Startups are the probably most headlined businesses when it comes to investment, venture capitals and seed funding within the tech ecosystem. Why there’s so much noise about them is not strange –startups are full of promises both for the market they provide solutions for and investors who want to be part of every “next big thing”.
However, not every business (tech-inclined or not) is a startup although they might be called that. What qualifies as a startup? What makes a business a scaleup?
In this article, I’ll share with you the clear cut differences between startups and scaleups. Stay with me!
Five key differences between startups and scaleups
1. The definition
It all begins with the words and what they represent. Here’s the most encompassing definition for a startup I’ve come across: A startup is a relatively new company which is just a few years old or less, startups are characterized by having big plans for growth, and usually have no geographic restrictions, they are open to spreading across countries if they are able to.
In other words, startups are new guys in business with some unfledged (most times not) products that they experiment with to see how it aligns with their target market.
Scaleups, on the other hand, are established businesses with recognized products and an optimized-for-profits business model.
Scaleups are done experimenting –they’ve found out what works from being in the open for some years.
2. Profit Making & Product Marketability
This is perhaps the most obvious difference between startups and scaleups.
While startups are still doing some dirty work trying to figure out how to go about customer acquisition and segmentation, and looking to see what product features should be updated or retained, scaleups are at the point where they know (or can predict with high accuracy) how much they’ll make if they invest so-so dollars.
Best put: startups start out with assumptions and tests to adopt a long-term business model. Scaleups have adopted a good business model.
3. Disbanding Team Member Roles
Startups typically begin with a small team of multitaskers who handle so many roles. The team is comprised of the pioneers of the solution, and they do the tedious jobs of building, marketing and research.
However, when a business grows into a scaleup, the specialists become pertinent. They (scaleups) employ many people who are able to play just one role –support staff, designers, project managers, managerial personnel, developers, human resources, and engineers.
4. Risk Management
Startups are more susceptible to risks owing to the fact that they usually have a small customer base and a sloppy business model on top of that. Experimenting results in a lot of fallbacks that might crash the startup or set back the growth pace.
When it comes to averting risks, scaleups have it under control pretty much. In their years of experimenting, they’ve developed fail-safes and have recognized regressive actions.
As expected of a relatively new and small business, the organization is really on the low side. This is strongly tied to the fact that the startup is still experimenting.
Therefore, tasks can take different forms and can be done in a number of ways until the best methods are established.
Scaleups embody proper organization to maintain a standard of best practices, for quality control and timely completion of projects.
There’s no middle ground between startups and scaleups. Generally, startups grow into scaleups or they die out along the way.
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