UNDERSTAND | November 21, 2019

Motivations to Scale: How European Entrepreneurs Think About Growth and Finance

Scaling mindset features
Photo Credit: Nesta | Motivations to Scale

By Charlotte Reypens, Denise van Blitterswijk and Christopher Haley.

Why do few startups scale? Most attempts to answer this question focus on the supply of talent, markets, finance or other environmental factors. This report offers a different perspective by looking at entrepreneurs' demand for growth and finance, a less explored driver of scaling.

Conversations with 64 startup and scaleup founders offers a peek into their minds. By combining rich data on entrepreneurs’ motivations, perceptions and mindsets, with an extensive review of European data sources, we offer novel insights to help entrepreneurs beat the scaling odds.

Key findings

  • The path to scaling puts large cognitive demands on entrepreneurs. These can pose substantial hurdles for many: we estimate that only around two per cent of entrepreneurs are likely to overcome the demand-side hurdles to seeking finance for growth.
  • The key hurdles include a lack of a growth mindset, little awareness of finance options and a lack of time and confidence to speak to investors and raise capital.
  • Growth-oriented entrepreneurs share four mindset features: Typically, these entrepreneurs want to innovate, create a positive impact on society, become a dominant player in their field and create value.
  • Growth is an individual process, often spurred by personal triggers. This realisation has important implications for when and where to best target support.

Recommendations

  • Nurture entrepreneurial growth mindsets, by including mindsets training alongside business practices and incorporating a growth mindset across the education spectrum.
  • Improve awareness of and access to resources for growth, such as through finance hubs with interactive tools for tailored advice, partnerships to expand the reach of matchmaking platforms, and peer-to-peer learning.
  • Facilitate risk-taking, such as through loan guarantees for startups, ‘second chance’ policies and the removal of perverse tax biases that discourage growth.

Visit Nesta's website for the Full Report and the shorter Motivations to Scale: A policy playbook, which summarises the report's key findings and recommendations.

About Nesta

Nesta is an innovation foundation. For us, innovation means turning bold ideas into reality and changing lives for the better. We use our expertise, skills and funding in areas where there are big challenges facing society. Nesta is based in the UK and supported by a financial endowment. We work with partners around the globe to bring bold ideas to life to change the world for good. Learn more: www.nesta.org.uk

About Startup Europe Partnership (SEP)

Established by the European Commission in January 2014 at the World Economic Forum in Davos, the Startup Europe Partnership (SEP) is the first pan-European platform dedicated to transforming European startups into scaleups by linking them with global corporations and stock exchanges. SEP is led by Mind the Bridge, an organisation based in Italy and the United States, which connects European entrepreneurial ecosystems to Silicon Valley, together with Nesta, the London Stock Exchange ELITE programme, the European Startup Network, the ScaleUp Institute, and the Bisite Accelerator. Learn more: www.startupeuropepartnership.eu

Charlotte Reypens is a Senior Policy Researcher at Nesta, where she carries out research projects to inform startup and entrepreneurship policy… About the author