15 Aug Starting up versus Scaling: Key differentiators
For a layman, the term “startup” is often visualized as growing companies. But when you are a constantly interacting species in the Startup ecosystem you should be knowing better than that.
There are various steps and stages that a Startup has to go through before confidently pronounce it as a company. These stages, although ordinarily, named and classified based on the funding a Startup receives, have more factors for the demarcation than just the money (dollar bills, if you may :D)
In the beginning phases of a startup, you’re despite everything settling on making sure about financing, building MVP, and cutting out a niche in your industry. These startups characteristically convey more risk since they’re uncertain in the market and still need time to develop.
Growth stage startups, then again, have demonstrated their product in the market and have made sure about financing. They’re developing and attempting to scale however are experiencing a few hindrances to that development. The attention here isn’t on innovation yet developing what’s as of now working for the business.
Early-stage startups are prepared to tolerate more risk as they work with lesser team size and minimum funding so regardless of whether they bomb or succeed, is anything but a major fiasco.
It’s an alternate story for Growth stage startups. The primary concern matters significantly more once you have a bigger team and prominent investors as stakeholders. At this stage, a startup has a lower capacity to bear risk thus; it has more to lose.
In this respect, the risk-taking capacity of Early-stage businesses is more as contrasted with Growth stage businesses.
The struggle for a Product-market fit
Early-stage companies are always seeking their position in the market, playing with their client base and attempting to sharpen their selling strategy while Growth stage companies have already proven their product(Market validation) on the market they are seeking to increase their market size either by increasing the team or by entering an unexplored sector.
Here we will point out that while early-stage startups are looking at their MVP, growth-stage entrepreneurs are more focused on increasing their marketing capacity.
From One-man army to Teamwork
For early startups, the entrepreneurs seek to do as much as they can by themselves so that they have to stop multitasking so that they can save their money and other resources. Growth-stage businesses are now in a place where they can afford to recruit team members with advanced skills.
Typically, at an early stage, startups need staff who are multi-tasking compared to the growth stage who hire specialists because they have ample resources to assist them.
Creating with minimal resources
At early stages, startups work with marginal resources – team size is low, zero funding, or a Seed Round, loose systems approach which is beneficial in bringing in more ideas to experiment with, finally creating a worthwhile process easy to replicate.
At the growth stage, the company have to hire more employees with clearly defined roles and responsibilities and with ever-expanding management and leadership positions. It is backed with Series A or successive rounds of funding and organized systems and processes, imperative for quality control and maintenance.
Starting up v/s scaling
Early-stage start-ups have fewer challenging tasks to perform. But that doesn’t mean it’s easy; this process of starting a company needs you to become a master of all the techniques, sometimes working long hours to establish a business.
Growth-stage businesses are not going through such strenuous time, they have more difficult problems to tackle. Payroll, investor ROI, and customer expectations mean that the pioneers of the growth stage are under pressure to create a consistently profitable company.
The difficulty is more at the growth stage of development relative to the early stage due to the broader growth period of the operational areas.
Insightful? Watch this space for more such takeaways ↑→ https://cie.iiit.ac.in/startup-jukebox/
Until next time!
– Sunita Kumari, Team CIE