5 Crucial challenges that will make or break your start-up's scaling journey
Belgium’s tech startup ecosystem is booming, with over 300 tech start-ups spanning sectors like AI, health tech, and fintech. However, despite a strong foundation, scaling a startup in Belgium presents a unique set of challenges. Founders must navigate complex issues such as critical mass, investor relations, and board governance, each of which can determine whether a company scales successfully or stalls. We spoke with experts Robin De Cock, Karen Wouters, and Axel Funhoff to uncover the key factors that tech entrepreneurs must master to scale effectively.
by Robin De Cock, PhD, Axel Funhoff, Karen Wouters, PhD
| September 30, 2024
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Belgium’s tech startup ecosystem is booming, with over 1.400 tech start-ups spanning sectors like AI, health tech, and fintech. However, despite a strong foundation, scaling a startup in Belgium presents a unique set of challenges. Founders must navigate complex issues such as critical mass, investor relations, and board governance, each of which can determine whether a company scales successfully or stalls. We spoke with experts Robin De Cock, Karen Wouters, and Axel Funhoff to uncover the key factors that tech entrepreneurs must master to scale effectively.
Overcome HR, culture and strategy challenges
In Belgium, 31% of scale-ups are in the deep tech sector (The Brussels Times), with many led by founders who excel in technological innovation. However, as these companies grow, founders face new challenges: hiring the right talent, making strategic decisions, shaping company culture, and transitioning from a founder role to an executive role. Often, founders remain deeply focused on R&D and lose sight of the crucial, actionable steps needed for scaling. Thus, as the company grows, its culture, identity, and habits begin to form organically, often without a clear direction.
As a founder, it’s essential to understand that this process is within your control. If you don’t actively design your company’s identity, it will be shaped by others, impacting how partners, potential employees, and clients perceive your business. Zhong Xu, founder of Belgium’s unicorn Deliverect, called this one of his most important challenges when scaling.
"We’re on a mission to take deeply embedded technologies from universities and research institutes out into the world, where they can make a real impact and address some of the most pressing societal problems. To do this, we need to connect the founders’ technological DNA with the business acumen required to scale effectively. Ambitious growth goals, a strong strategic action plan, and a clear, distinctive company identity that attracts top talent provide the fertile ground for successful scaling."
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Robin De Cock, Academische directeur Master in Sustainable Innovation and Entrepreneurship, Antwerp Management School
Be smart and realistic on your early-stage growth
Many tech products, especially in deep tech, aren’t immediately profitable. Reaching critical mass - both in terms of users and investors - is essential for unlocking profitability, but it’s a process that can quickly exhaust resources if not managed wisely. Companies like Facebook and Uber had to hustle beyond their comfort zones to achieve this, from handing out flyers to tweaking their platforms. These examples highlight how scaling requires founders to perform unfamiliar tasks, adding more pressure to an already complex process.
Moreover, what feels like a breakthrough to a founder can often seem like wishful thinking to venture capitalists. The longer it takes to reach that critical tipping point, the more expensive it becomes, further straining resources.
"Founders are often too focused on the US tech scene, where stories of quick scaling and high valuations dominate the narrative. In Belgium, reaching critical mass takes more time and effort. It's also crucial to be realistic about valuation and its implications for shareholder dilution and company growth. While convertible loans may seem tempting, they can become a very unattractive financing option over time. Founders must understand the race against time they enter with such financial structures."
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Axel Funhoff, Professor Corporate Finance | Start-up Coach
Be selective with investors to avoid conflicts of interest
Selecting the right investors is one of the most crucial decisions founders face when scaling their startup. While securing capital is undeniably important, too many entrepreneurs jump at the first opportunity without fully understanding the intentions behind the investment. This can lead to conflicts of interest, where investors might push for quick exits or even quietly position themselves for a takeover. Instead of accelerating growth, these pressures can slow progress and pull the company in directions that don’t align with the founder’s vision.
"In Belgium, securing funding is already a challenge, but it's crucial to be careful about who you bring on board. Some investors may push for decisions, such as a sale, that benefit their own interests, even when the company isn’t ready. Founders need to ensure their investors are aligned with their growth objectives, not just looking for a quick exit."
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Axel Funhoff, Professor Corporate Finance | Start-up Coach
Ensure the right board composition
As startups grow, the composition of the board becomes increasingly important. Founders need to bring in individuals who not only understand the technical aspects of the business but also have the strategic oversight to guide the company through critical growth phases. Poor board composition can lead to ineffective governance and misaligned strategic decisions, especially if investors on the board push for a direction that doesn’t align with the company’s vision.
"The board should be more than a formality - it should be a source of strategic insight, guidance, and decision-making. Founders need to ensure that their board members are a well-balanced mix of technical and business experts, fully aligned with the company’s long-term goals. Having the wrong people on the board can derail progress and, in the worst-case scenario, create conflicts of interest."
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Axel Funhoff, Professor Corporate Finance | Start-up Coach
Lead your board collaboration and politics
Once a board is in place, managing the dynamics between members can be tricky. Conflicts over company direction, differing opinions on product development, and interpersonal politics can slow decision-making and even threaten the company’s progress (7startup - Startup Funding Consultants). Founders must navigate these dynamics carefully, ensuring that their board remains focused on the company’s vision and not distracted by internal conflicts. How can founders effectively manage boardroom dynamics and ensure collaboration.
"It’s all about fostering open communication and understanding the power dynamics within the board. Founders must learn to manage conflicts constructively, ensuring everyone remains aligned with the company’s goals. It’s not just about solving disagreements; it’s about establishing and maintaining productive working relationships with and within your board."
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Karen Wouters, Professor Leadership @ Antwerp Management School
Conclusion: approach scaling with foresight and strategy
Belgium’s tech start-ups are primed for global leadership, but scaling them successfully requires overcoming significant challenges. From developing a clear growth strategy to navigating complex board dynamics, founders need to approach scaling with foresight and strategy. Each of these five challenges - if tackled correctly - can be a launchpad for sustained growth and success. By mastering these critical areas, Belgium’s tech companies can not only scale but also compete on the global stage, driving innovation and shaping the future.
The 'Scaling with Impact'-track has been created in collaboration with:
* Belgium counts 5.000 digital product companies. Of these, 29% qualify as start-up, 31% as scale-up, 11% as mature, 15% as acquired and 13% as discontinued or bankrupt. The remaining 1% merged or went public (with the courtesy of Omar Mohout).
