The Scaleup Report
Why Understanding Scaleups Matters
No matter their size or geographic location, entrepreneurship ecosystems and governments are increasingly focused on identifying and supporting scaleups — young companies that have proven their success, raised finance, and are in a growth phase that can deliver significant economic growth, technological development, and job creation.
The value of scaleups is well evidenced: In the U.K. 34,000 scaleups employ over 3 million people and account for more than 50% of the turnover of all SMEs, and while scaleups represent just 14% of companies in South East Asia, they are responsible for 77% of net new jobs in the region. Despite varying definitions, anecdotal evidence from GEN partners increasingly shows a similar story in most economies. However, while the scaleup growth phase provides the most significant opportunity for outsized impact, it brings with it significant challenges, particularly centered around finance, talent, and markets.
GEN is proud to partner with Startup Genome on groundbreaking new research in The Scaleup Report. This research goes a long way towards identifying the critical success factors that set apart successful scaleups from other young firms. The findings and underlying evidence set out in this report — which are drawn from over a decade of research — provide actionable insights for entrepreneurs, enterprise support organizations and policymakers, all of whom are seeking to increase the proportion of startups that go on to scale.
The report also makes an important case for a new way to identify and define scaleups. This comes as a result of an increasing belief that the existing widely adopted definition of a scaleup is imperfect. Economists looking at historical data on SMEs use annualized growth of turnover or staff greater than 20% per year for three years as a measure. However, for policymakers and investors looking for timely insights on the growth potential of young technology-driven firms, this is less helpful. Relying on three years of data means that scaleups can only be identified in their fourth year of operation — a timescale that is at odds with the shortening growth journey of startups. And by measuring the growth of turnover or headcount, this definition relies on access to company financial data that, in many countries, is not publicly available, limiting the ability to identify and verify scaleups.
To equip policymakers, investors, and support organizations with a timely, independently verifiable way of identifying scaleups, we must change the definition, and agree upon one as a global community. Reaching consensus on definitions is not easy, but we hope that this report can start a broader conversation on how best to identify scaleups. We look forward to working with Startup Genome, our various knowledge partners, and GEN operation leaders around the world to test and refine this definition within ecosystems and communities.
Endeavor. (2014). “The Impact of Entrepreneurs at Scaleup Companies in Southeast Asia.”
The Scaleup Institute. (2022). “The Scaleup Annual Review 2022.”