How to Regulate Business Growth and Preserve Company Culture

Business Growth


To get some perspective on how to regulate business growth and make sure company culture remains robust, COMATCH interviewed three investment companies to get their perspectives on factors that influence dynamics in a business—both internally and within their portfolio companies.

Sebastian Wossagk, Managing Partner at Acton Capital Partners

In what ways has the startup ecosystem changed since 1999?

Founding teams these days are much more professional, and in many cases partially consist of serial entrepreneurs. You also don’t need to invest in big infrastructure nowadays, and there’s definitely more startup capital available in an early phase. Entry barriers overall have decreased, but led to much more competition—and thus a higher failure rate overall, especially in early stages.

What are the particular challenges of late-phase growth?

You need to be faster. You can’t wait until the product is perfect to release; it’s a continuous process. It’s harder to convince customers to use a new product when there are multiple existing alternatives, so the organization has to adapt quickly and be very customer-centric.

It is easier for early-stage startups to do this due to the flexible structure. Later-stage communication is inevitably longer and more indirect. For example, the CTO and CMO may have little direct communication with one another, meaning that crucial customer feedback about the UX may not reach the tech department in time.

How do you define a workforce in each phase of the startup?

A company starts off with a small founding team, then the general workforce will grow to 20-25. When it gets to the 50-100 stage, the course changes dramatically. You can’t have people do a bit of everything; you need dedicated roles, even if the flipside is losing some agility. An early-stage startup usually doesn’t have, say, a CFO, but this is essential when your company reaches a critical growth stage. You have to make sure you hire people whose expertise is concentrated in each area.

What is the #1 people-related factor influencing the dynamics of a company?

The quality of your people starts with the founding team. Good founders acknowledge that they’re not the right person for certain tasks, which requires humility. You also need to establish a trusting corporate culture and common values. Whoever is making the hiring decisions must share these and therefore know exactly what an employee needs to bring to the table.


Benedikt Kronberger, Partner at btov Partners

You have three office locations. How do you keep all of them on the same level?

St. Gallen was the first office and is the most important in terms of strategy, but when it comes to dynamics and size, it’s Berlin. Our Luxembourg office is quite small, but our funds are based there. As you can see, each office has a different focus. We schedule weekly company-wide phone-in conferences and organize a big event twice a year, as well as holding various regular events with investors. This helps keep the culture even between the three.

What are the challenges of remote management?

Getting problems and questions solved over the phone can lead to misunderstandings. I would say that the interpersonal aspect suffers a bit; whenever we do a call, it’s always business. We can’t just go to lunch and chat less formally.

Are there strong country-specific differences that can make growth difficult to achieve?

Hiring in Berlin is slightly easier as it has a reputation as a fun and diverse city, which offsets the lower salaries. But in St. Gallen, there is competition from Zurich. This can hinder growth as finding the right people takes a long time, due to the low unemployment in Switzerland.

What are the challenges particular to late-phase growth?

Hiring! A good CTO will find good IT people, but at some point, the recruiters have to take over. One particular challenge in Europe is the lack of financing, especially when things get more technical. Also, acquiring venture capital for late-stage growth companies can be tricky, as the rounds are often too small for US investors and too big for European ones.

Can a company ever reach “critical size”?

It’s hard to give a generalized answer to this. It can be damaging if the company has expanded so fast that they’ve lost any sort of healthy dynamic. It’s all about whether the organization can match the rate of growth. There must be hierarchies so that it remains under management control.


Meera Innes, Ventire Developer and Marc-Oliver Lücke, Partner at Atlantic Labs

The team at Atlantic Labs is 50/50 on gender — albeit the CEO/partner roles are all men. Do you believe in quotas, or have a diversity strategy?


MARC: No, but fostering diversity is incredibly important, as disrupting the status quo is the business we’re in. This can only be done if you have as many diverse points of view as possible. About one-third of our startups have a female founder, most notably Clue (reproductive health app).

MEERA: Part of making the ecosystem more inclusive is recognizing not only that women are there, but also that they do face disadvantages. At Atlantic, we have an initiative where we bring together our female founders and leaders to create a support network.


Does the make-up of a team set the tone for the dynamics and diversity of a company and thus on how a company’s decisions are made?

MARC: Diversity at all costs isn’t a goal in itself. What’s important is an entrepreneurial, collaborative mindset. But getting a diverse founding group around the table as soon as possible will positively affect the direction it takes.

MEERA: The danger of a homogenous team is that it creates a feedback loop—you’re all saying and hearing the same things and you don’t think outside this bubble. Stepping outside that loop and putting yourself in a position of discomfort is necessary for healthy growth. You are limiting your potential if you insist on only addressing your audience in one voice.


Do you look for diversity in the individual qualities of a founding team?

MARC: All founders need the basic characteristics of being entrepreneurial and being able to develop with each other. They must harmonize and work towards a common goal. Our dream setup consists of interdisciplinary teams—for example, one is experienced in startups, one has a tech background, the other knows the industry. This has worked well for us.

MEERA: We look for compatibility rather than variety. A duo can be very charismatic during their presentations yet have only moderate chemistry, or you might have two shy people but one shows a commitment to balancing out the team. Communication issues, however, such as talking over each other or disagreeing openly, are a red flag.


How is company culture set and maintained?

MEERA: Codify your values at the very beginning: why you started and what you want to be. Founding is a stressful journey, so it can be easy to deviate from the values and get lost. The danger of letting employees dictate culture is that it can become distorted if they don’t share your values.

MARC: The first hires are critical in shaping culture, and a strong culture can allow a company to grow more quickly and flexibly and helps it better deal with crises. Still, in high-growth phases, if you haven’t invested in internal organization, culture may eventually deteriorate. You need to hit the sweet spot between a good organization and flexible culture.

MEERA: It gives you a baseline: no matter how much you progress, the culture represents your integrity.

Do you stress the importance of culture to your companies?

MARC: We do coach them if we feel they are going in the wrong direction, but we cannot mold their culture ourselves. All we can do is lookout for good leaders and support them.

MEERA: It’s not our job to influence a company’s culture. I do place great importance on encouraging founders to prioritize their wellbeing and to talk about the struggle of the founder experience. It’s okay to admit that this is hard and stressful. You have your own individual journey to focus on, and you can ask for help when you need it. Take care of yourself.

You may control the first steps in your company, but it’s the employees that keep things rolling. Keep them balanced and happy, and you’ll maintain a healthy dynamic in your company.