Growth Catalysts

Growth catalysts are structural or situational advantages that explain why some startups achieve outsized success beyond strong fundamentals. They fall into two categories: system-level flywheels (self-reinforcing and compounding) and boosters (high-leverage but less defensible). Flywheel catalysts represent the gold standard, with four main types: network effects (where more users increase value for all users), scale flywheels (where volume drives down costs enabling lower prices), embedded flywheels (where usage creates switching costs through data and customization), and brand flywheels (where more customers strengthen brand promise or erode market barriers). Network effects are particularly powerful, with NFX research showing 70% of tech value creation from 1994-2017 came from companies with network effects, despite only 35% having them.

Catalyst boosters span six categories: market (underserved markets, regulatory shifts), product (user-generated content, built-in virality), model (free pricing), brand (founder story, counter-positioning, category creation), channel (emerging platform timing, exclusive audience access), and company (elite teams, privileged networks, capital access). The most powerful growth comes from combining multiple catalysts, creating exponential rather than additive effects. Catalysts must inform growth strategy—for example, network effects require high-scale acquisition channels, frictionless onboarding, and low-friction pricing to maximize the flywheel effect.