Learnings from Bits&Pretzels: Navigating the common pitfalls of scaling

Echoing insights garnered from our fresh-off-the-press “Early-Stage Founders’ Blueprint for Series B Success”, our partner Valerie Bures had the pleasure to come on stage at the Bits&Bretzel Conference to present six potential pitfalls of scaling in 2023. Here is the full list - and some tips to expertly sidestep them!

Aiming for Series B is a crucial stage in the startup journey, where the focus shifts from validating the business model to scaling the company and reaching profitability. Even though every startup journey is unique, we have noted that entrepreneurs often make six common mistakes that can significantly impact their chances of securing funding and achieving success… Let’s see how to avoid them!



Mistake #1 – Pouring money down the drain (and not realising it)

During the leap from Series A to Series B, you find yourself at a critical crossroads. It might involve global expansion, product improvement, specialized hires, or possibly enticing mergers or collaborations. The challenge, though, is to manage your expenditures meticulously to prevent squandering funds fruitlessly…

This is especially true today, as the current market trend has shifted the power balance between investors and entrepreneurs. Investors have become exceedingly cautious about their investments, placing heightened emphasis on grounded, real-world metrics… Today’s growth VCs are cool with you lighting up the cash runway, as long as it’s turbocharging a rocketing business, not just fueling a money-burning party.

Mistake #2 – Being afraid of spending the money

Prudent fund allocation is key, but there’s a distinction between being cost-effective and being overly frugal! Investors expect that entrepreneurs will sufficiently finance their growth plans. For example, while entering the U.S. market is nearly twice as expensive as aiming for the U.K. and Italy — which are more feasible — the potential value creation is approximately 40-fold in the U.S. 


Similarly, resisting hiring key personnel due to high salaries could be shortsighted. Investments in talent and market access should always be in accordance with projected revenue growth.

Mistake #3 – Not growing beyond your local market

At Series A, founders no doubt have commendable achievements. However, the journey continues. Stepping into Series B, ambitious plans and potential for expansion like venturing into international markets are expected, because remaining local, especially in Europe, might restrict the potential scale and scope of the business.


Hence, Series B is usually the good time to go international and that’s primarily the founder or CEO’s responsibility. But market understanding is vital before any expansion plans to comprehend the diverse customer profiles: this entails a comprehensive understanding of prospective clients, who play a pivotal role in the success of any venture. 


Mistake #4 – You keep doing everything solo

Gone are the days of rolled-sleeves garage ventures. Independence might be rewarding but it’s vital to acknowledge that your time is priceless. It’s unrealistic to think you can single-handedly construct a CRM system, emulate a competitor’s market dominance, or master new expertise AND become a unicorn, within three years. 


Remember, there are alternative avenues to propel your company’s growth and conserve your invaluable hours. Embracing partnerships or making strategic acquisitions can serve as potent catalysts, enabling rapid market share capture or facilitating expansion into fresh territories.

Mistake #5 – Considering (team) size as the only thing that matters


With scaling comes team expansion. However, it’s not just about the numbers but the focus on productivity and maintaining quality. The “jack-of-all-trades” that served you well in the early days may no longer be the right fit… There’s a shift required from hands-on doers to strategy builders, and from generalists to specialists. 


This shift explains why end-of-Series A and early-Series B startups often witness significant attrition rates (sometimes up to 40% annually). As growth requirements evolve, employees need to evolve too and roles like the VP of Engineering or the CRO emerge at the Series B stage.

Mistake #6 – Thinking only your company has to evolve

Transitioning from managing a 5-member team to leading a 150-strong force in 36 months isn’t easy. As their companies scale, founders and CEOs must undergo a crucial shift from being focused on execution to assuming a leadership role. This means developing and executing ambitious strategies alongside their teams. 


The CEO must metamorphose into a Chief Engagement Officer, driven by a clear mission and serving as a resource for their teams. They should adopt the role of a coach, actively removing barriers and empowering employees to excel. It is essential to recognize that the CEO’s role is no longer that of a startup founder operating from a garage. Instead, their time should be dedicated to activities that create value, ensuring they do not become a bottleneck in day-to-day operations…


Want to dig deeper? Read our Series B Blueprint

The “Early-Stage Founders’ Blueprint for Series B Success,” draws from all the startups we’ve seen at XAnge across Europe and brings together key experts from our ecosystem. Developed for Series A CEOs preparing for Series B, the blueprint explores the specific challenges and changes you’ll encounter, providing insights, strategies, and practical tools to help you meet both market and VC expectations—all while navigating the human complexities of the Series B landscape.

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