These characteristics are shared by promising tech start-ups

Deloitte and Vlerick Business School research finds that successful start-ups prioritize growth.

Promising tech start-ups all invest heavily in growth and have a global outlook from the outset, according to new research by Vlerick Business School and Deloitte Belgium.

The researchers also found that these successful tech start-ups typically had a business model that is easily replicable internationally and were also characterized by greater financial scalability. Finally, successful start-ups also showed a greater appetite for risk compared to similar companies in terms of age, sector, size, and location.

What are the features of rising stars?
The findings come from a study by Vlerick Business School and Deloitte Belgium that takes stock of the Rising Star Competition, an annual list of the most promising technology companies in Belgium. The study examines what makes these companies so unique and how these Rising Stars evolve in the years after they enter the competition.

The annual study, now in its 8th year, is conducted by a Vlerick team led by Veroniek Collewaert, Professor of Entrepreneurship at Vlerick Business School, alongside colleagues at Deloitte – led by Sam Sluismans, Deloitte’s Technology Fast 50 Programme Leader.

The researchers used the study to understand the characteristics that promising tech start-ups share in their early phases. These characteristics are all able to help future entrepreneurs understand which aspects of their business they should focus heavily on when launching.

Companies that target a global market from the start and have an easily replicable business model achieve faster growth as they are able to build their business model with a global market in mind, setting up production and distribution so that it can be rolled out globally with minimal customization and cost. Digital companies, which can deploy their core technologies across different markets and sectors, can more easily implement this model.

“Focusing on ensuring your business model is easily replicable into further global markets or new customer segments can really allow the company to exponentially grow”, says Veroniek Collewaert, Professor of Entrepreneurship at Vlerick Business School. “However, though a business model could be applied to new markets easily, it is important to take local market preferences and regulations into account, which sometimes requires adjustments in products or services. Nevertheless, an easily replicable business model allows companies to scale up quickly and efficiently in international markets.”

Economies of scale
Those companies that do pursue greater economies of scale and higher profit margins were found to often achieve stronger growth. Whilst focusing on high growth and embracing risk-taking was also found to be extremely advantageous.

“This principle is essential for the financial health, efficiency and competitiveness of growing companies. The idea is that when turnover doubles, costs do not increase at the same rate. A lot of digital companies illustrate how economies of scale are significant in the tech sector, where a one-off investment in software enables a global offering with relatively little additional cost”, says Sam Sluismans, Deloitte’s Technology Fast 50 Programme Leader.

The research shows that many entrepreneurs who are in the early stages of launching their own tech start-ups can learn plenty of lessons from the successes, as well as failures, of others. It is important to consider the aspects that have made other businesses a success and use these as a guide for your own start-up pathway.

Read the full research report here.

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