The start-up and scale-up phases correspond to distinct stages of a company’s growth.

Product-market fit is what really makes the difference between a digital start-up and digital scale-up. Scale-ups have perfected its products and/or services through trial and testing. They studied customer segmentation, the product features and the customer acquisition cost, and have validated the company economical sustainability.

Start-ups and scale-ups funding patterns are also distinct. Typically, start-ups often lack funding or have investors backing them. By the time a start-up begins its second round of investment, it often falls into the scale-up category. A company can be called a scale-up when provides prospective investors, a reliable and trustworthy team, and a great market opportunity.

Source:  https://unsplash.com/photos/sOK9NjLArCw

During the early stages of a company growth, it is not uncommon for team members to take on multiple roles. But established companies hire people with specific skills, to perform a specific role. As a digital start-up turns into a digital scale-up, the scope of team members roles narrows. That is, several tasks or business areas that were responsibility of an individual, might turn into separate departments staffed with experts hired for that purpose.

Another key difference is the aversion to risk. During its early days, a digital company success depends upon its ability to quickly integrate and respond to incoming feedback, data, and ideas. On the other hand, it is expected that scale-ups rapidly increase their results, in accordance with investors and team members expectations. The more money you make, the more careful you must be when it comes to experimenting new ideas.

By nature, digital start-ups often have very loose procedures and management systems in place. The way an app is updated, how an email is drafted, or the way a client email is answered may vary. Often team members are given freedom to experiment various roles and processes, to figure out what suits them best. It is essential to document effective processes and easily replicate them, however. In the transition from digital start-up into a digital scale-up, it is mandatory to have processes and systems organised to ensure quality control and comply with deadlines.

The leadership style of an early-stage company is entirely different from a late-stage company. To put it simply, as more individuals are hired, it becomes increasingly challenging to manage human resources. On the other hand, there is a considerable possibility to make mistakes as departments grow in number and more processes are being developed in each project. Failure in managing these challenges might result in a hight rate of employee turnover, in low team morale and decreased productivity.

Source: https://unsplash.com/photos/5x4U6InVXpc

That is why scale-ups usually hire new leaders with corporate management experience. A good management team, responsible for overseeing metrics, quotas, and processes is key to scaling the company to greater heights.

Doing the transition

The list below summarises some of the key-differences between start-uppers and scale-uppers:

How do you know when the start-up is becoming a scale-up?

A recent research pointed the 10 milestone moments that define when a start-up is becoming a scale-up:

1. moving to bigger office or shop,
2. experiencing a rapid increased of clients,
3. launching a new website,
4. developing social media presence,
5. investing in customer experience and not just in products,
6. starting to trade internationally,
7. implementing a more reliable payment system as transaction volume increases,
8. working with a finance expert to look after the business accounts,
9. hiring an HR (Human Resource) consultant to recruit and retain talent,
10. refreshing the look and feel of the brand, for example by introducing a new logo.

Source: https://pixabay.com/vectors/insert-milestone-add-project-27081