The number of startups is on the rise, specifically digital startups with products entirely based on software. These companies are facing a resilient challenge when it comes to increasing their user base, revenue or market share. This process is called scaling, which is an essential part for every startup in order to establish themselves in the market. While there are several generic models focusing on scaling a business, there seems to be a lack of scientific research focusing on the challenges during the process of scaling. This paper describes a qualitative study focusing on purely digital companies which have scaled or are trying to scale. Resulting in finding several distinct challenges and barriers related to scaling digital companies, by comparing and contrasting growth literature with the data generated by this study. Besides these challenges, our findings suggest that B2B and B2C companies are facing different challenges during their scaling processes.

The advancement of digital technology has created a pathway for digital start-ups to flourish very rapidly. However, these companies are facing resilient challenges and barriers during their scaling. Scaling is an important stage for ventures to grow their revenue at an exponential rate while keeping operating costs low. Nevertheless, there are several research papers that reflect the challenges and obstacles that hinder the scaling of digital startups. There are a limited number of scientific studies conducted in the context of developing countries. Therefore, this study aims at investigating the key potential contributing factors in northern Ethiopia (Tigrai). In this study, qualitative exploratory research is considered as a suitable and appropriate method to generate contextual understanding. The outcome of the study shows that the most noticeable themes impeding digital startups scaling are market challenges, lack of financing, lack of support from incubators, poor digital infrastructure, digital culture, and regulatory issues. Based on the findings this research critically suggests key applicable recommendations to overcome those challenges.