People powered investment: the path to scale-up success

How can ‘scale-up’ companies in the West of England – or anywhere else – improve their chances of attracting capital to support growth? This was one of the questions raised by a recent Q3 Quarterly Investment Briefing (QIB) in Bristol, organised by innovation and collaboration hub Engine Shed. Taking the theme of ‘People Powered Investment’, the session identified some significant regional investment trends and highlighted the importance for scale-up companies of focusing on the people agenda.
 
Beauhurst now identifies almost 300 equity-backed scale up businesses in the West of England, up 20% on Q1 2018. This rate of growth is encouraging, demonstrating the vibrancy of the economy in the West. Many of these companies are early stage, with around 50% raising no more than seed rounds so far. Unsurprisingly, it’s crowdfunding outfits such as Seedrs and Crowdcube leading the pack with number of investments made, with 32 and 23 investments respectively. At the other end of the spectrum, when it comes to venture capital (VC) and growth capital, just ten companies account for around 60% of the total money raised in the region to date. VC and growth capital investment appears to be concentrated in a relatively small group of businesses.
 
I’ll be interested to monitor these trends over the medium term. Over time, I’d like to see the higher volume of crowdfunding investments translating into a larger pool of companies attracting VC or growth capital. But how might this be enabled?
 
Coming back to the theme of ‘People Powered Investment’, Tech Nation has reported that the Bristol and Bath tech cluster is the most productive in the UK, with a digital tech turnover of £320,000 per employee (far higher than London’s £201,000 per employee). This sounds like a good news story but, although there will be a number of factors at play, one interpretation of this statistic is that teams in the region are working harder to deliver the same level of output as teams in London. Might this be a consequence of the scarcity of VC and growth capital in the region to scale and grow teams? The investment picture certainly suggests this could be part of the regional productivity story.
 
The availability of VC and growth capital will increase as the depth of the senior talent pool in the region improves – but this will take time and is subject to many external influences. So what can early stage businesses in the region do now to secure the growth capital they need in order to scale?

Reflecting on the themes of ‘People Powered Investment’ from the QIB, focusing on putting in place a (senior) management structure, hiring the right people for the right roles, correctly positioning the role of the founder within the business and embracing diversity at the C-suite level will greatly enhance a company’s ability to secure the right investment.

To discuss the ways in which our local team can help you thrive in a changing world, please contact James Eastell.
 

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