From Startup to Scaleup?
Scaling up a tech company doesn’t start when you’re 50 people, it starts from the very beginning. You need to lay a good foundation by having a strong product/market fit, sufficient financing and great leadership. This website is a resource for tech entrepreneurs seeking to transition from startup to scaleup, those whose objectives are to create world class companies.
Good research is the foundation of evidence-based management. And if you aren’t basing decisions on evidence then what are you basing them on? The research you’ll discover here has been conducted in order to figure out how entrepreneurs can increase their chances of building a scaleable business.
Scaleup OS is the startup of an idea. It’s the idea that we have only begun to explore our opportunity for building a vibrant innovation economy. We have done an excellent job building a burgeoning startup community. Our challenge is to figure out how to help those companies transition successfully from startup to scaleup and eventually to world class size.
The Formula for Scaling to World Class
There is a financial formula for scaling to become a world class company and these are the rough parameters of that formula. A company must plan to grow at least 60% a year for 10 to 15 tears to become world class. In order to do that, the company will need to raise about $1.5 of capital for every $1 of revenue and allocate almost twice as much spending on marketing and sales as they do on research and development.
Minimum Annual Growth Rate
Ratio of Capital to Revenue
- Marketing and sales 45%
- Research and development 30%
- General and admin 25%
Allocation of Expenditures
Recent Research – Physical Technologies
In a prior report on patenting we identified that Canada has a significant problem in that it frequently doesn’t commercialize its own inventions. In this report, we wanted to look at whether part of that problem might be due to a lack of government support particularly in the area of Physical Technologies.
Physical Technologies are distinct from other types of technology because of their long and complex commercialization path. And yet there are no government programs that support the early-stage physical technology commercialization without requiring some external matching of funding.
However without market validation, which you can’t get in Physical Technologies without a significant investment to prove out the value proposition, venture capitalists and other investors will not provide that external funding. Without their support, no matching funds are available so it is often easier just to license the technology to a third party who can afford the investment.
Triggers and Barriers to Innovation
Making sure there is a market for your product or service is the first step in developing a world class company. One of the things that creates a challenge for entrepreneurs is thinking that there is a market for something that they have developed when there really isn’t. This frequently leaves them with a product in search of a market. In 2018 we will be releasing a book that sets out to explore this subject. In the meantime, take a look at the content we have on this site. In it we are looking at the forces that act on buyers; the triggers to innovation, as well as the barriers and forces of competitive differentiation.