Explosive increase for start-ups that develop into €multi-million scale-ups

There is a substantial increase in the number of start-ups that develop into rapidly-expanding €multi-million businesses, also known as ‘scale-ups’. In addition, achieving growth is becoming increasingly urgent for existing businesses. Meanwhile existing businesses fall behind and less often grow into a scale-up. This has emerged from the ScaleUp Dashboard 2017 produced by Rotterdam School of Management, Erasmus University (RSM) and the Erasmus Centre for Entrepreneurship (ECE).

The ScaleUp Dashboard is an annual research report about rapidly expanding businesses in the Netherlands led by Justin Jansen, Professor of Corporate Entrepreneurship at RSM and academic director at ECE, a research institute focusing on factors that make companies grow fast and identifying economic opportunities for regions and industries. A rapidly expanding business or scale-up is a company with at least 10 employees that achieves an annual growth of at least 20 per cent over a period of three years. The most significant results in the ScaleUp Dashboard 2017 are as follows:

  • The number of scale-ups in the Netherlands has increased to 3,237, an increase of 5.4 per cent over last year.
  • Scale-ups have created 39,000 jobs in the Netherlands over the past three years.
  • There is an explosive increase in the number of start-ups able to develop into scale-ups. Only 98 start-ups developed into scale-ups in 2014, but this number more than tripled to 331 in 2016: an increase of about 220 per cent. Today, one in ten scale-ups in the Netherlands originates from a start-up.
  • An increasing number of companies in the Netherlands show hardly any growth, or none at all. Moreover, almost 33 per cent of Dutch companies are actually shrinking.

“Our research shows that the number of scale-ups has increased further during the past year. There are currently 3,237 scale-ups operating in the Netherlands, which is an increase of more than 5 per cent compared to the preceding year,” says Professor Jansen. “One remarkable fact that has emerged is the explosive increase in the number of start-ups that have developed into scale-ups. Today, one in every ten scale-ups in the Netherlands originates from a start-up, and this number has increased substantially over the last few years. So it would seem that there has been a turnaround and rapid growth is an increasingly frequent phenomenon among relatively new, smaller scale-ups that use the latest technology and revenue models to inhibit growth at existing companies.”

The number of scale-ups in the Netherlands has further increased during the past year

“The fact that there’s a further increase in the number of scale-ups in the Netherlands is excellent news, particularly in view of the fact that the economy has improved,” says Professor Jansen. Scale-ups are eminently capable of adapting to a changing environment and they provide the Dutch economy with the vitality it needs. Every scale-up company in the Netherlands has been recorded in the ScaleUp Dashboard 2017. These are companies that achieved an average sales growth of 108 per cent between 2013 and 2016, while employment opportunities at these companies showed a 109 per cent increase. The average number of full-time employees at a scale-up has increased to 23 over the past three years.

Explosive increase in the number of startups that develop into multimillion scale-ups

The ScaleUp Dashboard 2017 shows that the number of start-ups that have developed into scale-ups during the past three years has increased by about 220 per cent. Only 98 scale-ups had been operating for less than five years in 2014, but this number increased to 331 during the past year showing many start-ups are achieving rapid growth: one in ten scale-ups originates from a start-up established less than five years ago.

“This explosive growth emphasises the importance of start-ups and relevant policy for developing a sound and favourable start-up ecosystem for the Dutch economy, and there are regular discussions about the effectiveness of all the attention and investments for encouraging start-ups. Our figures emphasise the importance of this and the need to develop intelligent policy which not only encourages people to start a company, but also supports start-ups in achieving their growth targets,” Professor Jansen explains.

Tech, health and ICT

Remarkably, most start-ups that succeed in developing into scale-ups are in technical advisory, healthcare, and information and communications technology sectors. Start-ups using the latest technology maintain a scalable revenue model and that are selective when entering new markets experience a faster rate of developing into scale-ups. “These start-ups carefully consider using the latest technology to resolve clients’ problems before launching their propositions on the market. They also often have a fast but structured approach to developing products or services, and they experiment with prototypes and new variations of existing products and services relatively early in the process. In other words, they don’t rush into making decisions; they adopt a practice-oriented approach,” says Professor Jansen.

Despite more scale-ups, almost 85 per cent of Dutch companies show little or no growth. Action is urgently needed.

The growing number of scale-ups in the Netherlands contrasts with an equally rapidly expanding set of companies achieving little or no growth. Almost 33 per cent of Dutch companies have shrunk in the last few years. Existing companies are often unaware of opportunities for using the latest technology or adjusting their existing revenue models. Moreover, they are often overtaken by new and relatively fast-growing companies that use disruptive innovations to enter the market and jeopardise their existence, making them lose ground.

Stable and shrinking companies already make up almost 85 per cent of Dutch SMEs, a percentage that has increased in the last few years, leaving the Dutch economy’s continued growth dependent on a relatively small group of companies that can adapt to the changing environment. Action is urgently needed, says Jansen. “In addition to more general policy and measures to stimulate and support growth at start-ups and scale-ups, the tools and techniques to help existing companies identify and implement new opportunities for growth need more attention. There are too many companies with enough ambition to grow, but unable to convert this ambition into growth opportunities because of obstacles in leadership, funding or introduction of innovations into their products and services.

The full report can be downloaded here. Read more about this research:

More information

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Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s top 10 business schools. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who can become a force for positive change by carrying their innovative mindset into a sustainable future. Our first-class range of bachelor, master, MBA, PhD and executive programmes encourage them to become critical, creative, caring and collaborative thinkers and doers. Study information and activities for future students, executives and alumni are also organised from the RSM office in Chengdu, China.

Erasmus Centre for Entrepreneurship (ECE) is the leading centre for entrepreneurship in Europe. Fueled by a belief that entrepreneurship is the primary driver for innovation, it strives to embed entrepreneurship in the DNA of people. We don’t create companies, we create entrepreneurs through the knowledge and network of the Erasmus University Rotterdam, a university founded by entrepreneurs more than 100 years ago.

With four full professors and 30+ academic trainers and researchers on entrepreneurship, it offers actionable executive training and development on entrepreneurship to corporates and well as to starting entrepreneurs that take place at the ECE Campus, a learning environment with 10,000 m2 in the Rotterdam Science Tower and the home base for our community consisting of 100+ innovative companies. We have a clear picture of the successful start and growth factors of companies; we monitor and study fast growing companies and present the results in the ScaleUp Dashboard. ECE is an initiative of Rotterdam School of Management, Erasmus University (RSM) and Erasmus School of Economics (ESE).

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