Scalability refers to the relative ability of a business to scale its operations. The scalability of a business directly affects its valuation, because it is related to how fast and how profitable it can be given the right market conditions. The more scalable a business’s model is, the more it is worth. Software startups and SaaS startups with asset-lite business models are often the highest valued companies because they can essentially scale indefinitely without inventory, physical assets, or intense amounts of labor.