Reject the Scale-up Hype, Size Isn't Everything

Early-stage founders often feel the need to include a "scale play" when pitching to investors in order to get funding.

Let's dispel that myth and address the notion of scale in business. Scale implies increasing profit margins brought about by increasing revenues.

But not every business is designed for scale. If you have an idea to start a coffee shop or a retail outlet, it is 1000 times more difficult to scale that type of business compared to a tech startup.

Does this mean that you can't get funding for your business?

Of course not. You can make a funding pitch for a well-structured business with healthy margins to investors. The?right type?of investors would be more confident in financing your company if you have a solid grasp of the fundamentals and a stellar track record.

Including a scale-play doesn't guarantee funding, in fact, it could have the opposite effect. Suddenly, investors are drilling into your assumptions around customer acquisition costs, churn rate, defensibility and risk-adjusted returns.

No one expects a newborn to immediately begin to walk. Infants must first learn to stand on both legs, then crawl, and then start to walk. This progression of development in humans is similar to the world of business.

Focus on developing your product - the best product you can, focus on understanding your users/customers and generating revenue (and profits!)

Remember, the best entrepreneurs are those who don't?need?funding to keep their businesses afloat.