Scale-up challenges are hurdles in the path of ambitious start-ups. Big challenges require innovative solutions, something which the technology sector has been grappling with since its inception. There is perhaps no bigger challenge than COVID-19 which changed our world almost overnight.

Change is a constant in the technology sector. The old adage ‘evolve or die’ is commercially played out in real time, with huge sums of money invested into ‘the next big thing’ which promises to disrupt the status-quo. Does this openness to change make tech businesses better equipped to handle the limitations of the pandemic? The huge growth experienced by some tech businesses in 2020 suggests so but what scale-up challenges are they facing?

Hector Mason is an investor at Episode1 Ventures, the backer of successful companies like Carwow, Zoopla and Attest. Hector’s portfolio specialises in B2B software, deep tech and marketplaces. As an early stage investor, he works with UK start-ups leading rounds of £500k to £3m, from Seed to Series A. This makes him well placed to discuss the scale-up challenges these businesses are facing amid COVID-19.

What’s the biggest scale-up challenge to start-ups post COVID-19?

It really depends on the company. For some, they will be at the mercy of the macro recovery. For example, some companies will depend on how fast tourism returns or how quickly people move back into the office. Others have different challenges, but I think the common challenge is in uncovering the opportunity presented by covid. Start-ups need to think about what the world is going to look like in 6 months, 12 months, 2 years, and plan accordingly. Those who get it right have a good chance of thriving and the opposite goes for those who don’t.

What innovative ways have the businesses in your portfolio responded to these challenges?

The companies who’ve done best are the ones who acted fastest, if they needed to act at all. Many of our portfolio companies are relatively unaffected by Covid – particularly the ones who are very early in their journey and who are building products rather than trying to win sales. For some founders it’s been a prompt to zoom out – a chance to think strategically (long term) about their business rather than tactically (short term). This has meant that some very established portfolio companies have taken big risks, slightly pivoting their models, to great effect. Big risks can lead to big rewards and those who dare to take those risks, often win.

How important is it for scaling start-ups to build effective teams?

It’s critical – the number one thing. And particularly in the early days – getting employee number one right is far more important than hiring the right 50th employee. Hiring really well in the early days will make your company orders of magnitude more likely to succeed in the long run.

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