Telefonica, Orange, Cambridge, IE Business School, European Investment Bank Group, and the European Investment Fund. SEP is testing accelerated scaleup methodologies, a term it coined while defining
Visible individuals in and around the Startup Europe Partnership supporting scaleups and rise of the scaleup movement:
Marco Marinucci
Founder & CEO – Mind The Bridge Foundation that leads Startup Europe Partnership (SEP). Marco Marinucci AngeList
Sherry Coutu
Scaleup Advocate, Angel investor, Commander of the Order of the British Empire for entrepreneurship. "We really need to shift the focus from startups to scaleups". Commander Sherry Coutu Video on scaleups.
In March 2014 Sherry was commissioned by BIS [department for Business, Innovation and Skills] through the Information Economy Council to produce 'The Scale Up Report on UK Economic Growth', an independent report that presents results from other nations that have changed their economic policy towards scale-ups and recommends actions the UK needs to take to ensure is the leading economy in the world for generations to come.
Alberto Onetti
Chairman – Mind The Bridge Foundation (MTB) that leads Startup Europe Partnership (SEP); SEP Coordinator at MTB. Professor of Entrepreneurship at Insubria University and serial entrepreneur. He is a scaleup advocate. Alberto Onetti Linkedin Alberto Onetti crunchbase
Endeavor
For its operations, Endeavor defines scaleups as companies growing at 20% over the past three years. It published a study reporting that scaleups create most of Southeast Asia’s new jobs. Endeavor founder/CEO Linda Rottenberg published the scaleup petition to further elevate the movement around scaleups. Endeavor's research arm continues to focus on providing more insight into scaleups.
Brad Feld
Brad Feld is a noted American entrepreneur, author, blogger, and venture capitalist. In 2013 he wrote a piece about shifting his focus from startups to scaleups.
World Economic Forum (WEF)
The WEF published a report highlighting scaleups as the collaborative road to sustainable growth. SEP was launched at the 2014 WEF event in Davos, Switzerland.
The Coca-Cola Company
David Butler, vice president of innovation at The Coca-Cola Company, gave a speech in August 2013 about the next wave of innovation; Scaleups. He described why and how Coca-Cola is joining the entrepreneurial revolution. "The weird thing is that big, established companies know how to scale, but don’t know how to start. At Coke, we think the big idea, or the next wave of innovation; will be all about building scaleups."
Scale Up Milwaukee
Daniel Isenberg, professor of Management Practice at Babson Global who publishes articles in the Harvard Business Review, leads the Scale Up Milwaukee startup ecosystem. He reports that "Startup CEO (written by Matt Blumberg, CEO of Return Path), Startup Boards (written by Brad Feld and Mahendra Ramsinghani), and Startup Metrics (written by Brad Feld and Seth Levine) each are a lot more about ‘scaling up’ than ‘starting up’."
Joe Haslam
Joe Haslam, Associate Professor at IE Business School and executive director of Owners & Entrepreneurs Management Program gave a class titled "Scaleup is the New Startup" in March 2014.
Verne Harnish
Verne Harnish is founder of ScaleUpU with Brad Feld and Sheri Coutu as advisors; author of Scaling Up (Rockefeller Habits 2.0); and founder of the Entrepreneurs' Organization.
ScaleIT
ScaleIT is a platform-event connecting international VC funds and scaleups from Italy and South-Eastern Europe: every year a team of analysts, advisors and investors analyze over 600 companies in order to identify the 15 most backable scaleups. Lorenzo Franchini, founder of ScaleIT, angel investor and entrepreneur, identified few key metrics in order to give a more precise definition of scaleup: 1 million euros in turnover in the past 12 months or 1 million users per month (for online B2Cs); at least 20% of turnover from foreign clients; at least +10% growth month on month and +100% year on year.
Matching Services
Seeing the need for scaleups to grow through partnerships and more interest from corporations to partner with viable scaleups, various businesses have taken shape in the scaleup movement offering matching services between established companies and corporations and scaleups. This is one of the major services in a scaleup startup ecosystem. A few examples:
The Petition
On Sept 4, 2014, Daniel Isenberg and Linda Rottenberg submitted a petition titled The Global Scale Up Declaration to Change.org to further highlight the scaleup movement, scaleups and the virtues of focusing on growth.
The petition notes the support of Fadi Ghandour, Gregoire Sentilhes, Fernando Fabre, Sherry Coutu, and Alberto Onetti of SEP.
History
Startups have been previously ambiguously described as having a business partnering phase. The scaleup movement labels these as a specific category of businesses whose main challenge is growth, as affected by various factors including policy; consequently the next milestone for companies that were previously startups. The growth of scaleups in the sharing economy industry has been affected by policy.
Startups remain the foundation of Scaleups and the scaleup movement. According to Brad Feld: "I view the concept of startup and scaleup as linked. You have to have a vibrant "startup community" to get to the point where you have enough interesting companies to "scale up."