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Scale-ups: Signpost for the wild growth phase

The path from the start-up to the digital SME is demanding. Frankfurt scientists now want to have some identified pointers for ambitious founders.

In a recent study, scientists have tried to understand the success factors for successful corporate development. For this purpose, a whole series of academic theories summarized, and the underlying interviews evaluated.

Behind the study “Scale-ups in Europe: An untapped potential” are; the Goethe University Frankfurt and the innovation platform Tec quartier. The foundation of the Chinese Internet entrepreneur, Yi Shi supported the project.

Authenticity, error culture, communication

As a scale-up, the authors define young companies that already have more than ten employees. They then increase in employee numbers or sales by more than 20 percent for at least three consecutive years. These indicators can serve as evidence that a start-up is positioning itself on the market with its product and brand. As a successful example, the authors cite the digital currency trading platform 360T, founded in 2000 in Frankfurt. After an intensive growth phase in 2015, which was acquired by Deutsche Börse for more than 700 million euros.

After evaluating the interviews, the scientists came up with a whole series of clues that could help founders on their way to a larger company.

Clues that could help founders:

Authenticity

According to the study, a “basic ingredient” when it comes to building successful companies. The start-up team sincerely embodies the values of the start up and the promise of the product. It has a decisive influence on sales success, as well as employee loyalty.

Mistaken culture

In fast-growing companies, many founders are being faced with the challenge of what form new hierarchical levels need be confiscated. A first rush is often translated into clearer processes. The study advises that if employees are being allowed to try things, this helps more than a strict hierarchy.

Communication

Despite the growing number of employees, the surveyed founders recommend a close exchange in the team. Transparent information about the well-being and woe of the start-up and regular feedback rounds in every direction. The founders need to be present instead of hiding in a boss’s office.

Founders can pay attention to these points. On some other construction sites they are more helpless. Many of the surveyed entrepreneurs complain that in Europe crucial financing is missing in order to enable the first phase of strong growth. In comparison to the US, smaller tickets flow here even though a lot has happened in Germany in recent years.

Frankfurt works at the Fintech capital

The local actors will also look curiously at the results. The region around Frankfurt wants to be the home of fast-growing start-ups, above all from the financial sector. In the current study, the authors complement the relevant fields with artificial intelligence and cybersecurity. Supported by state funding, ambitious plans were presented last year.

Currently, the study authors count nearly 400 start-ups in the Rhine-Main area. Roughly more than half of them work on products for business customers (such as banks could be in the financial sector), almost 40 percent are targeted at end consumers, the rest at both target groups. Other surveys have recently shown, however, that other cities are more successful than Frankfurt in promoting Fintechs.


Also published on Medium.

Published inStartups

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