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Paths to Scale: Finance lessons from European entrepreneurs

Why do some startups in Europe scale to billion-euro valuations whilst others barely grow? Despite the best efforts of investors, policymakers, academics and entrepreneurs to determine the recipe for success there remains a substantial gap with other entrepreneurial ecosystems like the US or Israel, both in terms of the number of scaleups and the capital they raise.

A better understanding of the role of different sources of finance in business growth can help entrepreneurs to consider alternatives, and give them confidence to pursue these in order to scale up their business.

This report aims to be both educational and inspirational, combining a practical guide to finance with real-life examples which demystify different finance options.

Key findings:

  • The stories of European entrepreneurs in this report illustrate various “paths to scale”, along with the opportunities and challenges that entrepreneurs face when trying to finance their growing business. The diversity of their experiences demonstrates that there is not one path to growth, but many.
  • The type(s) of capital raised is the product of an entrepreneur’s assessment of the added-value of one source of capital over the other (e.g., business validation, mentoring, access to networks and markets, etc.), and perceived suitability for their business (e.g., terms of the investment, cost of capital, growth prospects, etc.).
  • Combining different types of finance is common practice. Various intermediary tools and steps exist to ease the process and keep the business afloat in between and during funding rounds.
  • There is an array of resources and support available for entrepreneurs. From grants to investors’ networks, we have listed both European- and country-level resources that offer support to entrepreneurs throughout their growth journeys.

We published the original version of this report in February 2019. This version (published in June 2019) includes updated facts and figures, based on newly-published data and new funding rounds announced by the scaleups.

Authors

Christopher Haley

Christopher Haley

Christopher Haley

Head of New Technology & Startup Research

Chris leads Nesta's research interests into how startups and new technologies can drive economic growth, and what this means for businesses, intermediaries and for the government.

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Denise Van Blitterswijk

Denise Van Blitterswijk

Denise Van Blitterswijk

Senior Policy Advisor, New Technology & Startup Research

During a six-month secondment, Denise will work on the Start-up Europe Partnership.

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Jessica Febvre

Jessica Febvre

Jessica Febvre

Intern, New Technology and Startups

Jessica was the New Technology and Startups intern in the Policy & Research team

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