From startup to scaleup, the formula for success: top tips from successful entrepreneurs
They appeal to both clients and investors, theyâre adaptable and they have global ambitions. These traits are shared by thriving emerging companies known as scaleups. For World Entrepreneursâ Day, the founders of four exceptional scaleups share some of the pitfalls theyâve encountered along the way and explain how fast-growing companies can avoid them. Entrepreneurs – take note!
In 2009, Ukrainian-born engineer Jan Koum bought an iPhone and discovered the opportunities that apps have to offer. He decided to develop an app that could sync with any phone number, and ended up creating the quintessential instant messaging service thatâs now on all our smartphones. As illustrated by the case of WhatsApp, coming up with a novel idea that will benefit its users is an indispensable ingredient for any successful startup. Yet it is only the first rung of the ladder. To be considered a scaleup – a company with a proven track record of growth – and to continue to climb the ladder of success, thereâs work to be done every step of the way.
Strictly speaking, scaleups are defined as emerging companies that have obtained funding of at least $1 million, and have grown over a three-year period at an annual rate of over 20% in terms of the number of employees or their turnover. In Spain, an increasing number of startups are reaching this level of maturity. According to Dealroom, there are more than 300 scaleups. Also, the South Summit’s Entrepreneurship Map shows that the average age of emerging companies has increased from 2.5 years in 2020 to 2.7 years in 2021. Entrepreneurship ecosystems have also been strengthened in a number of Latin American countries, as illustrated by a CMD Innovation Lab report that classes Mexico, Brazil, Argentina, Chile and Colombia as well-developed innovation ecosystems.
How do entrepreneurs manage to secure increasingly large rounds of funding? What do the companies that make the leap from startup to scaleup have in common? And how do they get sizeable teams to work cohesively?
To mark the occasion of World Entrepreneursâ Day, which is celebrated on 16th April, we put these questions to the co-founders of four software startups with a proven track record – the Spanish company Trucksters, creators of a smart freight transport relay system that partners with BBVA following a successful BBVA Open Innovation pilot; Genially, an online tool for creating interactive designs; RatedPower, a company that optimises the design of large-scale solar PV plants; and Clara, a Latin American firm thatâs helping other companies manage their corporate expenses.
Scaleup growth drivers
The characteristics of an industry, breakthroughs from competitors, and even political and economic context can have an influence on a projectâs success. Nevertheless, we have identified specific drivers that, among other factors, spurred growth in each of the four emerging companies we interviewed.
- A team of co-founders. Although having a team of co-founders is not necessarily a requirement for success, getting several professionals involved in setting up a new company can make it more robust, say Geniallyâs co-founders John Rubio, ecologist and CEO, Luis GarcĂa, advertising expert and CMO, and Chema Roldan, computer engineer and CTO. “Having different backgrounds and personalities helps to strike a balance – Chema is more business minded, Luis is more creative and I am more analytical,” says Rubio. GarcĂa adds: “three is the perfect number. More than that can be tricky because there are too many voices, and fewer is too risky.” The three founders of Trucksters, who are on Forbes Spainâs 30 Under 30 List, also complement one another. Gabor Balog, one of the founders, believes that being part of a team has helped them “to support each other during hard times,” recognising that “people are not machines and our performance isnât always consistent – there are peaks and troughs.”
- Empathy with users. Putting yourself in your clientsâ shoes is key to success. Andrea Barber, co-founder and CEO of RatedPower, explains: “Our software stemmed from our experience in the renewable energy engineering sector, so we knew what clients needed.” Furthermore, following the launch of their MVP (minimum viable product) they interviewed potential stakeholders with a view to improving their product. At the same time, strategies are used to capture the customer first and build loyalty later. Genially launched their platform with a freemium model (a free version with paid features) to “create value before monetisation.” After winning over the end consumer (B2C), they are now are targeting businesses (B2B2C).
- Winning over investors. According to Truckstersâ co-founder, investors need to be won over by âthe resolution to bring about change in an industryâ – for example, by making logistics more efficient and improving driversâ quality of life – and âconvinced by the metricsâ – for instance, Trucksters had a turnover of âŹ5 million in 2021, which they expect to increase sixfold this year, having recently raised âŹ8 million. Genially adds that itâs important to be honest with investors, and not oversell an idea.
- An international outlook. The fintech Clara raised more than $100 million, and just eight months after its launch became a unicorn (an unlisted company valued at more than $1 billion). Claraâs CEO Gerry GiacomĂĄn believes that one of the key factors about its business traction is its “Latin American corporate identity” and resulting aim to help companies “be more competitive” in Mexico, Brazil, Colombia and other countries in the region. Genially, RatedPower and Trucksters also offer products and services beyond their respective local markets.
Image (from left to right): Luis BardajĂ Izard, Gabor Balogh and RamĂłn Castro Neira, co-founders of Trucksters.Â
Surf the wave of growth
The four startups all have between 70 and 300 employees. Although their founders agree that talent is essential for growth, they acknowledge that it is not easy to maintain a cohesive corporate culture when a large number of professionals come on board within a short space of time. To manage the growth of their teams, they recommend the following:
- Be clear about candidate profiles. “Itâs essential that candidatesâ values are aligned with ours. We want them to be motivated to create impact and accelerate the energy transition, and to believe in diversity as a competitive advantage,” summarises Barber from RatedPower.
- Create a positive environment to retain talent. “Having people of different nationalities is a challenge, but we must understand that each culture is different, and one of our values is inclusivity,” says GiacomĂĄn, co-founder of Clara, who also highlights the importance of “taking care of employeesâ well-being and their environment, which actually boosts productivity too.”
- Evaluate performance. Balogh at Trucksters advises that you should “be on guard and deal swiftly with people who arenât working out, because they can hurt high-performing teams.”
In addition to managing team growth, Balogh says that another common stumbling block is “falling in love with what youâre selling, rather than making the market fall in love with it.” The ability to pivot has allowed Trucksters to get it right. They initially planned to offer their technology to logistics companies, but following several adjustments to their model they now offer their own transport services to large companies. GiacomĂĄn explains that “the advice to never give up can be both good and bad. You have to do your best, but you should also be willing to change course.”
In essence, in order to grow you must recognise that change is necessary. “It’s like a video game where on each new screen you face tougher challenges,” says GeniallyÂŽs CEO. The entrepreneurship ladder is high and entrepreneurs will encounter hurdles at each rung, but with hard work, enthusiasm, and a solid team of skilled professionals, itâs possible to keep climbing. The entrepreneurs featured in this article are prime examples of this.
