What is scalability?
Scalability is a company’s ability to grow revenue at a rate substantially faster than the growth in cost — to maintain or expand margins as the business expands. Scalable businesses leverage technology, network effects, or content/IP that can serve growing demand without proportional cost increases.
SaaS, marketplaces, content platforms and software products are generally highly scalable; agencies, services and labour-intensive operations are less so. Scalability is a primary determinant of venture investability and equity valuation.