Is your business a scale-up? How to tell the difference from a startup

A common question we get asked at Bloom is: what's a startup, what's a scale-up, and how to tell the difference?!

As the leading marketing agency for UK startups, one of the challenges we regularly face is this:

Everyone has their own definition of what a startup is.

The range in startup definition covers anything from the LinkedIn Top 100 Startups which often lists the likes of Monzo and Revolut (huh?) to solopreneurs making candles on their kitchen table. There is zero judgment here, but - at that end of the scale - the tech connotations of the startup term which originated from Silicon Valley is lost on these Etsy-style, side-hustle founders.

A startup is correctly identified by the following characteristics:

• The business has a technology component. (Ideally one that's innovative and interwoven to the core product offering - as opposed to having a Shopify site and calling yourself a tech business... )

• The business is small and in its early stages - typically under three years, at most. (A startup does NOT have 8,000 staff across 6 offices a la LinkedIn fintech examples often cited!)

• In terms of funding, a startup can be bootstrapped/self-funded, have received government hep in the form of a grant, or have external investment from a venture capital fund or angel investors, typically labelled as "pre-seed" or "seed" rounds. The actual amount varies from business to business, from sector to sector - however Bloom has witnessed startups begin life with <£50k self-investment, up to £1.5M in external funding.

So, at which stage exactly does a business hit "scale-up" status?

Scale-up is the natural next stage of growth for startup businesses - and can be the most exciting one!

A scale-up is a business that's emerging from the scrappy startup nature of its first chapter of life. A scale-up is typically 3-5 years' old, with a growing team, multiple rounds of funding under its belt (Series A or similar).

In fact, the OECD (Organisation for Economic Co-operation and Development) defines a high-growth company as one that has achieved growth of 20% or more in either employment or turnover year on year for at least two years, and have a minimum employee count of 10 at the start of the observation period.

Once a startup graduates to its scale-up phase, the experimentation period has been scaled back and the company has worked out what works for them and - crucially - what's profitable. The high growth trajectory and reduced risk from surviving market tests make them sought after from investor, and employees looking to join the next big thing.

The other important differences between a startup and a scale-up is the difference in the inner workings of the company. Whereas a startup will tend to have a spread of staff that can perform various roles and wear different hats in the workplace, scale-ups tend to have a more focused workforce with concentrated specialisms, afforded by a bigger headcount. Scale-ups also tend to have a more formal hiring and onboarding process, whereas startups are more likely to have a ‘hit the ground running’ culture for their new starters.

Scale-ups will be thinking about embedding more robust processes such as: a clearly articulated vision and mission statement, people processes such as progression frameworks and cultivating a long-lasting positive company culture.

Also according to TechNation, a scale-up is ready to use their proven success to scale and grow their company significantly. The scale-up phase is typically the quickest and most significant stage of growth, and one that can bring the most challenges.

That's why it's so important for scale-ups to have the right level of support during this important growth phase.

Bloom is an award-winning marketing agency for scale-ups. Working closely with the scale-up's C-Suite and key stakeholders, we align ever-growing teams and lay the foundations for powerful marketing through our strategy services. Work with us on a project basis, either to conduct a marketing health check of your business or hold a 6-week strategy sprint, or lean on us to take your startup to the next level with our Virtual CMO package or monthly consulting.

Read more about the differences between a startup and a scale-up over on our most popular blog post, here.

If you're looking to scale up your challenger brand, speak to the UK's favourite agency for tech businesses. Simply book a no-obligation 30-minute chat, or send us an enquiry.