Why do few startups scale?
Most attempts to answer this question focus on the supply of talent, markets, finance or other environmental factors. This report offers a different perspective by looking at entrepreneurs' demand for growth and finance, a less explored driver of scaling. Conversations with 64 startup and scaleup founders offers a peek into their minds. By combining rich data on entrepreneurs’ motivations, perceptions and mindsets, with an extensive review of European data sources, NESTA offers novel insights to help entrepreneurs beat the scaling odds.
- The path to scaling puts large cognitive demands on entrepreneurs. These can pose substantial hurdles for many: we estimate that only around two per cent of entrepreneurs are likely to overcome the demand-side hurdles to seeking finance for growth.
- The key hurdles include a lack of a growth mindset, little awareness of finance options and a lack of time and confidence to speak to investors and raise capital.
- Growth-oriented entrepreneurs share four mindset features: Typically, these entrepreneurs want to innovate, create a positive impact on society, become a dominant player in their field and create value.
- Growth is an individual process, often spurred by personal triggers. This realisation has important implications for when and where to best target support.
The report explains why few startups scale, by exploring entrepreneurs’ views on growth and finance and recommends three areas for policy intervention to help entrepreneurs beat the scaling odds. You can access the report here.