"95% of Dutch startups grow prematurely and 92% are already seeking money to finance this premature behavior"
Ever heard of the butterfly effect?
When a butterfly flaps its wings, it can eventually cause a hurricane elsewhere. Meteorologist Edward Lorenz used this metaphor to illustrate how a small action can have a massive impact. But before a butterfly can flap its wings, it must go through several clear and observable stages: from egg to caterpillar, from caterpillar to chrysalis, and finally to a fully grown insect. No one would mistakenly call a caterpillar a butterfly.
With startups and scale-ups, however, it’s not so obvious. You can’t always see whether a company has truly made the leap to becoming a scale-up, and many entrepreneurs assume too early that their startup phase is over. This mistake often proves fatal: in the Netherlands, only 2–4% of startups actually grow into scale-ups.
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Investing in your own downfall
Gijs van de Molengraft conducted research with Gritd among more than a thousand Dutch startups. “We examined how startups grow and the impact of acceleration programs and funding on their growth. What stood out is that 95% grow prematurely. They act as if they are further along than they actually are, diverting time and money toward activities suited for later stages. This misalignment leads to misplaced focus and high burn rates.”
Is this sector-specific? “No, it’s everywhere. If you zoom in on early-stage startups, 92% are already seeking money to finance this premature behavior. It’s shocking that nine out of ten startups look for funding to fuel the main reason they fail. Compared to the U.S., where 70% of 34,000 startups studied grew prematurely, the Dutch numbers are significantly worse.”
The negative effect of scale-up support
“This premature growth also appears in acceleration programs. The Netherlands has about 119 of these programs, aimed at startups or scale-ups depending on their stage. But often, early-stage startups enter programs meant for scale-ups. Our research shows these programs do benefit true scale-ups, but they actually harm startups. That raises important questions: why do we do this, and how can we fix it?”
Market adoption over money and headcount
So why do companies think they’re further than they are? Gijs explains: “If you look at scale-up rankings, you see many companies with little to no revenue. They call themselves scale-ups based on raised capital or headcount. Honestly, that doesn’t make sense. More money equals more people, but that doesn’t prove market acceptance or adoption. The real measure is customers and revenue growth.
Funding matters, of course, but raising capital alone doesn’t make you a scale-up—it makes you a startup with resources to develop. Our definition of a scale-up starts with ambition: how many potential customers do you have, and how big is your market? Once you’ve reached 2.5% of those customers, achieved product-market fit, and built a repeatable, scalable sales process, only then can you say you’ve made the leap to scale-up.”
