Scale-up Briefing: Raising £1M and more
On Wednesday 17th January, Engine Shed, TechSPARK and SETsquared Bristol hosted a Scale-up Briefing event for founders and investors to explore how best to raise £1M or more. The event was sponsored by the London Stock Exchange and Alternative Business Funding.
What is a scale-up anyway?
Scale-up Enabler, Briony Phillips kicked off with an introduction to scale-ups and the challenges that they are facing.
The scale-up definition that Briony uses is a business with 20% growth year on year for 3 years with 10 people or more. Regional examples of scale-ups that she mentioned include Pukka Herbs, Pieminster and Cosy Club. However, Briony reminded us that there are invisible scale-ups too and businesses that face the same challenges but may not yet be a “scale up”as defined above because, for example, they have not yet hit 10 people.
What are the challenges that scale-ups face?
Briony, through her role as a scale-up enabler has identified the key challenges that Scale-Ups face. As pictured above this includes:
- Leadership Capacity
- Infrastructure (inc office space)
- Skills & Talent
- Markets
- Access to Finance
This event was focusing on the particular challenge of access to finance.
Fireside Chat with Silas Adekunle, Founder and CEO at Reach Robotics.
The first special guest of the day was Silas Adekunle, Founder and CEO at Reach Robotics. Silas shared open reflections on Reach Robotic’s investment journey so far. Reach Robotics was founded in 2013 by Silas Adekunle (together with co-founders Chris Beck and John Rees). This was while Silas was still at university. Ultimately Reach Robotics have gone on to develop the MekaMon the gaming robot which is now available in Apple Stores. Silas talked about different stages in their investment journey including examples of “cash to get going” which allowed them to create and develop prototypes, photoshoots with Wired Magazine before they had a functioning prototype and growing and leveraging their network to get further accelerator and angel investments.
Tips and insights from Silas that I wanted to share included:
- Don’t launch too early. If they had launched too early (before they were ready) the product would have been too ugly and consumers would not have accepted it.
- Keep in contact with investors. They might not be ready right now, but keep them updated. Silas also pointed out that some investors will make a point of watching a company for a year before investing.
- The more social validation you get the better.
- The vision of where you want to go will evolve. When considering acquisition offers they could align with your vision, but it could also be that you haven’t quite got there yet and that you want to do more.
Panel Discussion on Access to Finance and Raising Investment
The panel discussion was hosted by Chris Dyson, Partner and Head of Tech Sector at Ashfords and the panellists included Claire Dorrian, London Stock Exchange (@LSEplc), David Fogel, Accelerated Digital Ventures (ADV) (@AcceleratedDV), Anthony Carty, Alternative Business Funding (@NonBankFunding) and Richard Turner of Catalyst Venture Partners. (@CatalystVP) who all briefly introduced themselves.
The panel explored options available for raising £1M from debt to venture capital and shared their views and their tips for success. It became clear that the “access to funding” challenge is not a Bristol or even a South West Challenge. The panelists consider this to be a challenge in all of Europe where investors are simply more risk adverse than they are in the US and that in fact, founders should not consider location to be a limiting factor. ADV used the example that they themselves don’t have an office and that founders apply using an online platform therefore they are not limited geographically. David Fogel of ADV also reminded us that actually in Bristol your money will go a lot further – what will last over a year in Bristol would only last a few months in London.
Other interesting insights that came out of the discussion included:
“Fundraising is a strategic process”
Richard Turner advised the audience that they needed to have a plan and reminded them that fundraising is a strategic process and that it is about thinking longer term. It is not done on the basis that it will take 6 months and then it is done. You need to be out there marketing yourself and networking. You should have a three-year plan. This three-year plan should be about telling people what you do, investing your time in raising your profile, in your website, in your marketing materials etc.
“Fundraising is not a goal but a means”
David Fogel repeatedly reminded us throughout the discussion that the goal is not raising funds, but rather that the funds are a means to reach your goals. Fundraising is a way to deliver. David emphasised that investors want results and that you need to deliver what you are saying that you are going to deliver. (PR is also not a goal!). Additionally, don’t forget it is possible to raise money when you don’t need it as raising money when you don’t need it can be one of the most interesting propositions for a VC.
“Different Companies have different funding patterns”
Different companies will have different funding patterns and different types of funding will be right for you at different stages of your business. Think about what kind of company your are building. Think about your business plant and identify the correct funding pattern for your business and your business needs. For example, if you are pre-revenue you will need to be looking at an equity solution.
Lightning Talk from Marcus Stuttard, LSE
The last speaker of the afternoon was Marcus Stuttard, Head of AIM at London Stock Exchange. Marcus’ lightning talk brought to life some local examples of businesses that have successfully floated on AIM and described some of the benefits of their Scale-up Programme Elite. The ELITE programme supports companies through their next stage of growth (and includes business support and mentoring). The programme welcomes a new group of companies every six months – some of these companies will go through the IPO process but this is not always the case, and the programme helps companies consider their options. To apply to be a part of the programme the companies must be generating more than £5m revenue.
For more information Marcus also shared that the LSE had also created a Guide for Entrepreneurs which includes stories that people may find helpful.
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