Why Scotland must address the key scale-up challenges

Within Scotland, we have over 2,000 scale-up businesses, yet only 85 companies generate revenues greater than £50 million. The latest “Scaling Scotland” report by Shane Corstorphine and The Scottish Scale up Panel, published last year, suggests that closing this growth gap could actually create over 138,000 high-value jobs and unlock an additional £22 billion in annual revenues.

We know we are good at creating start-ups in Scotland but the real question is whether we can consistently help the companies to grow into competitive businesses that can compete within a global market.

Having spent more than 20 years working with technology companies, including leadership roles in start-ups and latterly supporting founders, investors and universities, I have seen first-hand that scaling a business for significant growth requires a very different mindset and skillset from starting one.

Too much of our business support ecosystem is focused on helping companies start rather than focusing on helping them to scale.

Scaling, however, is not about growing quickly. Sustainable and achievable growth requires patience as well as ambition for the future. Within many technology businesses, particularly university spinouts, the greatest risk is scaling too quickly without an experienced growth team, before customer validation and commercial readiness.

The first challenge is leadership. The skills required to launch a company are not always the same skills that are required to scale the business. Founders are often technical experts and visionaries. As a company grows, leadership becomes increasingly about building high performing teams, developing culture, creating accountability and making key strategic decisions that support achievable and sustainable growth.

One of the most important decisions founders can make is recognising when they need additional expertise to join their team. Senior hires, experienced non-exec directors and additional board members can bring with them valuable insight as well as the ability to challenge assumptions and help navigate through the unavoidable growing pains that come with a successful business.

The second challenge is investment. There is often a perception that raising investment is the ultimate measure of success, but it isn’t. Investment is a tool that enables growth. It is not a point that founders can sit back and relax. If founders raise too early, they can dilute their ownership unnecessarily. If they raise too late, they miss the window. The most successful companies understand why they are raising capital and what milestones and value inflection points it will achieve for necessary growth. Investors are investing in commercial execution, leadership teams and the ability of that team to convert innovation into a return on their investment. They rarely invest in just technology.

The third challenge is talent in the company. Teams should evolve as the business grows and bringing in the right people at the right time is key. One of the most common mistakes I see is businesses hiring too early or waiting too long to hire critical skills. Every new hire should address a clear business need and contribute to a balanced team which has the right mix of technical, operational and commercial expertise.

Lastly, mindset is super important. Scottish companies must think globally from the outset. Scotland is an incredible place to innovate and validate new technologies but without accessing international markets, they will never reach their full potential. Companies that build global ambition into their strategy early on are often in a better position to attract talent, partnerships and investment.

Scotland is great at creating innovative businesses, the next stage of our economic success is about helping more of the companies to navigate the difficult journey from start-up to scale-up.

By combining our world-class innovation with experienced leadership, smart capital and international ambition, we can create more companies that grow and stay in Scotland.

For me, that’s where the real economic impact lies – putting home-grown companies on the global map.

Dr Yvonne Davies, Founder, Focused Frog Ltd and Board Member of Senior Women in Science