The Scaleup Report by Startup Genome that was launched today in Melbourne revealed the three key factors that founders who look to improve their chances of scaling should ensure: Offering stock options for all employees, owning more than five global connections to top ecosystems, and having at least three advisors for their startup.

“Scaleup success rate clearly increases with Global Connectedness and startups that develop a high level of Global Connectedness have a 3.25x higher chance of scaling than those with a low level,” the report detailed.

“Ecosystems that are more connected to top global ecosystems (such as Silicon Valley, New York City, and London) see their startups go global at a much higher rate on average (66 per cent correlations between those very distinct variables).”

Despite the importance of connectedness on a global level, this did not mean that local connectedness did not play a role. The Local Connectedness Index measures the size, density, and quality of a startup’s local network, and it impacts a startup’s ability to scale.

“Startups with a Local Connectedness Index score of six or above achieve a scaleup of 5.1 per cent compared to 3.8 per cent for those with a score of two to four, a 34 per cent boost. Early-stage startups with a higher Local Connectedness Index see their revenue grow twice as fast as those with the lower Local Connectedness Index,” the report said.

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In addition to Startup Genome’s own research and dataset on startup ecosystems, the report also received contributions from experts such as the Global Entrepreneurship Network and Dealroom.

It provides insights into the characteristics that separate startups that successfully scaled from those that failed and highlights actionable insights for entrepreneurs, enterprise support organisations, and policymakers seeking to increase the proportion of startups scaling to a US$50 million+ valuation.

Factors that help startups to scale up

In addition to access to collaboration with local and global ecosystems, the report also looks at the countries with a significant number of “scaleups”–startups that have achieved significant milestones in their scaling-up journey.

“The US, China, and the UK are the top countries by number of total scaleups, with 7,100 based in the US—4.8x more scaleups than in China and 11.5x more than in the UK. India, Canada, Germany, Israel, France, South Korea, and Singapore (in order), round out the top 10 countries globally for the number of scaleups,” the report said.

“Top countries for VC investment into scaleups are the US, China, India, the UK, and Germany. North America makes up 55 per cent of all global VC investment raised in scaleups, with the US alone contributing 53 per cent. Since 2020, the US has received more VC investment than the rest of the world combined.”

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The report also said that for early stage startups that go global, they are on a revenue growth curve that is 2x faster than those that do not.

“For non-US startups that target the global market first, the scaleup rate doubles,” the report highlights.

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