Europe’s fast-growing scale-up businesses are proving they can compete on the world stage, achieving growth rates that are almost twice as strong as the OECD average. But what will it take to extend this success across more of Europe’s entrepreneurial businesses and to sustain the growth of those already outperforming? Sage’s research suggests that triumph lies at the intersection of technology and the human: businesses that can complement their own capabilities with tech such as AI are reaching new highs.
How human and technology collaboration can drive scale-up success
High-growth businesses are crucial for wider economic prosperity – and they are increasingly relying on technological support to underpin their expansion plans. We examine how to create the ideal conditions for entrepreneurial spirit and technological insights to work in tandem.
By Chris Torney
Europe’s fastest-growing businesses are playing an increasingly important role in the continent’s prosperity.
New figures from Sage indicate that European scale-ups are expanding at an annual rate of 38% – almost double the Organisation for Economic Cooperation and Development (OECD) minimum of 20% revenue or employee growth per year.
The research has highlighted the key characteristics of these fast-growing enterprises. Technology is the most important driver of success, with nine in 10 scale-ups saying that digital tools have played a vital part in their growth to date. A third say they are already incorporating AI into their day-to-day operations.
Willingness and ability to expand into new markets is another crucial factor. Almost all the high-growth businesses in the research are either already active in markets outside their domestic base, or have plans to expand internationally. More than half of the revenues generated by the average scale-up come from outside its home country.
However, Sage’s research found that for companies just embarking on their high-growth journey, issues such as access to capital, regulatory fragmentation and shortages of skilled workers are holding them back. Two-thirds of these businesses say they have struggled to raise equity funding, while half say fragmented EU regulation has acted as a barrier to growth. The question now for policymakers, advisers and service providers is how to create the conditions that will enable more startups to transform into scale-ups.
Derk Bleeker, chief commercial officer at Sage, says: “Europe is at a turning point. In a more competitive and unpredictable global environment, start-ups and scale-ups will be central to future prosperity, creating jobs, driving innovation and strengthening economic resilience. Yet in order to thrive, they must overcome significant barriers including fragmented regulation, limited finance access and digital policies that don't always facilitate their growth.”
The value of technology-driven insights
Marvin Fletcher Rogers is the principal consultant and head of business development at Sage. He works with growing businesses across Europe to help them address the obstacles associated with moving from the startup to the scale-up phase.
“One of the biggest challenges that scale-ups face is that the external environment they engage in changes very rapidly,” Fletcher Rogers explains. “And the biggest insulation they have in terms of being able to pivot their business, identify opportunities and potentially even mitigate risks, is information and insights.”
Technology can help provide a deep and comprehensive understanding of a business’s current financial status as well as its future trajectory. Fletcher Rogers adds: “This information can play a vital role in supporting fundraising exercises and providing transparent information for investors.”
Fletcher Rogers points out that, for many startups, success is built on their capabilities in areas such as product or service development as well as sales and marketing. But as firms start to scale up, he says, they face an increasing operational burden. “It is often the back-office infrastructure that is under-skilled and under-resourced, especially when the business becomes more fragmented among different locations and teams,” he explains.
“What the right technological solutions can do, however, is generate data about the businesses that can be shared across the organisation and used to inform management decisions. Ideally, the role of technology is to act as a complement to the founder’s or the senior management team’s own business instincts.”
Devin Bramhall, business growth adviser and former CEO at Animalz, a content marketing agency, adds: “When tech and humans can evolve together, influencing each other in a 'give and take' manner, then I believe we'll see an even faster pace of innovation and more positive outcomes.”
Creating an organisation that embraces technology
Dario Grandich, co-founder and director of tech consultancy Parallax – itself a successful scale up business - says that companies which are willing and able to take advantage of tech to support growth can create a competitive advantage. “Effective technology investment means looking holistically across people, processes and platforms,” he explains. “It can feel like a strategic gamble, so you’ve got to be intentional. Measure both the hard return on investment – like cost savings or revenue growth – and the softer benefits, such as quality-of-life improvements for your teams.”
“At Parallax, we’ve built native AI products and embedded GenAI into all sorts of digital solutions, so we know what actually works in practice. This experience means we can help cut through the hype, avoid common pitfalls, and rapidly turn AI into a competitive edge – helping you stay ahead while others are still figuring it out.”
Grandich adds that the ability to trade internationally from day one – something that has been facilitated by tech – has been a key element of Parallax’s scale-up journey. “In our first year, we had clients in Kuwait and the US simply through being discoverable online,” he says. “Technology has always made that possible, from basic tools like email and video calls to more sophisticated platforms for collaboration, project management and invoicing. When you’re dealing with multiple currencies and tax jurisdictions, solutions like e-invoicing strip out complexity and let you focus on delivering great work, not wrangling admin.”
“You should have a clear-eyed view of what you are trying to achieve with technology,” adds Mehdi Paryavi, chairman and CEO of digital economy thinktank the
International Data Center Authority. “But while it's always important to move quickly, do not rush into buying ‘shiny new toys’ just because you think you should. Creating a digital-first organisational culture starts with analysing every business process you have to see which steps can be reformed, which can be eliminated and how overall process flows can be improved.”
Yousef Khalili, global chief transformation officer at
Quant, adds: “It is also crucial to make digital tools accessible and simple for everyone to use, not only tech teams. Once people are given the opportunity to experiment with new digital methods in their everyday tasks, they begin to view technology as part of the solution rather than a challenge.”
Rogers says: “When we engage with clients, much of the challenge around skills relates to upskilling the back-office or finance function, but also enabling them to operate more efficiently – whether that involves adopting AI or other forms of automation to support their growth.”
The issues that scale-ups face around exporting and moving into new markets can also be addressed with the right data-driven insights, Rogers adds. “When businesses are thinking about how they can take their proposition to a new region, having the right financial, operational and management insights as well as a deep understanding of their clients are key.”
Government policy has an important role to play in supporting business adoption of technology, says Grandich: “The government should lead by example but it’s just as important for policymakers to create an environment where businesses can thrive. That means investing in digital skills training, modernising education and supporting companies who want to upskill their teams.
“We’re always training young, ambitious people and we’d love to see more incentives to help businesses do this at scale. Policy should remove barriers and encourage both risk-taking and ambition in digital transformation.”
