What’s The Difference Between A Startup And A Scaleup Business?

18th May 2023
Blog header with start-up scale up

In the world of entrepreneurship, there are several types of businesses that can be classified based on their size, growth potential, and funding requirements. Two of the most commonly used terms to describe such businesses are “startup” and “scaleup.”

While they may sound similar, there are distinct differences between them.

In this article, we will explore what each of these terms means, how they differ, and why Device as a Service (DaaS) is beneficial for both.

What Is A Startup Business?

A startup is a newly established company that is in its early stages of development. The primary goal of a startup is to find a repeatable and scalable business model.

Startups are usually funded by the founders, their families and friends, angel investors, or venture capitalists.

They are commonly focused on solving a particular problem or filling a gap in the market by creating an innovative product or service.

Startups usually operate in a high-risk environment, and the failure rate is quite high. However, if they succeed, the potential for growth and profit can be enormous. Startups usually have a small team of employees, and they are often run by the founder(s).

What Is A Scaleup Business?

A scaleup company, on the other hand, is a business that has already achieved some level of success and is ready to grow rapidly.

Unlike a startup, a scaleup company has already found a viable business model, and it is looking to expand its customer base, product lines, and revenue.

Scaleups are characterised by their ability to grow their revenue by at least 20% for three consecutive years while employing at least ten people at the beginning of that period.

The growth can be profit, number of employees, or both. Investors obviously care more about profit growth because larger staff sizes without profit increases aren’t financially sustainable.

Scaleups are usually funded by venture capitalists or private equity firms. They require more significant investments than startups because they have already established their business model, and they need resources to scale it up. Scaleups also require more significant management structures, and they need to hire experienced executives to manage their growth.

Ideally, most ambitious start ups aim to become scale ups very quickly if they are to be successful, certainly this is true for unicorn status aspirations.

What Is A Unicorn Company?

A unicorn company is a startup that has achieved a valuation of over $1 billion. These companies are rare, and they are often the result of a successful product or service that has disrupted an existing market. Some of the most well-known unicorn companies include Uber, Airbnb, Stripe, JustEat, and Deliveroo.

Why Is DaaS (Device as a Service) Especially Beneficial For Both Startup And Scaleup Businesses?

Leasing subscriptions in general are better for start ups and scaleups than buying outright as it spreads their costs, but the DaaS model is especially advantageous.

Device as a Service (DaaS) is a subscription-based model that allows businesses to lease devices such as laptops, tablets, and smartphones instead of purchasing them outright. This model is particularly beneficial for both startup and scaleup businesses because:

1 – Cost Savings – Instead of purchasing devices upfront, businesses can spread the cost over time, making it easier to manage their cash flow.

Additionally, DaaS providers often offer maintenance and repair services, which can save businesses money in the long run.

Maintaining a stable, healthy cashflow is especially important for scaleups and especially challenging for start ups. Both types of businesses stand to make gains by utilising services that improve their cash flow.

These types of businesses need to be pouring funds into new growth campaigns. Start ups need to make the most of their funds to get off the ground, so DaaS is particularly attractive to both types of business.

2 – Flexibility – Startup and scaleup businesses often experience fluctuating demand for devices. They need to react quickly and pivot the business in different directions, especially in the early launch stages and growth stages to see what works best. With DaaS, businesses can quickly scale up or down their device fleet, depending on their needs. Hardsoft’s DaaS solution is especially flexible. It allows businesses to add, swap, and return devices as needed without penalty.

3 – Security – DaaS providers often offer security features such as device encryption and remote wiping, which can help protect sensitive company data.

4 – Access to the Latest Technology – DaaS providers regularly update their device fleet with the latest technology, ensuring that businesses have access to the most up-to-date devices without the need for more expensive purchases every year. In fact, automatic upgrades are usually built into your DaaS subscription. Daas providers like Hardsoft can also help start up and scaleup companies with ongoing maintenance, tech upgrades, and cybersecurity updates. This means that your hardware and software is always the latest technology.

5 – Support – DaaS providers like Hardsoft not only offer ongoing tech support and maintenance, but also strategic advice, custom troubleshooting, and even full device lifecycle management, including green recycling of electronics. No DaaS service is more comprehensive and it saves new launches and scale ups so much time having all their associated IT services in one place.

In conclusion, while there are similarities between startup and scaleup businesses, there are also significant differences. They are at different stages of their success journey, yet both have characteristics that make DaaS models a huge advantage in their search for growth.