It’s a big deal: the company has raised some money, maybe as much as a million. The company is in a cool building with exposed beams, healthy drinks and a Ping-Pong table. Best of all, the company has released a product. Now, with its twelve employees and a dog, the company is all set. Very nice. But wait. Now what? That’s the question that investors, regions and startups are asking.
The question, “Now What?!”, is being asked because it’s one thing to sponsor or invest in a bunch of entrepreneurs; it’s another to create a company that is sustainable and that can grow. As one prominent venture capitalist told me, “It’s not all that hard to build a five million dollar company with a one million dollar investment. It’s really hard to build a forty million dollar company with that investment.” That focus on building and growing “real” companies will make 2018 the year of the Scale Up.
TAKE NOTE: And that means that new investments will go into companies that investors believe can scale.
Don’t believe me? Do a search. Institutes and programs are being developed to turn the verb “start” into the verb “scale”. Advisors are focusing on turning early stage companies into something that will last. Regions all over the world that invested so heavily in a “startup economy” now have plenty of tiny un-profitable companies. Those same regions are now investing in how to scale up those little companies.
Startups are still growing everywhere like mushrooms and that’s a good thing. But take note of the shift in 2018 from a focus on the startup to a focus on scaling up. A company with scale has real growth potential and real revenues, so much so that it is not worried about running out of money. A company with scale has a plan, has a leader who can execute, has an organization that makes sense and has controls in place. And investors and regional economies want to help make all that happen. It’s like helping a teenager through adolescence in the hopes there will be something good on the other side.
It will be interesting to see how the scale up focus will change the tech ecosystem. Maybe instead of incubators we will start seeing tutoring centers for startups with adult supervision.
Get in, hang on and stay tuned for the scale up economy in 2018.