Over the past few weeks I have been able to go to a few the seminars as I wanted to use the time as a way to gauge how start-ups and growing businesses where getting funding, what were the sources, and how the landscape is changing for companies in the growth cycle? It was time well spent on my part – mainly because I was very selective on what sessions and seminars I attended.
As an IT professional and manager who went through the last ‘dot net’ tech bubbles and was a founding director of a technology start-up until 2005 (before it was sold) I do not know if we are in a ‘new tech bubble’ again. In particular seeing the eye watering recent valuations going on for technology IPOs and acquisitions, such as Instagram, Groupon, Twitter, LinkedIn and of course Facebook. But that is a different story to be told at on another day (yes I do have an opinion on it)…
What did impress me here in the UK is that there are still groups of individuals willing to start up and run ‘real businesses’ and if the proposition is right, there are many many ways for them to get finance and investment. I have had the pleasure of taking technology propositions around many sources of financing in the past, including private equity, VCs, and high net worth individuals and ‘family offices’. I have not forgotten how hard it is to get finance even with the best idea but not enough customers.
Also, what I took away from these events was that if you had a good idea, started a company and have a few paying customers, the chances and sources of finance massively increases. In particular there is a very active sector of the market in ‘corporate venturing’, when a large company invests in your company, either because it is cheaper for them to do so that build your solution internally, or they can put their assets behind you to allow your company to growth at an accelerated rate. They are not charities, so want a serious piece of the action.
In the finance world there are many types of investors, the back seat one or the one who takes a very active hands-on approach to ensuring his or her investment grows and is secure. With the right backing team a business owner can grow the business very fast and push its sales dramatically. But to do this the investors may want the original owners to give up equity or control.
The old adage still applies; do you want 100% of a £0.5m / £1m company or 50% of a £5m / £10m company? I know which one I would want; even though I fully understand that the proposition is not just about the money.
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