The difference between a scale-up and start-up business

There are various characteristics that distinguish scale-ups from start-up businesses. According to Katka Letzing, co-founder and CEO of Kickstart Innovation, “Scaleups can have a lot of meanings. To us, it is companies that are in the growth stage, usually with funding of late-seed, Series A/B. Start-ups are usually very small and try to validate their idea or technologies. Scaleups do have traction already and usually customers and revenues.”

However, in addition to being at different stages of growth and funding, there are other differences between the two, including:

  • Risk mitigation:although this is not always the case, start-ups might be more prone to exploring new methods and taking risks to work out what works best for them. However, scale-ups tend to be able better mitigate risks and have found a business model that works for them.
  • Confidence surrounding return on investment (ROI):as scale-ups tend to have reduced the amount of experimentation and found a profitable model to work from, this makes scale-ups much more attractive to potential investors.
  • Staff: typically, start-ups will have a limited number of employees, with many of them carrying out several roles. Scale-ups, on the other hand, will have more members of staff and their employees will work in more specialised positions. The hiring process for scale-ups is also likely to be more formal.

Due to their differences, scale-ups and start-ups also tend to face different challenges when attempting to grow in size.

Source: Business Leader News

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