Introduction

Startups are young and innovative companies whose purpose is to achieve rapid and significant growth through a scalable business model. When they are successful, that is, when they actually achieve high rates of employee growth and turnover, they become scaleups.

Extensive research across various geographical contexts underscores the positive impacts of high-growth firms for the socioeconomic environment, including innovation, job creation, wealth generation, and overall economic growth (Bos & Stam, 2014; Henrekson & Johansson, 2010; Lee, 2014; Mason et al., 2009; Monteiro, 2019). Remarkably, these benefits persist during economic booms and recessions alike (Anyadike-Danes et al., 2009). In addition, the presence of such companies is an unequivocal sign of the robustness and solidity of the business ecosystem, acting as a catalyst for the entry of new startups and support agents, promoting a virtuous circle of innovation and economic growth (Muller et al., 2015). Therefore, policymakers are keenly interested in supporting these types of companies, facing the challenge of addressing their specific needs (Hart et al., 2021).

Transitioning from startup to a scaleup is far from straightforward. The fact that startups operate in uncertain scenarios, an element inherent in their innovative nature, explains, in part, their low survival rate worldwide (Colombo & Grilli, 2005, 2010; Cowling et al., 2006; McAdam & McAdam, 2008). The majority falter within the initial years, with between 26 and 58% ceasing operations after five years; achieving high growth also seems to be a great challenge, since between 36 and 71% of startups, depending on the country, maintain a workforce of fewer than 10 employees in their fifth year (OECD, 2018). It is difficult to identify what leads a startup to grow at high rates beyond having a successful business model, although the literature also points to considering the characteristics of the founding team (Haeussler et al., 2019; Sarada & Tocoian 2019; Spigel, 2022), the external growth-supportive factors, and the obstacles they must overcome (Fotopoulos, 2023; Lee, 2014; Löfsten et al., 2022; Sleuwaegen & Ramboer, 2020; Temouri et al., 2021).

Although startups can benefit from policies to support entrepreneurship in general, those with genuine high-growth potential require interventions tailored to their specific characteristics (Calvino et al., 2016; Mason & Brown, 2013, 2014), which should consider the holistic or systemic component of the entrepreneurial ecosystem (EE) (Stam & van de Ven, 2021), promoting networks and cooperation at local and regional levels (Scott et al., 2022; van Rijnsoever, 2020), while enhancing financing sources that fuel growth (OECD, 2022).

Indeed, the EE in which a startup is born and grows is not trivial, nor has the configuration of the most successful EE been the product of chance or luck. The EE in Silicon Valley, New York, Los Angeles, or Tel Aviv are the result of many decisions and actions of public and private institutions, entrepreneurs, investors, and other agents who have worked together to turn them into ideal breeding grounds for startup inception and growth (Startup Genome, 2023).

Similarly, a startup's opportunities to grow are not the same whether they operate in a consolidated EE or a more incipient one. Startup Genome (2023) acknowledges that some EE are less developed than others and therefore obtain different outcomes. Those EE falling outside the global top 40 in terms of performance are labeled ‘emerging’. The factors used to rank these emerging EE are slightly different from those of well-established ones, highlighting that they have greater difficulties in accessing talent which, while in the ranking of consolidated EE has a weight of 20%, in emerging EE, is only 12.5%, as well as the lower opportunities for connectedness and knowledge, which are only marginally considered in emerging EEs (both 2.5%).

Consequently, our objective is to identify growth challenges faced by startups and to pinpoint policy focal areas conductive to addressing these challenges within an emerging EE, based on the perspective that public policies are one more element of the EE in which startups are born and must be formulated and implemented considering the systemic nature of the EE.

This work is structured into four parts, along with the introduction and conclusions. In the theoretical framework, we study the main external antecedents of the success of startups and the concept of EE, highlighting public policies to support growth. Next, we present the methodology and results of research conducted in an emerging EE, specifically València (Spain). From the identification of the challenges Valencian scaleups have faced, we propose a set of interventions for policymakers to foster the growth of a greater number of scaleups.

Theoretical Framework

To advance knowledge about the challenges faced by startups transitioning into scaleups, this work analyzes the specialized literature to identify the actors and factors linked to high-growth entrepreneurship, as well as effective public policies that help strengthen an EE.

Startup Success Factors

The potential benefits that startups bring to the socioeconomic environment, coupled with their high failure rate (OECD, 2018) have put them in the focus of many studies that try to identify the factors that condition their success. These factors refer to the characteristics of the companies themselves, the attributes of their founders, and the contextual environment in which they operate.

Regarding the success factors related to the company, the literature has indicated that the company’s reputation (Chang, 2004; Hormiga et al., 2011a, 2011b; Kotha et al., 2001); its dimensions (Bonaccorsi & Giannageli, 2010; Geroski et al., 2010); management system (Davila et al., 2010); knowledge management (Bhardwaj, 2019), and participation in alliances or cooperation agreements (Hagen & Zucchella, 2014) are important considerations for this topic, among others.

With regard to factors related to the founders, motivation and some personality traits, such as tenacity or persistence, (Markman et al., 2005; Wu et al., 2007) or perseverance in achieving personal goals (Collins et al., 2000) have been noted, which are common among other entrepreneurs. Leadership (Ensley et al., 2006) has also been mentioned, as well as age, since an increase in age allows the accumulation of experience and knowledge, facilitating the identification of opportunities (Oakey, 2003; Diochon et al., 2007; Arvanitis et al., 2012).

On the other hand, the creation of a startup as a team is another of the determinants of its success because it has greater human capital than entrepreneurship by a single individual (Ganotakis, 2012; Muñoz-Bullon et al., 2015), also making it more attractive to potential investors, which, in turn, increases the startup’s chances of success (Miloud et al., 2012). However, it seems that teams founded only by women are less likely to succeed because they tend to have less initial capital (Verheul & Thurik, 2001), less professional experience, and tend to be smaller teams; therefore, they initially have less human capital, and, generally, their motivation is need and not opportunity (Gottschalk & Niefert, 2013). Additionally, certain characteristics of the members of the founding team, such as training in technical and/or engineering areas (Almus & Nerlinger, 1999; Aspelund et al., 2005; Newbert et al., 2007), business management training (Ganotakis, 2012), previous experience in entrepreneurship (Dimov, 2010; Packalen, 2007), industry (Marvel & Lumpking, 2007; Ganotakis, 2012; Muñoz-Bullon et al., 2015) and/or business management (Aspelund et al., 2005; Newbert et al., 2007; Ucbasaran et al., 2008), have also been identified as success factors.

Regarding the factors related to the startup environment, the availability of adequate financing for each stage has been identified as one of the most relevant factors to explain significant differences between their growth (Hellmann & Puri, 2000; Testa & Szkuta, 2017).

Other environmental factors highlighted in the literature are access to incubators and accelerators (Mian et al., 2012; Lamine et al., 2018; Van Weele et al., 2018; Cohen et al., 2019; Saura et al., 2019), the availability of spaces in general (Lee, 2014), the possibility of cooperating with universities and other public research bodies to advance research and product development (Coutu, 2014), fiscal and regulatory pressure (Aldrich & Auster, 1986), access to new geographic markets (Coutu, 2014), the inclusion of sustainability in entrepreneurship support actions (Kouam et al., 2023), and the availability of human capital with the appropriate qualifications for the needs of the startup (Koch et al., 2013; Lee, 2014; Marvel et al., 2020).

The lack of the above-mentioned factors constitutes barriers and challenges that startups need to overcome. Public policies, and through them, other elements of the EE, can play a crucial role in mitigating and/or eliminating some of these barriers.

The Entrepreneurial Ecosystem

The idea of an EE was first presented as a biological metaphor (Moore, 1993) to describe how businesses develop in a setting where they engage in interactions with other agents and one another. There is still no commonly agreed definition, even though most definitions in the literature take this interaction into account (Stam, 2015; Malecki, 2018). The term gained popularity with Isenberg (2010), who described the EE as a set of individual elements that enhance entrepreneurship and that, when they interact in a holistic and complex way, foster entrepreneurship, innovation, and economic growth in a region.

Isenberg (2011) identified the elements that must exist in an EE and grouped them into what he called the 6 dimensions or domains: (1) Policy: unequivocal support of the administration and public leaders for entrepreneurs and entrepreneurship, both in the promotion and improvement of the legal framework, as well as in the creation of institutions to support entrepreneurial activity; (2) Finance: sources of capital that provide quick and easy access to bank and private financing; (3) Culture: context that favors the assumption of risks and values the work of the entrepreneur, making success stories visible; (4) Supports: resources and initiatives to support the entrepreneur such as professional support (lawyers, accountants and consultants), business associations, links with universities and think tanks, general public infrastructure and facilities for entrepreneurs; (5) Human capital: persons with experience in creating and managing educational organizations and institutions (universities and others) that provide technical training and stimulate entrepreneurship; and (6) Markets: the existence of early adopters and distribution channels; promotion of networks of entrepreneurs, expatriates, and multinational corporations.

Public policies can influence the initiative level for starting or managing a high-growth business (Braga et al., 2018), and are one of the key dimensions of the EE, as they can support entrepreneurship or hinder it. There is a close link between the concept of EE and public policy, which has its roots in research on regional development and economic growth (Candeias & Sarkar, 2022). Through public policies, governments intervene to promote and shape entrepreneurial activity, acting on economic institutions; in turn, they encourage the creation of new businesses and impact long-term economic growth (Boudreaux et al., 2019). Likewise, entrepreneurs benefit from the support of public policies and are therefore entrusted with the task of serving public purposes and contributing to economic development (Klein et al., 2010).

Furthermore, it should be noted that policymakers sometimes mistakenly try to imitate an ideal "Silicon Valley-like" EE and import successful best practices, which can be ineffective (Hospers et al., 2008) as they are not suitable for their own EE (Isenberg, 2010; Spigel, 2017; Spigel et al., 2020), since each EE is unique, is born and evolves under unique conditions and circumstances (Stam & Van de Ven, 2021), giving it distinctive characteristics that are spatially, relationally and socially embedded (Brown & Mason, 2017).

In any case, as Autio et al., (2014:1106) point out, a holistic view is important in public policy interventions aimed at EE development, stating that a "context mix" requires a "policy mix." Public policies must be able to incubate, facilitate and integrate the processes of EEs and their different actors in different regional contexts, with differences in organizations and institutional environments, through well-designed, sustainable and leadership-based innovation services, in which entrepreneurs are linked to cocreation processes, data, infrastructures and competencies that support startups while benefiting the regional EE (Nordling, 2019) and promoting high growth in startups (Autio & Rannikko, 2016).

Public Policies to Support the Growth of Startups

In the formulation and implementation of public policies to support startups with high growth potential, there are two kinds of relevant issues. On the one hand, there are issues related to the way these policies should be designed and implemented; and on the other hand, there are certain aspects on which they should focus.

Regarding the first kind of issues, policies must be formulated and implemented from a systemic perspective that considers the EE in which startups arise, as well as the interaction and necessary connection between the different elements that make it up. Ignoring this overall perspective inevitably leads to the ineffectiveness of these policies (Mason & Brown, 2014). The coordination of the public and private sectors is effective for EE development and sustainability, and regardless of the role government assumes, coordinating efforts with the private sector is mandatory (Candeias & Sarkar, 2022; Isenberg, 2010).

Second, as for the issues of where to focus, policymaking should be carried out from the perspective that the role of national and local governments, academic institutions and other policy makers should be that of facilitator, leaving leadership to entrepreneurs and other EE actors (Feld, 2020; Mason & Brown, 2013; World Economic Forum, 2013). In particular, they should focus on the following issues:

Support for Innovation

Generally, companies that achieve high growth do so through market-relevant innovations, which are usually organizational, business model innovations, or those that rely on the novel combination of existing technologies and processes. Therefore, and considering that in many cases, these innovations arise from the creation of knowledge together with customers and end users, policies that encourage the "cocreation" of products could be encouraged (Mason & Brown, 2013). Nordling (2019) illustrates how in Finland, policies facilitate the interaction, collaboration, and cocreation of innovations through open innovation platforms, open data and interfaces, and open participation and customership, which, publicly funded, connect different EE actors, as well as EE actors from other regions and/or levels.

OECD (2023) further adds that networks that facilitate knowledge exchange and innovation go beyond customer–supplier relationships and more and more countries are implementing a wide range of measures to support the integration of companies into international networks.

Policies that focus on supporting R&D activities and technology-based companies, although necessary in an EE, do not seem to favor startups with high growth potential to achieve it. In addition, high-growth firms compete in all sectors, not just high-tech ones (Henrekson & Johansson, 2010), so policies should be considered that support companies regardless of their sectoral background (Pustovrh et al., 2020). Focusing only on supporting high-tech startups may leave out other companies with the capacity to innovate and create new jobs (OECD, 2022).

Interconnection Between Entrepreneurs, Companies, and other Actors

It is important that public policies facilitate the establishment of a broad network of linkages and relationships for companies to help share and recombine knowledge within new or existing innovative organizations (Pustovrh et al., 2020), for example, by facilitating cooperation with other EE actors in innovation projects (Leendertse et al., 2022). In addition, networking with other EE actors can enable startups to access other key information and resources, such as financial resources (van Rijnsoever, 2020). These linkages are not necessarily limited to local EE but can extend internationally for both established and emerging EE (Pustovrh et al., 2020).

The OECD (2023) suggests greater use of digital platforms to strengthen integration in knowledge and innovation networks. These platforms can serve different purposes such as facilitating contact with investors or other strategic partners of the EE, facilitating the creation and implementation of collaborative innovation projects, among other purposes.

One of the objectives of public policies should be to facilitate contact between founders of less experienced startups and those who have achieved high growth. This interaction is a form of support in which entrepreneurs can draw on the experience of others who have achieved success and learn from them (Mason & Brown, 2013).

Promotion of Entrepreneurial Culture

Isenberg (2010) explains how the visibility of success stories can activate imagination and thus inspire many entrepreneurs and boost EE development. Policy makers need to include and devise ways to increase the visibility of success stories to drive EE growth and sustainability, reducing the stress of business creation and strengthening EE legitimacy (Candeias & Sarkar, 2022). According to Roundy et al., (2017), the higher the level of entrepreneurship in an EE, the greater the number of success stories that in turn may inspire a greater number of new entrepreneurs. More recently Roundy and Bayer (2019) suggest that success stories influence the actions of entrepreneurs and can be considered as an antecedent to the success of the EE. However, the impact of success stories on entrepreneurship is not the same in all EEs as it is conditioned by the characteristics of each EE (Hubner et al., 2021). By their very nature, emerging EE have fewer success stories and the need to make them visible is therefore greater.

Disseminating information about what a startup is, how it works, and the economic and social benefits it brings also plays an important educational role and can be essential in creating the next generation of visionary entrepreneurs (Jonek-Kowalska & Wolniak, 2021). Paradis (2023) cites the Global Entrepreneurship Week as an example of an action that recognizes and celebrates entrepreneurs’ success.

Mentoring

Public policies should enable the creation of tutoring and/or mentoring programs that help with the procedures to apply for grants, guide in obtaining venture capital, provide support to protect intellectual and industrial property and that can help at crucial moments in which the startup faces the "activation point" that triggers high growth (Brown & Mason, 2013).

Cerver-Romero et al. (2022) highlighted, for example, the importance for academic entrepreneurs of participating in entrepreneurship competitions that include some form of training or mentoring to improve the business management skills of the founding team and support the need for advice they require in the early stages.

Incubators and Accelerators

In addition to a physical space in which to host startups, incubators provide various types of support services, such as legal advice, support on rights to protect innovations, support in accounting, training, mentoring…, as well as facilitating contact with potential investors and other EE agents (Hallen et al., 2020; Woolley & MacGregor, 2022). Their role is fundamental in the conformation of a connection network between startups and other agents of their EE (van Rijnsoever, 2020) and, therefore, for the creation of their relational capital. In this vein, Del Sarto et al., (2023) provide evidence of the relevant role of acceleration programs in the formation of open innovation networks which contribute to the innovative performance of startups participating in such programs.

Therefore, policy makers (regional, national, university and public research center governments…) see incubators and accelerators as relevant instruments to boost the growth of innovative companies (Aaboen, 2009), so often incubation or acceleration programs receive public funding (Audretsch et al., 2020).

Investment and Financing

Access to capital represents a significant challenge for entrepreneurs. Governments can help by including programs to support early-stage financing in the form of grants, soft loans, credit guarantees, etc. (Pergelova & Angulo-Ruiz, 2014), as well as tax incentives for investors (Paradis, 2023). Moreover, public policies should also favor the attraction and contact of startups with investors, banks, venture capital companies…, so that they can count on adequate financing for each stage of their life cycle (Mason & Brown, 2014).

Given the existence in many countries of different financing and growth support programs with distinct selection criteria, the OECD (2022) suggests the creation of one-stop-shops to help startups choose the financing programs best suited to their profile.

Improvements in the Regulatory and Tax Environment

Although there is no doubt about the need to regulate business economic activity, the time and cost related to the interpretation and adaptation to certain rules, compliance with administrative procedures and the delay of response times by the administration have a negative effect on the performance of companies (Chittenden et al., 2005; Kitching et al., 2015; Vickers et al., 2003). Some previous work also suggests that regulatory and fiscal pressure may weigh proportionately more for small companies than for larger ones, slowing down their possibilities for consolidation and growth (Chittenden et al., 2005). At the European level, the European Commission (2021) recognizes the need to address a simplification and homogenization of member states' tax systems to reduce compliance costs, thus facilitating cross-border investment between member states. Currently companies doing business in the EU are faced with 27 different national tax systems, which creates unnecessary compliance costs and discourages cross-border investment in the Single Market. While for large companies the cost of tax compliance represents 2% of their taxes, this percentage rises to 30% for SMEs.

Henrekson et al. (2010) suggest that labor market regulation and the tax system are two areas through which public policies can contribute to the creation and consolidation of new companies with high potential and growth aspirations.

Regarding labor market regulation, rigid standards in terms of job security/stability, wages and social security appear to be more detrimental to high-growth firms (Henrekson et al., 2010; World Economic Forum, 2013). Some laws, such as dismissal regulations aimed at protecting employment, or legislation governing non-competition agreements, reduce labor mobility and thus the possibility for SMEs to have adequate human capital at their disposal (Coad et al., 2022). Additionally, it is increasingly common for companies that require highly qualified profiles to be unable to cover them with local staff, which limits their growth potential. As a result, there is increasing competition to attract staff from other countries, which faces significant administrative obstacles. Migration policies can play an important role in boosting the growth of startups by simplifying bureaucratic procedures, shortening the deadlines for obtaining work and residence permits, both for the worker and his or her family, and reducing or eliminating the fees required in these procedures. For companies in the European Union, this issue acquires special relevance in regard to attracting international talent from outside the EU (Paavola et al., 2020). As a proposal to overcome these difficulties, the Startup Nations Standard defines the Best Practice target for the standard “Attracting and retaining talent” as that visa applications for experienced staff from third countries submitted by startups are processed within one month (Europe Startup Nations Alliance, 2022).

Regarding fiscal policy, Henrekson et al. (2010) suggest the need for a favorable tax system, especially with respect to stock options, as they allow attracting and retaining key employees for the company, and with respect to venture capital firms, insofar as they allow increasing the availability of funds that support the growth of startups. The World Economic Forum (2013) report, which draws on the assessments of more than 1,000 entrepreneurs from around the world, includes numerous references to regulatory frameworks that make it difficult or penalize employee share-based compensation.

Support for Internationalization

Many high-growth companies are characterized by a high level of internationalization; in fact, many are born global (Rialp et al., 2005). The challenge of internationalization and the speed with which a startup must address it when the size of the national market limits its growth justify the policies that support the internationalization of startups.

A possible initiative to help internationalization would aim to facilitate the contact with other compatriot entrepreneurs already installed in foreign markets and seek their advice (Mason & Brown, 2013). Wang et al. (2023) provide evidence in this regard, reporting that, in China, policies that facilitate interaction between entrepreneurs and other Chinese multinational firms have formed multi-scale entrepreneur networks with close business relationships, R&D collaborations, and peer-to-peer support that help startups in their internationalization.

Encourage Entrepreneurial Recycling

Entrepreneurial recycling refers to the flow of resources within the EE, including skilled workers, capital, and ideas from existing firms, whether successful or not (Mason & Harrison, 2006). Recycling occurs when resources created or attracted by companies, often large corporations or scaleups, flow into new startups and scaleups in a region, and they take advantage of these resources to enhance their potential for innovation and growth. These flows originate from events, such as mergers or acquisitions, or even from the bankruptcy of the company.

Other events are also forms of entrepreneurial recycling, for example, when employees leave a company to create their own or when the founders of a startup or scaleup take advantage of the financial resources obtained by the sale of their shares to create another new company, become business angels, or mentor novice entrepreneurs (Frederiksen et al., 2016; Spigel & Vinodrai, 2021). Yet entrepreneurial recycling is not a linear process driven by rare blockbuster exits, but instead sometimes also occurs when entrepreneurs leave their company and go back to work for others (Walsh et al., 2023).

Mason and Harrison (2006) state that it is important to implement policies that allow taking advantage of entrepreneurial capital, both when there are serial entrepreneurs and in the case of "retired" entrepreneurs, who can assume roles such as serving as business angels, forming venture capital funds, or serving as mentors.

Methodology

To achieve the objectives of this work and to be able to analyze the role of public policies in an emerging EE that supports the growth from startup to scaleup, the EE of València (Spain) was chosen, which, according to the Startup Genome ranking (2023), ranks 71–80 within the emerging EEs of the world. The directory of the Startup Ecosystem of the Valencian Community comprises just over a thousand startups, of which approximately 85% are in the city of València and its urban areas.

For scaleups, in Spain there is no official or consensual registry of companies that meet this condition, nor is there complete information about them. To have a database of scaleups of the city of València and its urban areas, we made a list of Valencian startups with features of scaleups, based on the participants in different training, characterization, or acceleration programs as well as on the analysis of the rankings of innovative companies in that territory. That list was manually refined with the help of ‘European Startups (n.d.)’ and ‘Startup Valencia (n.d.)’ databases, to ensure that it was composed exclusively of companies that could be considered scaleups.

The information on the selected startups was completed with a series of classification data that were obtained from the Commercial Registry. Finally, those startups younger than 13 yearsFootnote 1 that met the scaleup requirements set by Eurostat-OECD (2007) were selected from the list. In this way, we obtained a database with 23 scaleups.

In the 2018–2020 triennium, the average turnover per scaleup in the population studied was 2.8 million euros, with a range between 400,000 euros and 9.5 million euros. In the same period, these companies had an average of 33 employees, ranging from 260 in the company with the most staff to 10 in the smallest. Seventy percent of the sample had already begun the process of internationalization to a greater or lesser extent, although there were great differences between the companies that compose it, with an average export of 46%. The sectors of activity are shown in Table 1.

Table 1 Scaleups in València and its urban areas by sector
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To obtain primary sources of information, we decided to collect data from two groups of informants: the founders of the scaleups and prominent agents of the Valencian EE. To select the latter, their previous experience in other EEs was considered, thus ensuring their ability to evaluate the Valencian EE in comparison with more advanced ones.

Both groups were sent an online questionnaire organized into 4 parts: profile of the founding team, attractiveness of the city to undertake and grow a business, the company, and identification data. For the items of the questionnaire that asked for different degrees of assessment, a Likert scale from 1 to 7 was used. Answers were collected between November and December 2021.

The online questionnaire was answered by 10 scale-up founders (43.5% of the population) and by 9 agents, representing investors (4), public sector (2), corporate (1) and accelerators (2).

The novelty of the topic to be analyzed and the small size of the population made it advisable to complete the information obtained from the questionnaires with focus groups, in which the two groups surveyed were invited to participate. According to Wilkinson (1998), this research technique is an appropriate complement to the chosen research method since it allows participants to express their concerns and/or opinions within a context that is useful to the scientific community (Zeller & Carmines, 1980). In addition, questions are answered within the framework of a joint reflection and as a result of the interaction between the participants in a context of trust to express opinions and perceptions of any kind (Juan & Roussos, 2010).

According to Juan and Roussos (2010), there are 3 steps in the process of researching with a focus group: recruitment, moderation and writing of the report.

The main criterion for recruitment was the willingness to collaborate among the groups of respondents who had shown a greater degree of collaboration during the previous questionnaire phase. The contact was made through e-mail, and in the first message, together with the invitation, the general topic of the meeting was disclosed.

The meetings were held on February 2, 2022, in a room with a large screen to project slides and encourage participation through videoconference, with an audience interested in the subject, both in person and through the online platform. The focus groups of entrepreneurs had 7 participants in person, while in that of the agents, 7 participated in person and 3 participated through videoconference. Both focus groups fulfilled the recommendation of Folch-Lyon and Trost (1981) that the number of participants should be greater than 6 and less than 12 to ensure active dialogue while facilitating the participation of all guests and control of the moderator(s).

Table 2 shows the composition of both focus groups in terms of gender, age, academic background, and area of expertise.

Table 2 Sample composition of the focus groups
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The focus group discussions were structured around a series of questions that assessed the main results of the survey carried out in the first phase of the research, grouped under the items location, founders, public support, talent, and financing. At the end of each session, participants were given the opportunity to discuss other topics of interest.

According to the transcription-based analysis, the sessions were recorded in audio and video, the content of which was subsequently transcribed and analyzed together with the field notes taken by the research team during the meetings (Onwuegbuzie et al., 2009).

The content of each topic was incorporated into the research results, thus completing those extracted from the prior questionnaires. All participants received a copy of the results and had the chance to express their compliance. Therefore, it was possible to integrate the variables addressed, providing both general trends and literal opinions.

Results

In this section, we will analyze the findings that have emerged from the analysis of the questionnaires sent both to founders of scaleups and to EE agents, as well as their participation in both focus groups regarding issues in which public administrations can design policies to support startups that are transitioning to scaleups.

Starting by analyzing the sample of Valencian scaleups, we can conclude that they are mostly founded by a team. Entrepreneurial founding teams are often composed of millennial university graduates, with some previous training in business management and entrepreneurial experience. The presence of women in these teams is very small, as shown in Table 3.

Table 3 Characteristics of the entrepreneurial founding teams
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The reduced presence of women as founders was discussed in both focus groups, and participants shared their concern about it.

"We have more and more resources to make it easier for women to be able to undertake (...) Dedicate 100 percent of your time to the project (...). But it still costs a lot, because (...) the mentality is something we have to start from the bottom."

Corporate agent

The questionnaire included a list of characteristics cited in previous research related to the location of the ventures, asking respondents to rate the extent to which these issues facilitated or hindered the growth of startups in the territory on a scale ranging from 1 ("It is a highly relevant obstacle") to 7 ("It is highly favorable"), being 4 for those that were not relevant to the growth. Figure 1 shows the averages of these responses, distinguishing between those offered by the entrepreneurs and those offered by the EE agents. These results enable us to categorize the factors as either obstacles or enablers; those issues with average score close to the threshold are ultimately classified with the assistance of the findings obtained from the focus group discussions.

Fig. 1
figure 1

Facilitators and obstacles for the growth of startups in València. Source: Authors

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To complement the results obtained from the questionnaire, especially those close to the boundary separating obstacles from enablers, we will now supplement them with the findings obtained from the focus groups. To present them, we will group them into major themes according to the questionnaire items (talent, networking between entrepreneurs, spaces, bureaucracy) and the topics that emerged during the focus group discussions (role of public sector, financing).

Talent

The most valued factor that supports the growth processes of startups in the city, as shown in Fig. 1, both for agents and entrepreneurs, is the cost of living (6.22 and 5.70, respectively), indicating that professionals are happy to live in València. The ability to attract nonlocal talent is also considered a relevant facilitator, mainly because of the quality of life and the attractiveness of the size of the city, as they explained in the focus group discussion.

"València is a magnificent city to live in, both for the cost of quality of life, gastronomy, having the sea nearby… it can attract talent"

Banking agent 1

Going on with the analysis of the questionnaire answers shown in Fig. 1, the availability of talent in València, which agents consider as a facilitator (6.09 points), is less valued by entrepreneurs (4.50 points); however, a more detailed analysis shows that this was the most mixed response among them, which is most likely conditioned by the different sectors in which they operate, so that in some the availability of talent is much more favorable than in others. For example, a founder from a technological venture stated during the focus group:

"There is a real need for digital and technological talent in companies. It does not matter how many graduates have completed computer science schools. València needs more talent, but we cannot even imagine Madrid, Barcelona, Paris, or Berlin. That is an absolutely overwhelming reality and clashes quite a bit with the reality of youth unemployment."

Entrepreneur 1

According to the discussion held in the focus group with entrepreneurs, València has a very substantial supply of graduates from universities and vocational training centers; however, it does not seem enough to cover scaleups’ needs, particularly for talent in programming and software development. Additionally, Valencian employers consider that university education should be completed with the necessary specialization that scaleups require.

"Universities and companies need to be much closer. This relationship must involve students, entrepreneurs, researchers, teachers, academic leaders... Because only in that way will the gap be reduced"

Entrepreneur 2

For scaleups that opt for international hiring, entrepreneurs pointed out that, although it is not difficult to attract nonlocal talent to the Valencian EE, there is a great difficulty in the legal requirements and administrative procedures linked to hiring.

"The experience of bringing someone from outside Europe is a real nightmare"

Entrepreneur 3

"For management profiles, when we want to get someone international, we have to use service contracts because there is too much bureaucracy"

Entrepreneur 4

Networking Between Entrepreneurs

Figure 1 also shows how one of the main facilitators of startup growth is the professional environment and networking opportunities (5.55 agents; 4.70 entrepreneurs). In the focus group it is recognized that, in València, the professional environment is good and that relationships between entrepreneurs exist, although the fact that the number of scaleups is small and that practically all are in the same developmental phase means that the relationships are between equals, lacking benchmarks for those in advanced stages that act as mentors of those who are in the growth phase.

"Just a phone call, a coffee, it can give you guidance or advice: "keep going, you're going wrong." It means that companies can save a lot of time and a lot of money, avoid failures, problems... and gain speed. This is important."

Entrepreneur 1

The discussion in the entrepreneurs’ focus group claimed that the size of the EE is not in its favor, since this beneficial interaction happens between companies from different sectors. Some of the scaleups miss the opportunity of having more companies in their own sector with which to share their concerns.

"If there are more companies around you in your sector you can always do many more collaborations, more projects, get more synergies. That is the success that has been behind Silicon Valley, where technology companies are enhanced, exchanging workers, managers, projects, financing... "

Entrepreneur 3

Spaces

The agents of the Valencian EE point out in the questionnaire the availability of spaces in the city as a facilitator for the growth of startups (see Fig. 1). However, during the discussions in the focus group, the issue of spaces seems to be less enabling for entrepreneurs.

"We've had trouble turning one of the teams' bases of the America's Cup into a BioHub. We want to put all the companies in the sector together. In this space, we will see the projects in development, the corporate with the projects, we will see some of the companies scaling and the companies that do not fit will have at least their showroom. A unique building on the beachfront that will attract international talent, customers, and suppliers"

Entrepreneur 5

In addition to the administrative obstacles to occupying singular spaces, there is a waiting queue to enter some of the acceleration spaces, such as the science parks of both state universities. The city council recognizes that there is a general lack of adequate spaces, although work is being done to make buildings in the city available to startups and to promote an industrial area as an innovative district of reference, which allows hosting startups, companies and tractor organizations, and research and training centers.

Bureaucracy

The factors that are considered the main obstacles are the high level of bureaucracy (2.90 for agents, 3.00 for entrepreneurs), followed closely by the regulatory environment (3.55 for agents, 3.00 for entrepreneurs); there is, however, some heterogeneity in the responses, especially from entrepreneurs. Entrepreneurs say that administrative procedures related to entrepreneurial activity are multiplying. They are generally cumbersome and often slow to resolve, and the preparation of the dossiers to apply for subsidies is complex; usually, their resolution takes too long. The slowness of the administration to resolve some files and the multiplicity of administrative procedures are also pointed out.

"Most of the people who start a business encounter many obstacles. They ask for a license and have to wait eight months, or twelve or twenty-five for it to be granted, if it’s finally granted, or they force you to do construction work that you had budgeted at 10,000 euros and suddenly it becomes 25,000 because you have to adapt a whole space to a reality that does not really exist".

Entrepreneur 6

"We are going after two agencies for an aid issue; we must present ridiculous certificates. It is bureaucracy, pure bureaucracy and it is being a real hell. The whole issue of bureaucracy becomes heavy, very heavy."

Entrepreneur 4

Apparently, it is not a Valencian idiosyncrasy or a recrimination exclusively of entrepreneurs, but this does not detract from the validity of this demand.

Role of Public Sector

The discussion in the focus groups went beyond the questionnaire items, leading to reflections on the role of the public sector. Specifically, concerns were raised about the relationship between entrepreneurs and public authorities, and the support received by several public institutions.

While acknowledging the effort made to maintain a good relationship between public administration and entrepreneurs in the seed stages and in certain strategic sectors, entrepreneurs lament the lack of continuous interaction with scaleups, even affirming that sometimes they are more recognized by the central government than by the regional or local government.

" ‘Startup Valencia’ goes to Madrid and talks about the Entrepreneurship Law and they are listened to"

Entrepreneur 5

To resolve this situation, entrepreneurs demand a direct, fluid, and exclusive dialogue with public authorities.

"Just as we have joined ‘Startup Valencia’ to be a single voice to speak and to be heard, I also believe that there could be a single contact that could be permeable to different institutions, different universities, political parties. I think that's important so that all these things eventually come together into something really useful."

Entrepreneur 1

Entrepreneurs also point out the ignorance of administrations and institutions about the reality of scaleups, their sectors, technological trends, and even that in certain areas they are world leaders. The feeling is that local administrations are more concerned about large companies based in the territory.

"I think it is important that when a success story occurs, when a Valencian startup that started working in the university science park in 2009 and ten years later is sold for 1,250 million euros, politicians had the interest to go out and take the photo and promote the pride of belonging to the Valencian Community. The success stories go beyond traditional sectors. Why don't we take our successes to heart and highlight their value? It has cost a lot of money to train all our professionals."

Entrepreneur 5

Furthermore, the agents of the EE unanimously agree that Valencian public institutions actively and intensively support EE: they offer nonrefundable subsidies, assist growth and innovation, cover the costs of international travel to events where they are represented, provide aid for recruitment, training, etc.

The praise is directed not only to the local government but also to universities, training centers, the regional government, the Valencian Institute of Finance IVF, and the Valencian Institute of Business Competitiveness IVACE… They are supports that sometimes seem to blur because not all of them are associated with an economic amount, but often it is about accompaniments, establishment of contacts, and in general aid that is not easy to quantify in monetary terms.

"I come from working in three different ecosystems, which is Germany, including Munich and Berlin, València and Madrid (...) and I can assure you that there is no point of comparison of support from public institutions that we have in València"

Accelerator agent

"It is true that everything can be improved, it is true that it would be interesting if the subsidies arrived earlier and that they were easier to justify (...) but some time ago they told us "oh, how I would like to start a business in València, with the sunshine there" and now they tell you "how I would like to be in València, with the partners, programs and opportunities you have."

University entrepreneurship supporter

Entrepreneurs also recognize that institutional support has increased, although they emphasize that this aid is more visible and broader in the initial stages of entrepreneurship.

Although it seems accepted that there is ample support, sometimes startups are overwhelmed with information and find it difficult to know which option is best for them. This leads them to try to opt for multiple support actions, but just the fact of applying already requires a serious effort that is not compensated when you are not requesting the most appropriate one for each company and its specific situation. In this context, there is a lack of mentoring to guide these startups toward which support programs to direct their efforts.

"Both in València and in Spain the support is there, the case is also where to put the focus, and there a mentor figure can also help."

Banking agent 2

The agents point out that, from the administration, meeting points should be promoted, and synergies between the world of the most consolidated companies, startups, and the scientific-technological research community should be considered. In many calls, the joint participation of startups with other companies or even with research institutions is encouraged, but it is not easy to search and find the most suitable partners.

"There are many calls that put "to present this call there must be an SME, a startup, a more consolidated company, companies that subcontract, a research center...". Where do I start looking? If there were some catalogs, some inventories, some presentations... Many projects do not find the right partners, they are next door, but they do not know them."

Entrepreneurship professor

Financing

Focus group discussions note that, with the pandemic, it has been demonstrated that the physical presence of venture capital companies in the EE may not be necessary when relationships can be carried out online, even traveling to investors' headquarters or attending their events, if needed.

"The pandemic has perhaps taught us that geographical distance is going to be mitigated a little (...) And in the end, if you have a good idea, a project and a good team, the geographical distance from venture capital will be shortened."

Banking agent 1

In the same way, just as a few years ago, access to venture capital in València was missing —a situation that seems to have already been overcome thanks, in part, to entrepreneurial recycling— now the EE aspires to have more and better programs of corporate venturing.

"It would be great if the large companies we have in València bet and discovered that the cheapest and least risky way for them to innovate is to outsource to startups that generate those innovations they need."

University entrepreneurship supporter

Discussion and Policy Implications

Scaleups have a significant impact on employment (Coad et al., 2014; Henrekson & Johansson, 2010; Monteiro, 2019) and, in general, on productivity, innovation, and internationalization through their interaction with the business fabric of the territory in which they are based (Mason & Brown, 2014), favoring their robustness and competitiveness at a global level. Thus, the transition from startup to scaleup is not only an objective of its founders; it should also be a territory strategy with public policies to support EEs and their companies.

Through the analysis of an emerging EE rich in startups and with an increasing number of scaleups, this research aims to identify the opportunities that public administration must consolidate the dimensions of the EE that favor the growth of its companies. It is precisely because the EE studied is emerging that public administrations are at the right time to lay the foundations for its development, avoiding excessive bureaucracy and generating initiatives so that the small size of the EE is not an obstacle to obtaining talent and funding, enabling networking, and establishing an entrepreneurial culture. Following the findings described in the results section, this discussion section presents a reflection that leads to action proposals addressed to public authorities.

First, the scaleups in this study were mostly male based. According to Verheul and Thurik (2001), women found startups with less seed capital, which affects their chances of growing and becoming scaleups. It has also been found that startups founded by women export less, which is partly explained by gender-related differences, such as unconscious biases and social norms (OECD, 2023), making it more difficult for them to become scaleups. The literature also suggests other reasons why the presence of female scaleup founders is small, namely, that teams founded only by women have less professional experience, tend to be smaller, less focused on technical areas and often tend to undertake more out of necessity than opportunity (Gottschalk & Niefert, 2013).

Although studies testing the effects of gender diversity in top management do not offer statistical evidence toward different results, gender diversity in leading positions of startups seems to be considered an advantage (Weber & Zulehner, 2010). Public administrations could work on initiatives and actions that advance entrepreneurship policies with a gender perspective, seeking to alleviate this gap and help eliminate the glass ceiling in entrepreneurship, in line with the UN sustainable development goal 5, Gender Equality: "Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality and the empowerment of all women and girls at all levels".

At the EU level, the Europe Startup Nations Alliance (ESNA), an initiative aimed at boosting the competitiveness and sustainability of the European startup ecosystem, includes eight best practices in startup-friendly policies, referring the eighth to social inclusion and including recommendations towards gender balance and considering the percentage of ventures by mixed and women-only teams as an indicator to assess the standard “social & democratic values” (Europe Startup Nations Alliance, 2022).

The Spanish government has also launched the strategy “España Nación Emprendedora” (Spain Entrepreneurial Nation), aimed at fostering innovation, entrepreneurship, and digitalization (Gobierno de España, 2021). In fact, an international program has already been launched to attract European female talent to Spain and to retain Spanish talent, “The Break: Women Entrepreneurship & Internationalization in Spain”, financed by the European Union (EOI, 2022). This strategy also proposes other measures pending development, such as promoting the activity of women investors and improving the percentage of women founding or joining professional investment groups, promoting equal presence in events, encouraging gender equality criteria in public procurement, monitoring the gender gap in innovative entrepreneurship through official statistics, fostering STEAM vocations among women, and sponsorship and mentoring for women.

Thus, the first recommended action to politically support emerging EE is:

  • Action 1. Continue advancing entrepreneurship policies from a gender perspective

The availability of talent is a key element in achieving growth of startups (Koch et al., 2013; Ouimet & Zarutskie, 2014), as it is also for the innovative performance of the EE (Filho et al., 2023). The first finding in the case study is that València is considered an attractive city to live in at a very reasonable cost, a characteristic probably shared by other similar destinations and that distinguishes it from consolidated EEs, where the cost of living is much higher. This reality offers the opportunity to promote citizenship and attract talent, a task that can well be addressed by public policies.

Our second suggestion for public authorities would be:

  • Action 2. Establish promotional policies of the city aimed at attracting talent

Carayannis et al. (2016) highlight the role of universities as institutions that positively impact a territory's ability to foster and support the growth of new ventures, by contributing to the diversity and spillover of specialized knowledge. Fotopoulus (2023) agrees on the positive influence of universities, especially those with a strong entrepreneurial, innovative focus, stating also that knowledge spillovers that matter in terms of supporting firms’ growth are those associated with higher overall diversity and unrelated variety. Since knowledge spillovers are proven to foster agglomeration and human capital accumulation (Cerver-Romero et al., 2020), many startups set up in the universities’ area of influence to take advantage of this knowledge (Cerver-Romero et al., 2021).

Focusing on training, without undermining the educational offerings and educational quality of a region, entrepreneurs demand a series of professionals with very specific skills, often associated with programming as well as with managerial skills. Although the importance of generalist training is recognized, which also favors the versatility of graduates, it is considered that there are various mechanisms for educational institutions, in collaboration with the business environment, to design their own degrees in secondary and higher education to meet the latest technological trends that are being demanded by local scaleups. Hence, public administrations have the duty to encourage educational institutions to offer these qualifications.

These concerns are in line with reports of key international institutions, such as the World Economic Forum (2013), that highlights the need to supply a well-trained workforce. Likewise, the “España Nación Emprendedora” strategy contemplates training in digital, entrepreneurial, and innovative skills from childhood and at all educational stages, up to university (including lifelong learning) and, more focused on scaleups, a program that combines training, mentoring and the opportunity to present projects to leading investors (Gobierno de España, 2021).

Therefore, the following action emerges:

  • Action 3. Expand the training offerings with more specific programs adapted to the needs of scaleups

Companies experiencing rapid growth need new employees and may not be available locally, especially when specialized skills are required (Lee, 2014). When suitable local talent is not found, startups that have passed the early stages and are stunted in their growth as scaleups due to the absence of qualified professionals look abroad. Well-known regulatory obstacles that limit business growth (Aldrich & Auster, 1986; Chittenden et al., 2005; Kitching et al., 2015; Vickers et al., 2003) also exist in international contracting (Paavola et al., 2020). These difficulties may be rooted in policies that seek to regulate the labor market in a general sense, overlooking the existence of labor markets with distinctive characteristics, namely skilled labor (Russ, 2017) necessary for the growth of startups, which therefore require specific policies.

Public administrations should consider reducing the bureaucracy associated with hiring talent from other countries, as the Europe Startup Nations Alliance (2022) defines in its standard “attracting and retaining talent”. In this line, the “España Nación Emprendedora” strategy (Gobierno de España, 2021) already proposes a program for access to work visas for foreign professionals not residing in the EU who are going to carry out the previous formalities to develop an entrepreneurial activity or to start, develop or manage an economic activity as an entrepreneur in Spain. There are also plans to develop a program to facilitate visas for digital nomads (freelancers, self-employed and people employed by third parties).

However, the agents of the EE continue to express regret at the difficulty of recruiting international talent, and therefore this measure remains fundamental:

  • Action 4. Reduce bureaucratic hurdles to attract nonlocal talent

The growth from startup to scaleup is also based on the opportunity to learn from others and to rely on references that have overcome the difficulties they are going through, or that can help them work collaboratively to grow. Indeed, networks (indirectly through SME-universities collaboration; opportunities for networking along the supply chains, between small firms, and local peer networking opportunities), would be supporting firm growth (Fotopoulos, 2023). Collaborative networks among these and with other EE agents drive innovation, for example, when they interact through collaborative platforms (Chursin et al., 2022).

Networks of entrepreneurs to achieve an EE that favors the internationalization of startups are also important (Mason & Brown, 2013), as well as their growth (Mason & Brown, 2014).

To try to overcome the impossibility of establishing a "network of equals" in those smaller EEs, such as València, it would be advisable to seek some solution that would allow having "big brothers" from other EEs that help them in the "activation point" that triggers the growth of the startup (Brown & Mawson, 2013). Public administrations can enhance communication channels within the EE and help identify new partners in other EEs, as is already being done on a small scale with IVACE's Peers4Growth program.Footnote 2

A further action promoted in Spain is the "Desafía" program, within the framework of the broader "España Digital 2026" initiative, which aims to facilitate the entry of Spanish SMEs into the world's most innovative technological ecosystems. It is a program focused on advice and accompaniment to innovative EE such as Tel Aviv, San Francisco, Berlin, or London, as well as the connection with key agents through experts within each of these EEs (Ministerio de Asuntos Económicos y Transformación digital, n.d.).

Hence, the fifth action for policymakers to consider is:

  • Action 5. Establish peer-to-peer programs with other national and international EE

Suitable accommodation and planning permission are problems for growing startups (Lee, 2014). One of the common demands of entrepreneurs, often associated with their specific interest in locating in entrepreneurial environments, is the availability of spaces. It is not only about being able to access offices and premises, but startups highly value the opportunity to be very close to each other, particularly those that have passed the early phases and are ready to grow.

The role of public administrations in urban planning is key to ensuring the availability of adequate spaces in which to install incubators and accelerators (Aaboen, 2009), which allow numerous startups to coexist and, in this way, stimulate growth (Mian et al., 2012; Lamine et al., 2018; Van Weele et al., 2018; Cohen et al., 2019; Saura et al., 2019) and, if possible, using attractive buildings or areas for development.

Subsequently, two suggestions for EE enhancement are:

  • Action 6. Ensure the provision of spaces for entrepreneurship

  • Action 7. Promote occupation by the EE of emblematic buildings and in attractive locations

Complaints about high levels of bureaucracy seem common among firms, especially among entrepreneurs who, due to their small initial size, perceive it as a greater burden (Aldrich & Auster, 1986). The tempos at which startups move do not coordinate with the slowness of some administrative procedures (Kitching et al., 2015), which were inherited from previous ways of granting permits and ensuring compliance with regulations. In fact, according to a survey by the European Investment Bank (2021), 29.66% of European small companies considered business regulations (licenses, permits and taxes) to be a major obstacle to growth, and this percentage is alarmingly high for Spain, reaching 66.07%.

The Startup Nations Standard declaration calls on European governments to adopt the Small Business Act's "Think Small First" philosophy and to consider startup-friendly exemptions and regulatory sandboxes to prevent unnecessary administrative burden/red tape (Europe Startup Nations Alliance, 2022). In this regard, the recently published Startup Law, to promote the startup ecosystem (Law 28/2022) incorporates an important set of measures that significantly reduce the legislative obstacles to the creation and growth of these companies, mainly related to tax and social charges, the requirements of commercial law and bureaucratic procedures.

So, reducing bureaucracy and facilitating the completion of administrative procedures will have a positive impact on users and help to boost business productivity. Acknowledging this, a pivotal measure to bolster venture growth is:

  • Action 8. Reduce bureaucracy linked to entrepreneurship

Scaleups need to talk one-on-one with the public administration, so building bridges that facilitate dialogue and help design policies that favor their growth becomes a necessity for all EE, especially emerging ones.

In Spain, the "España Nación Emprendedora" strategy (Gobierno de España, 2021) has launched the National Office of Entrepreneurship (ONE, in Spanish), which aims to coordinate and organize the support services for entrepreneurship in collaboration with all the state bodies and public and private agents in the EE, but it remains to be clarified how the dialogue with the different stakeholders will be managed.

Accordingly, we advocate policy makers for the following action:

  • Action 9. Generate a permanent and regular channel of dialogue of startups/scaleups with the main public decision-makers in entrepreneurship

A key element in an emerging EE that favors the growth of startups is the existence of a culture that recognizes these companies, values them, and highlights their successes (Isenberg, 2010). There are many actors who have a responsibility to develop this culture, although public administrations can start the process in basic topics, such as defining and pointing out what a scaleup is and which are the scaleups of their territory. To achieve greater and better collaboration between administration and scaleups, it is first necessary to identify the category of scaleups in the observatories and catalogs of startups and ensure that they are kept up to date.

Furthermore, the definition of a scaleup lacks clarity, with various reports and documents employing different variables to delineate the concept (Vandresse et al., 2023). To foster a culture that encourages scaleups, additional effort is needed to agree on a definition that effectively identifies ventures falling within the scaleup category, as suggested next:

  • Action 10. Identify, make visible and regularly update the scaleup category

The next step is for public administrations to make these scaleups visible and turn them into role models. The recognition of scaleups by the authorities provides a greater social impact, supporting and reinforcing the brand of the EE, giving it value, and increasing the pride of belonging to it (Candeias & Sarkar, 2022). It is required that opinion makers, among which are public administrations, assume responsibility for providing status to entrepreneurship through social networks and public media because only by addressing all the channels through which public opinion is informed will the objective of extending the entrepreneurial culture and the consolidation of successful models to imitate be achieved (Jonek-Kowalska & Wolniak, 2021).

Keeping this in view, we propose:

  • Action 11. Publicly recognize and make visible the successes of scaleups from the public administration

Developed economies seem to share a sincere and determined concern to favor an EE that enables the success of their locally based companies. However, the speed with which events take place, the proliferation of agents in the EE, the willingness to launch initiatives, the novelty of emerging EE and, ultimately, the determined public support for entrepreneurship, sometimes exert an opposite effect in which entrepreneurs feel lost when identifying the opportunities and support that are offered to them. Helping them focus their efforts and target the initiatives that best fit their specific circumstances through mentoring programs (Brown & Mawson, 2013) can be the finishing touch for public action to provide support for entrepreneurial success.

The “España Nación Emprendedora” strategy (Gobierno de España, 2021) proposes to advance in these fields with initiatives yet to be developed, such as sponsorship and mentoring for women, the promotion of intergenerational meeting points to facilitate the exchange of knowledge and experiences between senior professionals and entrepreneurs who can benefit from their knowledge and extensive professional experience, or the Scale Up program that contemplates different mentoring actions associated with the design of scaling-up programs.

Therefore, we encourage policy makers to undertake the following measures:

  • Action 12. Promote mentoring and tutoring to scaleups to take advantage of support initiatives

Finally, EEs attract investors, generating a symbiosis in which the more entrepreneurial talent there is, the more sources of financing there are. Even emerging EE have adequate sources of financing to stimulate growth, such as venture capital (Hellmann & Puri, 2000) or subsidies for R&D from public administration (Testa & Szkuta, 2017).

However, startups that take the step to become scaleups recognize the need to ally with the consolidated industry and aspire to become its innovation vehicles (Scaleup Institute, 2021). Public administrations can act as a bridge between both business models and encourage large companies to approach startups and scaleups through corporate venturing.

In this regard, the “España Nación Emprendedora” strategy (Gobierno de España, 2021) includes corporate venturing as a measure to channel more capital towards risk investment and generate open innovation in the business sector.

In this context, our last recommendation to public authorities is:

  • Action 13. Empower corporate venturing

Conclusions

The growth from startup to scaleup is facilitated within an EE that provides specific conditions not easily arising spontaneously. Emerging EEs face an even greater challenge, where public policies become a crucial facilitator to strengthen other dimensions of the EE and lay the foundations for startup growth.

At an academic level, this study contributes to existing literature by juxtaposing prior research on the success factors of startups with the perceptions of entrepreneurs and other agents in the analyzed EE. This paper provides a specific and enriched understanding of the EE and the challenges that startups face to grow, presenting a reasoned set of policy focal areas to address them. Our research aims to contribute to the development of specific theoretical frameworks addressing the complexity associated with startup growth in emerging EEs.

The practical implications of this study manifest in a series of public policy actions designed to bolster essential elements in an emerging EE supporting startup growth. The analysis of the proposed actions reveals their categorization into three broad lines: enhancing talent availability, promoting networking opportunities, and reinforcing the entrepreneurial culture of the territory.

Regarding the facilitation of talent availability, actions 1 to 4 propose public policies aimed at attracting talent to the EE, either by incorporating more women (action 1), more nonlocal professionals (actions 2 and 4), or by promoting specific knowledge (action 3).

To promote networking opportunities, recommended public policies involve developing relationships with other EEs (action 5), favoring specific locations for startups (actions 6 and 7), and facilitating the relations of entrepreneurship both with public administration (actions 8, 9 and 12) and with established industry players (action 13).

Lastly, public policies can strengthen the entrepreneurial culture of a territory by recognizing the scaleup category (action 10) and public acknowledging its achievements (action 11).

The suggested actions stem from the analysis of a single EE, which stands as the main limitation of this research. Likewise, the fact that it is an emerging EE translates to a limited number of scaleups, resulting in a very small population for consultation, thus hindering the extrapolation of statistical results. Nevertheless, the participation in the study of individuals with experience in other EEs leads us to consider that the challenges faced by the Valencian EE are likely akin to those encountered by other emerging EEs.

Future research could also gauge the effectiveness of public policies and interventions of public administrations in EEs. Similarly, it would be interesting to analyze one or more emerging EE through a longitudinal study, which would enable researchers to observe their evolution, fine-tune the proposed public policy actions and, in general, contribute to the theory on the dynamics of emerging EEs. Comparisons between the development and challenges for startup growth in emerging and mature EEs could also yield valuable insights.