A scaleup company or just scaleup is defined by the

OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...

as a company having an average annualized return of at least 20% in the past 3 years, and had at least 10 employees at the start of the 3 year period. A scaleup can be identified as being in the "growth phase" life-cycle in the Millers and Friesen life cycle theorem, or the "Direction phase" in the Greiner growth curve. The importance of scaleups and the rise of their terminology according to the

World Economic Forum The World Economic Forum (WEF) is an international non-governmental and lobbying organisation based in Cologny, canton of Geneva, Switzerland. It was founded on 24 January 1971 by German engineer and economist Klaus Schwab. The foundation, ...

is that, although not all

startup A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...

s make it big, the ones that do greatly impact society by means of new technology, services and increased employment. To aid this rise, instead of large startup incubators, policy makers are more and more focusing on scaleups since they are the ones that add value. One commonly used definition of 'scaleup' is the OECD-Eurostat definition relating to 'gazelles' or High Growth Firms: "All enterprises with average annualised growth greater than 20% per annum, over a three year period should be considered as high-growth enterprises. Growth can be measured by the number of employees or by turnover."

Evolution of a scaleup

One way of looking at the evolution of a startup into a scaleup is that scaleups evolve from

startups A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...

as they cross the (so called) "growth chasm" that is, once they solve the startup challenges of market research, development, and identifying a repeatable,

scalable Scalability is the property of a system to handle a growing amount of work by adding resources to the system. In an economic context, a scalable business model implies that a company can increase sales given increased resources. For example, a ...

business model. This can be identified by a significant sustained repetition of critical mass in a particular startup's most significant metric – generally, this metric is revenue, number of employers, number of active users, number of active customers, or effective reach, relative to funds raised. A key difference between a startup and a scaleup is the main challenges faced. While a startup's main challenge is to find a repeatable scalable business model, a scaleup's main challenge is growth of the already identified business model while maintaining operational controls. A 2018 study showed that only 0.4 percent of all startups scale, reaching more than 10 million revenues within 5 years. The remainder stabilizes or grows at a much lower rate.

Economic importance of Scaleups

Endeavor published a study reporting that scaleups create most of Southeast Asia's new jobs. Endeavor founder/CEO Linda Rottenberg published the scaleup petition to further elevate the movement around scaleups.

References

{{reflist Private equity Types of business entity