Why do so many businesses struggle to fulfil their potential and scale-up?

As an industry, lack of funding is not a barrier to getting good ideas mobilized, and there is no shortage of demand for innovative digital businesses. So why do so many of these businesses struggle to fulfil their potential and scale up? Altamira address just this.

In this series, we’ll unpack what we’ve learned, highlight common trends that cause start-ups to stall, and more importantly, what can be done to avoid it or, even better, to prevent it.

We must clarify that we don’t believe every business should scale up – there is no automatic right for a poorly thought through business or wrongly timed idea to succeed. However, according to a report by Deloitte, 0.5% of start-ups become a scaleup. A scale-up is typically a company that achieves $10m in annual revenue by their 5th anniversary, so this means that 99.5% of start-ups do not scale.

At a macro level, we can eliminate funding as the issue because there has never been more venture funding available than now. Recently, Crunchbase reported that venture funding in 2021 broke records across the board, with investment last year up more than 10x what it was a decade earlier. Specifically, they reported that Global venture investment last year totalled $643 billion, compared to $335 billion for 2020—marking 92 percent growth year over year. That’s quite astonishing.

Current and future demand for digital products and services feels like a never-ending river of activity. When the world is beside itself with worry, we are turning to technology more than ever to support our response to some of the world’s most complex global issues. Dealing with the pandemic and its consequences has created a significant demand for digital products and improving our health has prompted an explosion in digital wellbeing services. Disrupted supply chains and changes in buying behavior have resulted in an exponential growth in online kitchens. Removing harmful gasses from the environment relies on new technologies. Wherever we turn, there is a problem that can be helped with digital technology.

As a consequence of this, the ripple effect is that new and exciting start-ups are springing up across the globe at a phenomenal rate. Brave and courageous entrepreneurs use their own resources to form small businesses with big ideas and ambitions. As a result, this creates jobs, innovates, and challenges traditional business models. We hail the start-up and applaud the founders. It’s not for the faint hearted, and there are no guarantees. – just the pure determination and creativity of a handful of courageous people who want to make their ideas a reality.

In 2021 we decided to invest our funds into people and assets who will do all they possibly can to improve the probability of our start-up customer-base and help them become successful scale-ups. There are obvious business reasons for this, our customer’s success is our success. But its more than that. We care. I care. We have the advantage of delivering hundreds of digital products, and along the way we’ve observed common themes that prevent start-up from scaling successfully.

As much as wehail and applaud our founder customers, they don’t know what they don’t know. In the past, when created a partnership, we would follow our customers faithfully. Today, we have people leading them within our sphere of expertise. By asking some reasonably straightforward but challenging questions, we can uncover the probable causes of why businesses may stall their growth and support our client’s to make sure that doesn’t happen.

It’s no secret that founders are not always in possession of the skills needed to bring the structure and organisation required to enable their business to scale. Personal characteristics that are a strength when getting the product funded and launched, can become the weaknesses that prevent scaling or stall growth.

In our experience, one of the most common root causes of a stall is Product Management, or more precisely the absence of. Poor organisational performance and Product Management are directly linked in a digital product business – what we mean by this is the structural and cultural development of your business. Ensure your scaling is anchored in a thorough understanding of what you’re building, how to prioritise and most importantly, how to translate your innovative idea into the heads of a team of engineers who create your solution without dilution of the essence of the product you wish for your customers to experience.

Visibility of what is really happening on the ground with your engineering team. Based in fact and in data, having a dispassionate view of when the functionality will get to your customers and how well its likely to work. Our CTO customers can sometimes find themselves dragged into doing the do. This is a really hard one because you are now in an almost impossible situation. You are part of the solution, using all of your experience and expertise to unblock that priority issue, but you need help. We’ve found that CTO’s who place a combination of data and quality assurance in their uncompromisable priorities are more likely to achieve the milestone commitments they have made to their investors and customers.

At the heart of our customer’s products is a suite of technology. Fundamental technology choices made too early or too late are common challenges that prevent successful scaling. Funding raised as a result of a product that, in reality, is a bunch of MVPs held together with a some smart work by a couple of ninja engineers is not uncommon. Our own CTO obsesses about the level of technical debt built by our customers. Decisions, made mostly for good reason, can be buried in the euphoria of early success, but to assume that your growth won’t stall if you don’t address it is to avoid reality.

If you want to have a conversation about scaling your product/solution, get in touch.

Get in touch ×

Get in touch

We’d love to hear from you. Please fill in your details below and a member of the team will be in touch shortly.