From startup to scale-up: when does your risk profile change?
A dream becomes reality: a tech company grows from eight to seventy employees, wins international clients, develops its own platform and adds AI capabilities. The organisation is barely recognisable compared with the startup it was a few years ago. Yet its risk assessment has never really been updated. Growth does not just create new opportunities. Liability, dependencies and the financial impact of an incident also increase. These five developments are a natural moment to reassess your risks and insurance. Sandy Buurman-Drenth, Senior Account Manager Tech at Meijers, explains what to look out for.
Congratulations – but be extra alert when you reach these milestones:
1. Your first enterprise client
A major client brings revenue and credibility, but often also comes with stricter contractual requirements. These may include high liability limits, SLA penalties, indemnities and requirements relating to privacy and security. An outage or software error can also affect far more users and business processes. Before signing, check whether the obligations in the contract align with your insurance coverage.
2. Your first international client
International growth brings different laws, contractual practices and liability risks. Insurance policies do not always automatically provide coverage in every country or jurisdiction. Contracts with clients outside Europe in particular require extra attention. Check which law applies, where a potential claim would be handled and whether your insurance coverage is suitable.
3. Your first acquisition
An acquisition does not only mean taking on customers, employees and technology. You may also inherit outdated systems, weak security, unclear intellectual property rights and risky client contracts. In addition to the financial and legal position, assess the cyber risks, insurance history and technical dependencies of the company you are acquiring.
4. Your own software platform
Once your own platform becomes the foundation of your services, your dependence on technology increases significantly. An update error, cyberattack or outage at a cloud provider can immediately affect multiple clients. New applications such as AI also raise important questions. Who is responsible for an incorrect output? What data does the system use? And do your contracts still reflect the services you actually provide?
5. More than fifty employees
As your workforce grows, your employer-related risks change too. These include sickness absence, disability and employers’ liability. At the same time, new management layers emerge and directors take on greater responsibilities towards employees, clients and investors. The organisation may also become more vulnerable if a key specialist leaves or is unexpectedly unavailable.
Is your insurance programme growing with you?
Sandy Buurman-Drenth concludes: “An insurance programme that suited a startup with eight employees will usually no longer be sufficient for an international tech company with seventy employees. Do not wait until a client, investor or incident forces you to reassess your risks. Use important growth milestones to review your contracts, activities, technology and insurance.
At what point are you no longer a startup, but a mature software company? Perhaps it is exactly the moment when your risks start growing faster than your insurance programme.”
For more information, please contact Sandy Buurman-Drenth, Senior Account Manager Tech.
