Working in Startups: Understanding the Growth Cycle

So you want to work for a small agile innovative company, one that has purpose and can make a difference. You want to be in on the ground level, part of a small team, get a good view of all the different aspects of a company, and get a broad range of experiences.  But you are not one of those entrepreneurial founder types or would be CEO’s, or you don’t yet have that big idea to start a company around.  But you do have enthusiasm, skills and energy and you don’t mind having an adventure so are attracted to working in a start-up… you are an entrepreneurial employee for hire.

If you are the founder, inventor or been there from the start you get to know a company inside out. If you are wanting to join it after it has got going then you have to get beneath the surface that is presented to the outside world. This short series of blogs is going to lay out how to start finding your way around start-ups and get under their surface.

In thist blog we will look at the growth-cycle of a “typical” start-up…… Of course the concept of a typical “start-up” is like the concept of a typical “person” it doesn’t really exist, and generalisations can quickly break-down. But hopefully this generalisation can provide some awareness and insights to understand real start-ups and give a sense where they are at in their growth cycle. But as there is no typical, there is no substitute for getting to know more about a specific start up…..The second blog explores how to get to know more about a particular start-up you are interested in.

Growing pains – What are the phases a start-up goes through as it grows?

Very few start-ups can get to the position of having a product to sell with the cash that the founders themselves have and their time and efforts alone. Most businesses will need some kind of investment to get going, and some will require substantial sums to get to the point where they have a products or services from which they can generate a profit.
In order to get going they may rely on start-up funding through grants or equity investment (funds in returns for shares).
In fact they can require so much funding that an investor will not have deep enough pockets to fund it till it is self-sustaining. Investors also like to de-risk the proposition by only funding part of the journey and having a point to take stock and assess how the business is going.

So most high growth start-ups will go through cycles of funding – raising investment, spending it, reaching a milestone and then going back to raise more funding to get to the next milestone
(If they are unsuccessful, they don’t make it to their milestone they either go out of business, are sold cheap (a fire-sale), or change direction (pivot))
If you understand where a company is on its journey to being self-sustaining, and even on particular cycle of growth towards that, it means you can get a sense of what they need to do and what they will be looking for at a particular time

For a company on a growth cycle:

• at the beginning the team is gearing up, has money to spend (but rarely enough to allow it to carelessly spend it) and is likely to be in position grow the team, and it’s activities
• in the middle phase of the cycle the team has understand what is necessary to achieve the milestone, and be committed to delivering that, even if they are having to adapt plans slightly.
• In the end phase the pressure is on to hit milestones, but also to secure more funding.

Of course that gives you no sense of the length of the cycle – other than it is determined by investor appetite/ depth of pocket and sensible steps which validate or prove the concept. Traditionally that might be 2-3 years, but with a greater amount of patient capital available, these cycles can be 5-6 years or longer if staged.

In terms of when you might be able to jump on board, it depends on your skills, and as before, this is a gross generalisation…

• CEO or technical lead is most likely to be required from the start
• Technical skills (coders, scientists, technicians) shortly after the start of a cycle when things are gearing up
• Business development and sales are required when the market is in sight, which could be mid-way through a cycle, unless the landing the customer takes a protracted period, when the business development team may be brought on board earlier, to give insights into the customer and to build a key relationship

So to put it crudely if you can identify where a company is on its growth journey, or what phase of a growth cycle it is at you may well be able to understand how much it is worth exploring further and be more targeted in which ones you look at, or when you approach them.

Dr Stuart Wilkinson is the Head of the Knowledge Exchange and Impact Team (KEIT) in Research Services, at the University of Oxford.  He is a technology & knowledge transfer professional, experienced in working with world class researchers to take new ideas and innovations into a commercial setting; and in developing strategic partnerships and collaborations to enable innovation to have a greater impact.