Welcome
uilding a website, hosting, CMS...for first cheapest element – however you don’t need to time business owners, getting these online spend a fortune,’ he adds. ‘TSO Host and Krystal Bessentials in place, on a budget, can seem Hosting I would recommend. TSO at the moment daunting at first. But there are many ways to does have some issues at the moment but the ensureBR youI TISHcan set these elements up at a support is good. reasonable price. Krystal Hosting, which Blackman has used Most hosting providers come in at a similar low since the start of his web design career, offers a priceG pointRO – oftenW fromTH just £1 a month – so £99+VAT a year package that will allow you to business owners should look at online reviews and manage a site with at least 200 -300 pages and go for quality of support, says Alex Price, founder 500 visitors a day. ofS 93digital.co.uk.TARS ‘You need to know you can get With a background in digital marketing, Caroline in touch with your hosting provider quickly and Taylor, founder of Taylor’d Bundles, took the easily, at any hour, if your website goes down,’ he decision to design and build her own CMS using adds. Drupal - saving money. ‘Their plug ins and updates Getting the best web hosting package is key for are straightforward and allowed me to build a site your website to work smoothly and problem free, that worked especially for me,’ she says. ‘I have a says James Blackman, founder of website design very good friend who programmed, tested and and digital marketing agency CocoonFX Media. helped me support the site as and when I need it. ‘When we set up our business, there weren’t many I’m very fortunate but made it a priority to fully hosting options out there, however the golden rule understand and learn what the site was capable of we stuck to was rock solid customer support and so I can manage the majority of my site itself.’ UK-based servers,’ he says. Taylor works with up-and-coming designers and The key factor to consider for web hosting is the asks as many as possible to link to her site to help SLA and the hardware, he adds. ‘RAM and CPU is with link building and add her URL to as many a good start. The higher the numbers the better posts as possible to help increase SEO visibility. and also cloud is often a wise choice.’ ‘It was also really important for my site to be ‘If you want hassle-free web hosting, businesses mobile optimised so we built the site to appear should consider getting a host with cPanel, an perfectly on the top 15 mobile operators - I now easy-to-use administration package and allows use analytics to see what the site is being viewed you do things with a click of a button,’ Blackman on and optimise accordingly.’ advises. ‘Hosting should not be seen as the REPORT H1 2017
DATA PARTNER SPONSORED BY
DATA PARTNER 1 SPONSORED BY Contents
3. Foreword
5. Acknowledgements
Venture Capital Growth Stars
6. Farfetched and Improbable? Why European venture capital is now larger than life
11. Inside insight – Venture capital: Driving growth in the UK
Crowdfunding Growth Stars
13. Has crowdfunding peaked?
15. Inside insight – Breaking the biggest equity crowdfunding misconceptions
Business Growth Stars
17. Who are the British Growth Stars?
18. Seed stage stars
22. Venture stage stars
25. Growth stage stars
The British Growth Stars is an independently reviewed, data-driven, editorially-led report that deep-dives into the UK’s fast-growth business landscape.
This is the first edition of the report, which includes industry analysis, expert insight, interviews and profiles of top funders and unlisted UK-based start-ups that have raised funding in different stages of its growth.
DATA PARTNER 2 SPONSORED BY Foreword
Investors funnelled more money into British start-ups and high-growth companies in the first half of 2017 than ever before. But is it good news all around?
It’s the best of times, it’s the worst of times.
If there has ever been a time to gratuitously borrow from Dickens, it is now, the second half of 2017. This year’s British Growth Stars report was compiled against the backdrop of continuing concerns over Brexit and its esoteric ramifications on currency rates, policy, and investment climate. Global uncertainty also prevails, with the rollercoaster Trump presidency, and the unrelenting growth of American and Asian tech giants.
However, the British entrepreneurial ecosystem has never been healthier.
Dealflow data from the first half of the year shows that investment volumes have been skyrocketing compared to last year. UK-headquartered unlisted companies attracted a record £3.03 billion of equity investment during the first six months of 2017, up 74.7 per cent from the second half of 2016. Interestingly, the deal numbers reveal a different story. The first half of 2017 saw 3.5 per cent fewer transactions than the same period last year. What this shows is that the UK is now seeing larger deals enter the pipeline, fuelling growth at a rate the start-up ecosystem has never seen before.
But the numbers could be skewed. In the first six months of 2017, the UK saw two of the biggest deals so far –cloud computing firm Improbable raking in £389 million from American firm, Softbank Capital, and fashion-tech marketplace Farfetch securing £313 million from China’s JD.com.
Deal numbers and amount invested by half
Amount invested Number of deals
3.0b 750
2.8b 700
2.6b 650
2.4b 600
2.2b 550
2.0b 500
1.8b 450
1.6b 400
1.4b 350
1.2b 300
1.0b 250
800m 200
600m 150
400m 100
200m 50
2011H1 2011H2 2012H1 2012H2 2013H1 2013H2 2014H1 2014H2 2015H1 2015H2 2016H1 2016H2 2017H1
Based on Beauhurst data
DATA PARTNER 3 SPONSORED BY The UK’s record half for equity investment was largely because of fire-power from overseas investors. This suggests that the number of deals involving investors headquartered outside the UK was up by 26.7 per cent in the first half of 2017, which experts suspect is a direct impact of the weakened pound over the past year.
It could also be symptomatic of the fact that early-to-mid-stage UK business now have a host of funding options, but for later-stage businesses, attracting investors to fund their Series D round and beyond is an uphill task. Top investors by deal numbers
Top BanksinvestorsCrowd by dealfunding numbersCrowd funding Crowd funding
Banks Crowd funding Crowd funding Crowd funding
SyndicateRoom
SyndicateRoom 19 19 Entrepreneur First Entrepreneur First 18 18 Crowdcube Funding London Funding London Crowdcube 11 56 Seedrs 11 56 Angel Seedrs AngelCapital Group 64 Capital Group 11 64 Accelerated 11 AcceleratedDigital Ventures Digital Ventures 13 Startup Funding 13 Business Startup Funding Club SEIS Fund BusinessGrowth Fund Club SEIS Fund Growth Fund 11 11 14 14 Finance Wales Scottish Enterprise Finance Wales Scottish Enterprise 16 17 16 17
Based on transaction data tracked by Beauhurst, a leading research platform specialising in high- growth companies, this report looks at the equity investment landscape, as well as the most promising companies in the UK, from seed to late stage in their growth.
We spoke to investors in the most active venture firms in a deep-dive feature dissecting how the two largest deals to date came to be, and what the industry can expect for the rest of the year.
In the first half of 2017, the number of deals secured on crowdfunding platforms, rose by 2.6 per cent, even though transaction numbers slowed in the second half of the year. Looking at the equity crowdfunding sector, we zeroed-in on the most active platforms, speaking to those at the helm on the biggest trends in alternative finance.
Praseeda Nair Editor
DATA PARTNER 4 SPONSORED BY Acknowledgements
As banking partner to some of the most disruptive and innovative businesses in the UK and beyond, we understand entrepreneurs and what it takes to help make a venture successful. For the ambitious entrepreneur, growth can sometimes happen so quickly that you have little time to focus on your financial strategy – that’s why it’s so important to have a banking partner that can keep pace with your business. entrepreneurs.barclays
Beauhurst is the leading provider of rich data on high-growth UK companies. The platform is used by hundreds of organisations around the UK to research and monitor the most ambitious businesses and their backers. beauhurst.com
GrowthBusiness.co.uk is for CEOs of fast-growth businesses in the UK. The site features in-depth interviews with business leaders, and news and analysis of hot-button topics affecting the start-up world. From trends in fundraising and financial management, leadership, productivity and workplace culture, to how-to guides from Europe’s top venture capitalists and advisers, GrowthBusiness.co.uk is an essential resource for today’s savvy entrepreneur. growthbusiness.co.uk
Vitesse Media is a digital media and events company specialising in enterprise technology, growth business, investment and diversity. Our award-winning magazines and content, engaging and responsive websites, exciting events and highly acclaimed research touch millions of small businesses, entrepreneurs, IT professionals, investors and professional women, as well as advisors and suppliers. Our flagship media brands, published across print and digital, include Information Age, SmallBusiness. co.uk, GrowthBusiness.co.uk, What Investment and Growth Company Investor. We also host a series of high-profile and prestigious live events that bring together thousands of business, technology and finance decision-makers.We are dedicated to building focused communities of professionals and high- net-worth individuals who consume our high-quality content across multiple platforms – including print, online, social media, mobile, email and events – and providing numerous opportunities for our clients to access, connect and engage with these audiences. vitessemedia.com
Authored by Praseeda Nair, Owen Gough, Juliet Rogan, and Chris Rea. Based on interviews with entrepreneurs, investors and industry commentators.
DATA PARTNER 5 SPONSORED BY Venture Capital Stars Farfetched and Improbable: Why European venture capital is now larger than life
Are H1 2017’s recording breaking deals a sign of things to come, or just one-offs?Praseeda Nair speaks to top investors on what they look for when they invest in the hottest up-and-coming sectors in technology.
etween the £389 million raised by cloud digit series A to C deals, or simply the new norm. computing software firm Improbable, “The ARM Holdings and Skyscanners of Band £313 million secured by fashion tech this world have revealed a regular pattern platform FarFetch, the first half of the year from Europe. But it’s an incredible set has propelled the UK investment scene firmly of circumstances that leads to deals like back into the global spotlight. These are two of Improbable, which is probably a one-off,” says the biggest deals on record in the UK, and top Laurence Garrett, partner at Europe-wide investors seem divided in opinion on whether Highland Ventures. “But £500 million is big in these are rare breeds among Europe’s double- anyone’s book.”
Founded: 2012 Investment date: 11 May 2017 Improbable is developing cloud computing Investment amount: technology supporting large scale virtual reality, with applications for gaming, defence, £389m transportation, health and finance. Improbable Investor: SoftBank Capital has raised £423m over 4 fundraisings. Introduction on Farfetch deal, Improbable deal.
Founded: 2007 FarFetch is a global online marketplace for Investment date: 22 June 2017 independent fashion boutiques as well as Investment amount: major designer brands. The site has clothing for both men and women. FarFetch has raised £313m £516m over 8 fundraisings. Investor: JD.com
Entrepreneurship beyond borders triangle versus Berlin, Paris, Barcelona, and the For Garrett, the it goes beyond viewing UK deals Nordics. As a whole, Europe is doing well,” he in a vacuum. The success and failing of each city says. in Europe have a deeper impact when viewed “The world of finance is incredibly fluid. Just in the context of the wider European start-up as you’ve seen with Softbank, investors are ecosystem. “I view Europe as a whole, and tend investing across the world. It’s pretty dangerous not to break it up into London and the golden to view (deals) city by city. Our aim is to do the
DATA PARTNER 6 SPONSORED BY Venture Capital Stars
best deals we possibly can for our investors, and in clusters, like in the Valley, and we’re seeing you’ve got to look far and wide to do that. You critical mass in London, and critical mass can’t just look at one city or one geography.” developing in Scotland with the likes of Fanduel As for cluster-based rivalries, Garrett believes and Skyscanner,” he adds. it stems from competition within the venture “In Manchester, we’re seeing clothing and capital world. “I think it’s driven by some of fashion boom, and a lot more activity in the west the VCs and the politics. I don’t think the country. In Cambridge, we’re seeing the effects entrepreneurs look at their business from a city of the ARM Holdings acquisition already. New by city perspective; far from it! Quite a lot of money is going in and fuelling the infrastructure companies we’re backing have operations out of there. We need to spend more time in these the UK, in places like Poland, Portugal, Germany, clusters to create the next wave coming through. Singapore, the US, and so on.” They’re not one offs. This is just the beginning.” “What the Hello Freshes of the world prove But for longevity and true profitability, it’s is that you’re still going to see significant crucial to let these clusters that make up a wider companies being created from Europe. I’m entrepreneurial ecosystem flourish organically, delighted to see serial entrepreneurs coming says Highland Ventures’ Garrett. “I’ve heard a lot back. The maturity of the European market is of people doing the Silicon Valley comparison, terrific. I’ve been doing this for 20 years now and and I think it’s ridiculous! Within America, the it’s good as I’ve ever seen it.” East Coast doesn’t try to do what Silicon Valley For BGF Ventures managing partner, Simon is trying to do. It’s a bit out of whack, the Valley,” Calver, the likes of Improbable and FarFetch he explains. foreshadow a potential renaissance for “We try and build companies with long, entrepreneurship. “Well, I’m hoping there’ll sustainable futures, that ultimately have good be more of them,” he says. “In my personal profitability with unit economics in their business experience with LoveFILM, I’ve seen a lot of model. We’re lucky to be a part of that. I think successful people come out of that sale, and we can repeat that, time and time again in the they’ve gone on to build even more successful European context. It isn’t really what Silicon firms, like graze, Zoopla, Tails.com and so on.” Valley is about. I don’t think the comparison is healthy.” Fuelling a self-sustaining ecosystem If any cluster in the world could rival the Calver believes the next wave of entrepreneurs Valley, Garrett believes it’s China. “China’s got and investments will fuel the UK and European a chance, but nowhere in Europe is going to ecosystem. “The more successful companies have the concentration of people, finance, and we build, the more we’ll create an ecosystem tech giants that Silicon Valley has. Let’s be clear. that will drive further success. We’ve seen this Silicon Valley is like the whole of the UK being
DATA PARTNER 7 SPONSORED BY Venture Capital Stars
dedicated to technology, in terms of scale.” venture firm raised many eyebrows in the Europe’s own brand of growth is just as healthy investor community, but Reeve sees this as a and robust, he adds. “We’ll never replicate what prime example of good corporate governance. the Valley is doing, and that’s ok. European “Have you seen Travis Kalanick? He spoke at an venture capital already punches well above its event at the Institute of Directors a while ago. He weight and will continue to do so.” comes across as arrogant and hypocritical, and There’s a long track record of Europe was sitting there talking about how Uber is the delivering great companies, but it’s not the future of green transportation. It’s not. It’s a taxi same concentration of Silicon Valley, says app,” says Reeve. “Benchmark’s opposition of Garrett. “European companies take on one- Kalanick’s leadership to me is a positive slant on sixth the financing than companies in the Valley, how venture capital can and should encourage and produce one-sixth the revenue as those decent governance.” companies in the Valley. So we’re ahead in terms This is why Albion Capital relies on two main of capital efficiency.” factors, likeability and decency, when deciding on whom to back, he explains. “We only back people we like. Any relationship with one of your Biggest deals companies could be quite long; at least 10 years or so. It also involves quite tricky conversations about strategy, and you can’t have those difficult conversations with certain people. I would never, ever in a million years have backed Travis BrewDog Kalanick.” £100m The other factor, decency, is fairly obvious, he adds. “It’s just about backing people who try to do the right thing.” Gigaclear Albion’s portfolio is testament to that ethos, £111m FarFetch with companies like Abcodia, the lifesciences £313m firm taking on cancer research, to Quantexa, technology tackling financial fraud; all working towards solving very real problems in the world today.
Trends in technology Improbable There are a number of AI and machine learning £389m Gryphon Group companies being funded in the last few years, £180m says BGF Ventures’ Calver, which is why the firm is looking for a point of difference rather than more of the same. “Where we’re seeing quite interesting development is in the cyber security tech space. Companies are reaching different A recipe for long-term success level of maturity than before. For example, we’ve “For venture capital, it’s important to be humble invested in AimBrain, which provides facial in approach, and always know that you don’t recognition, voice and behavioural recognition. know enough. In some cases, venture capital It’s now more about showing real traction and has to be the responsible voice of reason,” says real customers, rather than just the concept of Albion Capital managing partner, Patrick Reeve. it.” Citing Uber’s Marmite CEO, Travis Kalanick, On the back of these developments, Calver and the ride hailing app’s biggest investor has noticed almost a throwback to traditional Benchmark, Reeve explains why investors technology. “It’s not only about software sometimes have to make the hard choices. solutions now, but also hardware solutions. The battle over the future of Uber heated For example, with cyber security, we’re seeing up in August, as a court in Delaware decided companies that create virtual hardware based whether Kalanick should stay at the helm of the firewalls as an added level of protection. We’ve multibillion dollar company. invested in a company called Garrison in that The unprecedented lawsuit of founder versus area too.”
DATA PARTNER 8 SPONSORED BY Venture Capital Stars
Other areas of note now include medtech, he Brexit: boon or bane? adds. “There are very broken models in how care The future can seem murky at the best of times is provided in some areas, so we’re beginning to in the investment world, but for Albion Capital’s see some interesting developments in medtech Reeve, Brexit marked a lingering sense of as well,” he adds, citing another of the firm’s uncertainty, the ripples of which will be felt for investment, Scottish start-up Caresourcer, years to come. which is a marketplace for connecting people “I can see a trainwreck coming quite visibly who need care with care homes. “We’re also in a couple of years’ time, perhaps followed looking at genomics, but that’s early-stage in our by a change in government and an increase thinking.” in political uncertainty; which is never good Some of the first wave of businesses in areas for business,” says Reeve. “Things are going like e-commerce are beginning to lose what to become tricker. We need to concentrate on makes them unique, Calver adds. “Unless businesses that focus on international markets, someone has a different angle or approach, and are insulated from domestic chaos.” these first wave businesses are not proliferating. Reeve also expects increased competition The next wave was apps. But apps as standalone from international investors interested in UK products aren’t game-changers.” companies. “It’s easier for businesses to raise The industry is beginning to return to deeper finance in their home markets, but competition technology and more integrated platforms that isn’t always a bad thing.” have greater understanding and insight; almost Highland Ventures’ Garrett remains optimistic. like ‘tech as a service’. “I think London has bucked the trend quite well. He imagines technologies like AI will become People don’t really know what’s going to happen a commodity service within tech companies, with Brexit. It’s still 2x Berlin in the first half of rather than functioning as companies in their the year, with around 550 deals worth over £1.8 own right. “It’ll become more a platform or billion. Berlin has a lot less deals at half that toolkit people can use. There’s going to be a lot value. On the whole, Berlin is going well, Paris is of consolidation over time to a few players.” going well, and we love Barcelona.”
DATA PARTNER 9 SPONSORED BY Laurence Garrett Partner: Highland Europe “Highland is focused on the growth sector, so Barcelona, with the sale of Socialpoint at $250 companies that are raising over £10 million. For million. It gave us a great return in 2.5 years,” example in the first half of 2017, we had a £35 Garrett adds. million deal for Lovecrafts in London, selling As a firm, Garrett explains that the strategy crochet knitwear and all of the patterns and has always been ‘low volume, high quality.’ advice that go along with that. We also co-led “We add value in the growing of management the Starleaf £40 million deal,” he adds. The teams and operations to execute and deliver Cambridge based video conferencing company great sales and profitability,” he says. is one of the bigger fundraising deals led by “The VCs out there are all shooting for 10x, Highland Ventures in 2017, which admittedly but we expect a lower loss ratio than venture had been a pretty busy year so far. capital, and slightly more modest returns like 5x “On the exit side, which is the other side of or even 3x returns, with a lower loss ratio.” the coin, we’re having a terrific year so far in
Patrick Reeve Managing partner: Albion Capital “Our focus is where the world is changing and “Once you’re deep within a sector, on boards where will result in growth, and ultimately, of many companies within a space, you see where the growth will result in value. A lot everything in 3D. You build a sophisticated of time goes into thinking about these areas ecosystem. We’ve got an advisory council, of growth and how to measure value,” says made up of people with different skills. This is Albion Capital managing partner Patrick what gives rise to new ideas.” Reeve.
Simon Calver Managing partner: BGF Ventures Over at two-year-old BGF Ventures, managing out there we can help scale and grow,” he says. partner, Simon Calver talks about building a With 20 deals under its belt, BGF Ventures robust and scalable venture firm. “We’ve just has invested nearly £60 million and is looking completed our second year at BGF Ventures, to continue this a-deal-a-month pace. and have are continuing to add to the portfolio “On average, we’re focused on the series while expanding the team. Wendy Tan White A space (investing between £1 million and is joining us from Entrepreneur First, bringing £6 million) and are finding good companies the partnership to four. We’re looking to build there,” he adds. fantastic opportunities for great companies
DATA PARTNER 10 SPONSORED BY Venture Capital Stars Inside insight Venture capital: Driving growth in the UK
The venture capital landscape in the UK is booming, with more companies than ever securing funding to innovate and grow, helping to stimulate the UK economy. Juliet Rogan, Head of High Growth & Entrepreneurs Coverage at Barclays, explains the options available.
he past decade has witnessed a dramatic loosely organised, occasional gatherings or as growth in the number and types of investors tightly coordinated groups. This helps them make Thelping businesses at all stages of their a larger impact on the businesses they fund, while development. The UK sits firmly at the centre also sharing the risk. of this trend. One particular area of investment growth is Venture Capital (VC) firms, which have 2. Crowdfunding – platforms that pool together been the catalyst for prosperity for many exciting relatively small investments from a large number new companies, and form a vital part of the of individuals nation’s economic infrastructure. Crowdfunding takes several forms. Equity crowdfunding is the online offering of private The investment landscape company securities to a group of people for There are five main categories of investors for investment. Debt-based crowdfunding, also known entrepreneurs looking for equity. as peer-to-peer (P2P) lending, provides funding to individuals or businesses through online services 1. Angel investors – individuals who invest their that match lenders directly with borrowers. own personal wealth Rewards-based crowdfunding raises capital online Some angels are former entrepreneurs, while in return for specific non-financial incentives. others have built or inherited wealth from elsewhere. They tend to invest at the earlier 3. VC funds – structured limited partnerships stages of a company’s lifecycle and often employ investing with a view to generating large returns a less formal approach to investing, both in Funds are raised from a set of limited partners terms of their appraisal of the business and the (e.g. wealthy individuals, university endowments formality of the cash injection’s terms. They and pension funds), which are then invested into often come in hosts, pooling their resources in a portfolio of innovative companies. As general investment clubs that either come together at partners, venture capital funds are contractually
DATA PARTNER 11 SPONSORED BY Venture Capital Stars Inside insight
obliged to return the capital and proceeds within a How Barclays is supporting the set timescale, often 7 to 12 years. entrepreneurial landscape As banking partner to some of the most 4. Corporate VC – established corporations disruptive and innovative companies in the UK, investing in innovative start-ups we understand the entrepreneurial landscape Parent corporations provide capital for and the core ingredients needed in order to investment, varying from an ad hoc, deal-by-deal thrive. We offer a unique blend of transactional basis through an annual budget allocation to a banking and lending services, complimented by multi-year, designated pool of money. Different our knowledgeable and experienced relationship VC units within the corporation can have their managers. We open up the Barclays network to own investment objectives. Some exclusively look our partners via initiatives, workshops, conferences for high returns, while others seek a balance with and networking opportunities – all invaluable the strategic objectives of the parent corporation experiences for founders. (e.g. technological co-development and joint We have built a network of dedicated high- commercialisation). growth experts across the UK, who support businesses with their deep understanding of the 5. Accelerators – collaboration-based entrepreneurial journey and landscape. Through programmes that offer mentorship, work space our Venture Capital Coverage Unit, we aim to use and technology in return for equity our expertise to support the businesses they’ve Accelerators give expert advice plus practical invested in to achieve the highest levels of success. and technical support, but to gain access to this, We have also created venture loan products companies will often have to go through robust to help support fast-growing, equity-backed application processes, and may need to have businesses before they’ve broken even, in addition already secured some funding. The Barclays to our extensive range of more traditional lending Accelerator, in partnership with Techstars, has products. We currently have a fund of £200m helped many FinTech start-ups with mentoring available for venture debt for Series A, B and C and guidance. stage companies to help promising businesses scale up. Why is VC important? VC funding is an important route for fast-growing companies and The UK’s strong VC scene has created a fertile environment for disruptive tech companies and is likely to become even more critical in the years ahead. Today, it is a popular choice for the FinTech, enterprise technology, e-commerce, property and travel sectors. In recent years, entrepreneurship has gone mainstream – people are dreaming up ideas at their desks, trying to start new initiatives and looking to disrupt the status quo. They’re becoming less fearful of failure – a shift in mindset that has been in the US since the advent of Silicon Valleythis bodes well for an uncertain future.
About Juliet Rogan Juliet Rogan leads a national team of High Growth Relationship Directors, focused on supporting companies scale from start-up to exit. Over the past six years, Juliet has worked across Barclays Corporate and Investment Banking, specialising in the Technology, Media and Telecoms Sector and played an integral role in building Barclays’ high growth franchise and venture debt product. Previously Director for Barclays’ Technology, Media and Telecoms team, she has worked with a portfolio of some of the most exciting tech companies in London. She joined Barclays in 2010 after qualifying as an accountant at KPMG.
DATA PARTNER 12 SPONSORED BY Crowdfunding Growth Stars Has crowdfunding peaked?
Owen Gough crunches numbers and speaks to some of the most active crowdfunders in the market today to find out.
he convenience and ubiquity of the Mackay thinks that, because crowdfunding is internet has given rise to a new trend of online, the process can be faster than offline/ Tinvestment in the shape of crowdfunding. banking. With the opportunity to offer new Alternative finance has become the go-to cash flow opportunities (eg selling invoices), option for businesses looking for funding. In the she thinks it can help build a community of last two years equity-based crowdfunding has evangelists or customers. Crowdfunding also grown by almost 300 per cent. represents a more transparent, efficient tech However, the question still remains: Is reaction to the credit crisis by offering online crowdfunding the new powerhouse of business marketplaces for funds and raisers to transact, growth? which has philosophical appeal. Deal numbers suggest that the short answer is Mackay says, “I believe that the future of “yes”. investing will be dominated by crowd funders, Beauhurst H1 2017 data shows that deal but the industry is rapidly evolving. Achieving numbers from crowdfunding platforms were up even greater scale is necessarily drawing slightly (2.6 per cent) from H2 2016, but have in larger pots of money. So the sources of seen a decline in the last few months by 18 per investment are becoming more institutional cent. once again, albeit with direct retail investment Does this mean that crowdfunding was simply alongside. The question is how close to a flash in the pan? recreating banking the industry will really Emily Mackay, CEO of TAB firmly doesn’t reach.” think so. TAB is an analysis platform that draws One of the largest crowdfunders in the UK in messy, inconsistent data from hundreds of is Crowdcube, and co-founder Luke Lang platforms globally. TAB Dashboard visualises thinks that it’s only going to get bigger. Lang that data to enable exploration of the data. says, “Over £255 million has successfully been
DATA PARTNER 13 SPONSORED BY Crowdfunding Growth Stars
invested into 519 businesses on Crowdcube Tom Horbye, senior campaigns development since launch in 2011, and we now have over associate, told us that, in 2016, 159 deals were 420,000 members. The long-term trend funded and more than £85 million from 45,000 shows that crowdfunding is now a popular investments into campaigns on Seedrs £64 and established part of the funding scene for million in 2015. Over £250 million has been startup and growth businesses. We’ve helped invested on the platform since its inception. hundreds of business to secure funding from Looking into the future, Horbye says, “In our crowd, who are able to provide not only the terms of long-term trends, we think more funds for growth, but who are also committed and more later stage growth businesses will and passionate, and love the products of the turn to equity crowdfunding to top up their companies they invest in.” rounds and deeper customer engagement and Lang is confident that crowdfunding will advocacy, potentially even used as part of a become a main outlet for businesses looking customer retention strategy. Revolut, who just for investment, and says, “Equity crowdfunding raised £3.8 million on Seedrs from over 4,200 is now firmly established as an accessible way investors as a part of its £50 million series B, to fund startups and growth companies - it’s is a prime example of this. The crowd, greatly now part of the mainstream with a strong track consisting of Revolut’s own customers, invested record of helping young companies grow, for in Revolut’s series B alongside Index Ventures, instance the likes of BrewDog, Monzo, goHenry, Balderton Capital and Ribbit Capital.” JustPark and Chilango.” Clearly, giving the opportunity to invest in Many businesses are looking to use alternative the products they love is something that the finance options and it’s hard to overlook the customer has been craving and crowdfunding success and convenience of crowdfunding for scratches that itch, giving businesses that ambitious businesses. Because of this hunger might not have survived a chance to flourish. for investment, SyndicateRoom has actually So have we answered the question then? Will seen the opposite. crowdfunding dominate the investment market? CEO and co-founder Goncalo de Vasconcelos The general consensus appears to suggest says, “The past few months (June, July and that it is here to stay and that we are simply August) have been some of the best we’ve seen in the brink of a deep well of investment since launching the business four years ago. opportunities. This summer, we’ve seen a continuous trend in growth, with record levels of sign-ups and investments through the platform. “Crowdfunding has become a bona fide Biggest crowdfunding deals in Q1 2017 and first-choice route to finance for growth businesses. What’s more, in today’s low-yield March 2017 VentureFounders environment, early stage investing offers ambitious investors long term, significant £3.3m Lightpoint Medical growth potential. “Crowdfunding is certainly here to stay, but March 2017 Crowdcube is only scratching the surface at present.
We’re starting to see later stage deals on £2.5m Monzo the platform, series A and beyond. In March 2016, SyndicateRoom became a member of March 2017 Crowdcube the London Stock Exchange and the first crowdfunding platform to offer IPOs and £2.4m Cocoon placings on the public markets. As online investment grows, we’ll see later and later March 2017 Crowdcube stage companies funding in this way - and platforms broadening out their scope to £2.1m Gripit Fixings offer more choice.” Compounding this notion, Seedrs, another March 2017 VentureFounders one of the largest and most active platforms in the UK, hasn’t seen a significant drop in recent £1.9m Idio months.
DATA PARTNER 14 SPONSORED BY Crowdfunding Growth Stars Inside insight Breaking the biggest equity crowdfunding misconceptions
Chris Rea, Senior Campaigns Manager at Seedrs banishes the nine biggest crowdfunding misconceptions entrepreneurs and potential investors may have.
here are a few equity crowdfunding 2. Capital is the only benefit from equity misconceptions that can mislead and confuse crowdfunding Tthose considering it as an option. In fact, Not entirely true. Although the prospect of raising equity crowdfunding can be an excellent way of money for a business is the main objective of raising money for a business. Yet, it isn’t a superb crowdfunding, there are other benefits: solution for every businesses, not in the least • Engaging with existing customers. because of common misconceptions. • Acquire new potential customers • Creating evangelists who’ll spread the word 1. The crowd is all I need about your brand. If only! As well as sending out stories to • Gaining valuable feedback on how to develop generate PR and creating an awesome the product/service. pitch, entrepreneurs need to make contacts, • Hearing what new services/products customers, friends and family aware of their customers would like you to offer. campaign. Ever noticed how no-one seems to like 3. Managing lots of small investors is time- being the first to arrive at a party? Well, consuming equity crowdfunding’s a bit like that. Investors Yes and no…. it depends on the platform you choose. who’ve never heard of your business might If the platform you choose doesn’t have a nominee be impressed by your pitch, but many won’t structure, you could end up having lots of investors part with their cash until you’ve reached a on your cap table, which can mean a lot of work, reasonable amount of your investment target. especially if you need consents at a later date. That’s because they want to see that you have However, if the platform does have a nominee a reasonable chance of reaching your target structure such as the one Seedrs uses, the funded before they’ll invest in your campaign. This is company only has one shareholder to deal with. So, perhaps the biggest of all equity crowdfunding there isn’t a large cap table to put off VCs further misconceptions. down the road.
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4. Crowdfunding platforms don’t attract angels 7. The crowd is ‘dumb money’ Probably the craziest equity crowdfunding This is probably the most insulting of equity misconceptions of all. It’s just not so. On Seedrs, crowdfunding misconceptions. The crowd is a traditional angels, venture capitalists (VCs) and diverse and savvy bunch, just go onto the Q&A general members of the crowdfunding public are section of any campaign to see the discussions. all welcome to co-invest – and they do. In fact, they look to the platform for access to deals that they In fact, the top five investor professions on may not have had access to. Angel investors are Seedrs are: particularly welcome because they can provide 1. Finance. more than funding, such as their expertise in taking 2. Investment funds. a business to the next level, which can be invaluable 3. Self-certified angel investors. to long-term success. 4. Business founders. 5. Legal professionals. 5. If I use a crowdfunding platform, I’ll put off VCs and institutional investors Many investors work in business daily and know If the capital that you raise is invested wisely, it how to value early-stage businesses and appreciate could put your business in a stronger position if the risks involved with investing in this area. you decide to go for an institutional round at a later date. And, many VCs will see a successful 8. Businesses looking to raise from the crowd are crowdfunded round as a positive validation of your overvalued business. It’s important to remember that a business’s In fact, many of the companies that raise on valuation is very subjective. If anything, valuations Seedrs have gone on to raise further rounds either on crowdfunding sites are more transparent, open exclusively with a VC or in tandem with the crowd and fair because it’s the crowd investors who again. For example: decide whether the valuation seems accurate, and if • Landbay received investment from Zoopla the business is worth investing in. • Adludio from Passion Capital and Episode 1 • Perkbox raised alongside Draper Espirit. A common reason for a campaign not hitting its target is because of a hyper-inflated valuation. But if you don’t have a clear structure in place As we’ve already established, the crowd are (such as a nominee at Seedrs) to manage your sophisticated, they know whether a business is shareholders, they might be more adverse to trying to pull the wool over their eyes and if they investing in your business. don’t like what they see, they won’t invest.
6. Businesses crowdfund because they can’t raise 9. Crowdfunding is an easy way to get investment capital from VCs or angels It’s not a case of creating a campaign, sitting back Equity crowdfunding has a track record of funding and watching the money flow in. It takes dedication, serious, growth-focussed businesses. It’s not a creativity, team engagement and time. At Seedrs, last resort. It’s also now commonplace for VCs to we aim to make the process quicker and more diversify their portfolios by investing this way, for efficient than it is offline. But, it still takes work to instance: get it right and to make the most of the opportunity. • Blow secured Unilever Ventures whilst raising Crowdfunding can be a brilliant way to get a on Seedrs. business funded and turn dreams and targets into • Maily had Faber Ventures co investing in their reality. But, it’s crucial that you see past the equity Seedrs round. crowdfunding misconceptions and understand • Beeline’s crowdfunding co-investors were the realities of raising if your campaign is to be Seedcamp and TrueStart. successful.
About Chris Rea Chris Rea is Senior Campaigns Associate at Seedrs. He is responsible for finding the hottest new startups to raise on Seedrs. He previously founded YoungOnes Apparel and appeared on Dragons’ Den before joining Seedrs.
DATA PARTNER 16 SPONSORED BY Business Growth Stars Who are the British Growth Stars?
A definitive guide to the most promising businesses at varied stages of growth
he first half of 2017 has broken the mould. In rose 26.7 per cent from the previous quarter. this period, British high-growth businesses Sectors that have seen the biggest injection Treceived a record amount of funding, of funding include IP-rich, R&D heavy fields like catapulting the likes of FarFetch, Improbable and medtech and pharmacology, as well as digital BrewDog onto the global stage. challenger banks within the fintech umbrella. UK investment into these growth companies has Based on comprehensive data from Beauhurst, been consistently ticking along, but investment we have compiled a snapshot of the most from abroad has given the biggest boost for promising businesses in three phases of British businesses in recent years. In the first half of development: seed, venture, and growth. 2017, the number of deals involving non-UK funds
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A snapshot of the most promising businesses that have raised funding at seed stage in the first half of 2017.
Total deals: Total amount raised: Average deal size: 1328 £731m £564k
Average pre-money Average stake valuation: taken: £1.8m 15.4%
Company Location Amount raised Date Gryphon Group London £180m June GammaDelta Therapeutics London £27.5m May kwiff London £17.3m March ApcinteX London £14m February Renegade Spirits London €14.4m (£12.2m) April Roslin Technologies East of Scotland £10m May Madison Sports Group London £9.21m June Macrophage Pharma South East £9m January SuperX East of England $11m (£8.8m) February Congenica East of England £8m February Z-Factor East of England £7m May Bioturbines South East £6.67m March Zeetta Networks South West €7.8m (£6.62m) May Bad Wolf Wales £5.18m March Neos London £5m May Renegade Spirits London £5m April G. Network London £4.6m June Redux East of England $5m (£4.01m) April A Cloud Guru London £4m May SpyBiotech South East £4m March
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Gryphon Group Holdings Limited was founded as an insurance challenger that seeks to protect more families in the UK.
Founded: 2016 Investment date: June 2017 “We are creating what we Investment amount: £180m Equity: Unknown think protection should look Investor(s): Punter Southall Group; like in today’s digital age.” Leadenhall Capital Partners Founder(s): Daniel Pender (CEO), Simon Davis (COO)
Inside track Gryphon Group Holdings is an insurtech start-up funding from investors Leadenhall Capital Partners founded by seasoned insurance professionals and Punter Southall Group. motivated to tackle some of the industry’s key “Life protection is an area where good customer challenges. Its co-founders are chief executive outcomes are vital, making a service focussed officer, Daniel Pender, former executive director challenger an exciting proposition,” said Dan Knipe, at Prudential and UK Life chief financial officer at life portfolio manager, of investors Leadenhall Zurich; and chief operating officer, Simon Davis, Capital Partners. “We see strong growth potential former chief risk officer at Guardian and corporate for the business as the management team have services director at Admin Re. a deep commitment to their vision and bring “The insurance industry plays a pivotal role significant industry and technology expertise to in our society but there is work to be done to make it a success.” keep pace with the evolving needs of customers The insurtech company believes its high-tech and advisers. We felt there was a tremendous approach will differentiate it in the market. The opportunity for an insurance challenger to build a infrastructure will be based on digital and cloud business around the people it serves, and in doing based technologies, built with the support of a so, establish strong long-term relationships built number of leading partners. The core platform on trust,” CEO Daniel Pender said. technology partner is Liss Systems, a UK company “We are creating what we think protection owned by Nasdaq-listed technology group, EXL. should look like in today’s digital age. Technology The digital interface technology partner is Space. has moved on remarkably and our ambition is to “We already know there is a significant protection embrace that, bringing an intuitive customer offer gap in the UK. This translates into a great and adviser experience to market. This will give opportunity for an insurance company that can certainty to advisers when recommending our solve the issues of customer trust and adviser products and enable families to feel confident that experience,” Jonathan Punter, CEO, of investors we can offer the insurance that they need.” Punter Southall Group, said. “This company, with Advised by Craven Street Capital Limited, its new approach, will be well placed to meet these Gryphon Group Holdings has raised £180 million in challenges head on.”
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GammaDelta Therapeutics is developing the potential of gamma delta cells to create improved immunotherapy of cancer and other serious diseases. The company plans to exploit unique properties of tissue resident gamma delta T cells for effective immunotherapy.
Founded: 2016 GammaDelta Therapeutics Investment date: May 2017 formed a strategic collaboration Investment amount: £27.5m with Takeda Pharmaceutical Equity: 57.3% Investor(s): Takeda Pharmaceutical Company Company to develop its T cell Founder(s): Adrian Hayday (Scientific founder); platform to discover and develop Oliver Nussbaumer (Head of cell research) new immunotherapies to treat a broad range of cancers. Inside track GammaDelta Therapeutics formed a strategic development. The funding includes an equity collaboration with Takeda Pharmaceutical investment, an option fee and research and Company to develop its T cell platform. The development funding, and provides Takeda companies intend to use this novel platform to the exclusive right to purchase GammaDelta discover and develop new immunotherapies, Therapeutics. Under the agreement, Takeda will with the aim of treating a broad range of cancers, appoint a director to GammaDelta Therapeutics’ including solid tumours, and autoinflammatory board. diseases. “At Takeda, we recognise the enormous potential GammaDelta Therapeutics is an Abingworth of tissue resident gamma delta T cells to deliver portfolio company, that had previously raised transformative medicines in our core therapeutic £800,000 in seed funding from Abingworth, The areas of oncology and gastroenterology,” said Francis Crick Institute, King’s College London, and Daniel Curran, MD, head of the Center for External Cancer Research Technology. Innovation at Takeda. “This collaboration is “The pioneering research developed by Professor another example of our strategy to invest in highly Adrian Hayday and Dr Oliver Nussbaumer at innovative areas of science and we’re pleased King’s College London and the Francis Crick to collaborate with the experienced team at Institute, the scientific founders of our company, GammaDelta Therapeutics as they aim to take a forms the basis for the development of potentially leadership position in this rapidly emerging field.” transformational treatments for cancer and “We are delighted by the progress GammaDelta autoinflammatory diseases,” said CEO of Therapeutics has made since we founded the GammaDelta Therapeutics, Dr Paolo Paoletti, MD. company in 2016,” said Tim Haines, managing “We believe the collaboration with Takeda partner at Abingworth and a director at validates our novel approach and should allow us GammaDelta Therapeutics. “This collaboration to move rapidly to the clinic.” with Takeda will enable the company to advance Takeda, together with Abingworth, will commit the development of this exciting technology, which up to $100 million in funding to accelerate has the potential to address significant unmet GammaDelta Therapeutics led research and needs in cancer and autoinflammatory diseases.”
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ApcinteX
ApcinteX Limited, a University of Cambridge spin-out company, is developing a new therapy for haemophilia.
Founded: 2014 Investment date: February 2017 ApcinteX is seeking to disrupt Investment amount: £14m the $10 billion haemophilia Equity: 61.5% Investor(s): Medicxi Ventures; market by developing a drug Touchstone Innovations that can be used in all patients. Founder(s): Trevor Baglin, Jim Huntington
Inside track In a series A round, ApcinteX raised £14 million, “Bearing in mind that the majority of people in co-led by Medicxi Ventures and Touchstone the world with haemophilia have no access to Innovations Group plc. Cambridge Enterprise effective therapy, a stable, easily administered, helped in ApcinteX’s formation, licensing key long-acting, drug that can be used in all patients, intellectual property to the company. regardless of the type of haemophilia, could bring ApcinteX is seeking to disrupt the $10 billion treatment to a great deal many more people who haemophilia market by developing a drug that suffer from haemophilia,” Dr Baglin commented. can be used in all patients, regardless of the type Currently, the standard treatment is of haemophilia. This new treatment is based on administration of the missing clotting factor, but the work of Professor Jim Huntington (Cambridge this requires regular intravenous injections and is Institute for Medical Research) and Dr Trevor not completely effective. In addition, about one Baglin (Cambridge University Hospitals), world- quarter of patients develop inhibitory antibodies renowned experts in blood clotting disorders. to the administered clotting factor which renders Around 400,000 individuals in the world are further treatment ineffective. affected by haemophilia, a genetic disorder “We are delighted to be supporting this funding that causes uncontrolled bleeding as a result of round which is in many ways a classic example of patients having a deficiency in proteins required our model: backing outstanding research which for normal blood clotting. Apcintex has developed has the potential to translate into differentiated a new treatment that aims to treat patients with all products for patients in a substantial global types of haemophilia, including those who develop market. We believe that ApcinteX has the potential antibodies to replacement factors. Furthermore, to provide a better alternative,” Dani Bach, director the drug does not cause anti-clotting antibodies of healthcare ventures at Touchstone Innovations to form and could be administered fortnightly by commented. simple injection under the skin.
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A snapshot of the most promising businesses that have raised funding at venture stage in the first half of 2017.
Total deals: Total amount raised: Average deal size: 791 £1.29b £1.68m
Average pre-money Average stake valuation: taken: £8.55m 14.3%
Company Location Amount raised Date Orchard Therapeutics London £45.7m March Bicycle Therapeutics East of England £40m June MiNA Therapeutics London £35m May NightstaRx London $45m (£34.6m) June afforditNOW North West £24.5m June Pulmocide London £24m March NeRRe Therapeutics East of England £23m January Inivata East of England £21m January Monzo London £19.5m February Roborace London £17.8m March CompareEuropeGroup London €20m (£17.4m) January DiffBlue South East £17m June Smart Pension London £15m June MIRACL London £12.3m June Yoyo Wallet London £12m June Garrison Technology London £12m June Ecrebo South East £12m February VST Enterprises North West £11.4m May Flat Iron London £10m March Blu Wireless Technology South West £10m February
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Monzo (previously Mondo) is a ‘digital challenger bank’ based in London, aimed for smartphone savvy consumers.
Founded: 2015 Investment date: February 2017 The challenger bank Investment amount: £19.5m Equity: 27% previously raised £1 million Investor(s): Orange Digital Ventures; in a record-breaking 96 Passion Capital; Thrive Capital seconds on Crowdcube. Founder(s): Gary Dolman, Tom Blomfield, Paul Rippon, Jonas Huckestein, Jason Bates
Inside track Digital challenger bank, Monzo, raised its series service with a linked app. This latest funding C round through a mix of venture capital and round will help the Old Street start-up launch a full crowdfunding, securing a total of £22 million, current account. including a £19.5 million investment from Thrive Deals involving institutional investors, like VCs Capital, Passion Capital and Orange Digital and banks, raising money alongside the crowd Ventures. have increased four-fold on the Crowdcube Monzo broke funding records once again on platform in the last two years. The Monzo raise Crowdcube, raising £2.5 million and attracting follows in the footsteps of companies like POD more than 6,500 investors in its latest fundraise. Point, which recently raised almost £1.6 million in This is almost doubling the previous record, which a round that also attracted investment from VC it had set in March 2016 when it raised £1 million in firm Draper Esprit, and stock market investment just 96 seconds, the fastest funding round ever. platform Freetrade. Monzo currently operates as a pre-paid card
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Yoyo Wallet is a mobile wallet start-up that lets users to pay for their goods with their smartphones.
Founded: 2013 Investment date: June “We have combined the best of Investment amount: £12m Equity: Unknown Starbucks mobile experience Investor(s): Metro Group; Touchstone Innovations; with the advantages of Tesco’s Woodford Investment Management Clubcard scheme.” Founder(s): Dave Nicholson, Alain Falys, Michael Rolph
Inside track Yoyo Wallet, an app that allows shoppers to make “We address a fundamental problem for retailers payments and earn loyalty rewards, raised £12 — they want to know their customers better,” said million, bringing total investment in the UK start- Alain Falys, former Visa executive and Yoyo co- up to around £24 million. founder. The latest series B round was led by wholesale “We have combined the best of Starbucks and food retail firm Metro Group, asset mobile experience with the advantages of Tesco’s management company Woodford Investment Clubcard scheme.We democratise the privilege of Management, and tech investor Touchstone the very biggest chains like Walmart and Tesco for Innovations. all the retailers and small boutiques.” The start-up recently passed the milestone of While banks cannot drill down purchasing data processing more than 1m monthly payments for to tell retailers what products a customer bought, its 400,000 registered users. It has grown rapidly Yoyo Wallet can. It also allows retailers to build a since its creation four years ago as a mobile app to profile of each client. pay for goods in university student unions. The latest fundraising will be used to finance the The app is used to handle payments in 1,700 company’s expansion in the US. outlets, including over 60 UK and Irish universities; Hansjörg Sage, general manager at Metro the canteens of several big companies such as Group’s digital unit, said: “We intend to work with JPMorgan Chase; and retailers such as Caffè Nero Yoyo, leveraging its considerable success in the and Planet Organic. UK, to help tailor and market its offering to the Yoyo Wallet allows consumers to pay for goods continental European market and in particular, the using their mobile phone and keeps all their loyalty long-tail of independent entrepreneurs.” card schemes updated automatically. Companies Its latest fundraising was also backed by on the platform can track customer behaviour and Touchstone Innovations, the Aim-listed venture can send personalised offers to them via the app. capital arm of Imperial College London.
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A snapshot of the most promising businesses that have raised funding at growth stage in the first half of 2017.
Total deals: Total amount raised: Average deal size: 402 £2.51b £6.76m
Average pre-money Average stake valuation: taken: £45.4m 12.3%
Company Location Amount raised Date Improbable London $502m (£389m) May FarFetch London $397m (£313m) June Gigaclear South East £111m May BrewDog Aberdeen £100m April Atom North East £83m March Funding Circle London £82m January Claranet London £80m May Cell Medica London £60m March babylon London $60m (£46.8m) April MarketInvoice London £45m May Evans Cycles South East £39.7m April Zopa London £32m June Blockchain London $40m (£31.5m) June StarLeaf East of England £31m May Atom North East £30m June Blue Zoo London £30m June Atlas Genetics South West £28.3m January LoveCrafts London £26m April Spring Studios London £22.5m June Tomlinson's Dairies Wales £22m May
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Gigaclear is a private company dedicated to building and operating Ultrafast broadband networks based on pure fibre technology.
Founded: 2010 Investment date: May “Millions of rural homes and Investment amount: £111m businesses across the country Equity: 31.6% need better broadband and Investor(s): Infracapital, Railpen, Woodford we want to reach as many of Investment Management Founder(s): Matthew Hare those in rural areas as quickly as possible.”
Inside track Fibre optic broadband ISP Gigaclear has raised £111 the country need better broadband and we want million in equity funding to bring connectivity to to reach as many of those in rural areas as quickly 150,000 rural areas in the UK by 2020. as possible. Our pure fibre network transforms Before the funding, Gigaclear reported that their lives by providing access to the fastest internet network was already available to 42,000 rural speeds to be found anywhere in the world properties (with 10,000 active customers) around and technologically future-proofing these rural counties such as Berkshire, Buckinghamshire, communities for years to come.” Cambridgeshire, Essex, Hertfordshire, Existing investors, Infracapital (£60 million) Gloucestershire, Kent, Leicestershire, Lincolnshire, and Woodford Investment Management (£15 Northamptonshire, Oxfordshire, Rutland and million), were joined by new investors, railways Worcestershire. pension scheme Railpen (£35 million), and smaller The government’s recent moves to support undisclosed investors (£1 million) to raise a total of alternative “full fibre” network (altnet) providers £111 million. with £600 million of public funding has helped to “As a long-term investor, we see the partnership give investors’ confidence in the market, which has with Gigaclear as a natural fit that will allow us also been supported by Ofcom’s move to make to generate strong returns over time and fulfil Openreach’s national network more accessible to our mission to pay members’ pensions securely, the competition. affordably and sustainably,” Paul Bishop, Railpen’s “Full fibre is the future. This latest round of Investment Director, said. investment will enable Gigaclear to step up our “We are also delighted that the company will speed of network delivery and is a clear signal of be supporting local communities by bringing the the confidence investors have in our continued benefits of best-in-class fibre-optic broadband expansion and success,” Matthew Hare, CEO of to homes and businesses in new parts of the Gigaclear, said. country.” “Millions of rural homes and businesses across
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BrewDog is a craft beer brewery based in Scotland that produces bottled and canned beers in a variety of styles.
Founded: 2007 Investment date: April “The deal is designed to Investment amount: £100m deliver long term capital Equity: 22% Investor(s): TSG Consumer Partners with 10 year time horizon.” Founder(s): Martin Dickie, James Watt
Inside track Scottish craft beer company, BrewDog has now BrewDog was founded by James Watt and reached unicorn status following its £100 million Martin Dickie, who funded their business via the fundraise from American private equity firm, TSG crowd until now. Although the founders have now Consumer Partners. warmed to the idea of institutional backing, in May, In a message to shareholders, the north east it raised further funding from the crowd. Scotland brewer said TSG had acquired 22 per More than 50,000 beer fans who invested in cent of the business and the transaction had given BrewDog’s crowdfunding over the years were told it a £1bn enterprise value (equity and debt). the deal with TSG had boosted the value of their In a message to investors, BrewDog said: “TSG investment by as much as 2,765 per cent. has acquired approximately 22 per cent of “Crowdfunding can no longer be viewed as the company in a transaction where £100m in alternative finance; this is the democratisation of proceeds went into the company for continued finance,” founder James Watt said in the update. expansion and the balance to create early In May, BrewDog received a £324,000 grant shareholder equity in a transaction that valued from Indiegogo, and in August, which is out of the BrewDog plc at £1 billion enterprise value.” scope of this report, it raised $7 million at growth “The deal is designed to deliver long term capital stage with Equity For Punks. with 10 year time horizon.”
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Atom Bank is a mobile banking application that offers a range of personal and business banking products.
Founded: 2014 Investment date: March + June Atom Bank has been Investment amount: £83m (equity) + £30m (debt) championing the concept Equity: 28.4% of banking-as-a-service Investor(s): BBVA, Toscafund, Woodford Investment Management, British Business through its tech-led Investments (further funding: £30m) offering since its launch. Founder(s): Anthony Thomson
Inside track Atom Bank, a Durham, UK-based bank designed “Access to tier 2 capital at such an early stage exclusively for mobile, raised £83 million in equity of the growth cycle is rare and we are extremely funding and a further £30 million in debt finance pleased to be gaining this support from (British from British Business Banks’ investment arm. Business Investments). Together with the British Backers in the equity funding round included Business Bank, we are sending a clear sign – we current investors BBVA, Woodford Investment are here to support UK SMEs,” Anthony Thomson, Management, Toscafund Asset Management and founder and chairman of Atom said. others. “This facility provides us with tremendous The digital challenger bank will use the funds flexibility. Like all banks, we are actively managing to continue to expand its offering with plans to our capital structure and having access to tier 2 launch further products and enhancements to its capital at this stage helps support our growth and app throughout 2017. is a great result for Atom, its shareholders and Led by founder and chairman Anthony Thomson customers.” and CEO Mark Mullen, Atom Bank secured The facility will help support the growth of Atom its banking license in June 2015 and launched bank and its desire to lend to UK corporates and operations in April 2016 by offering two Fixed smaller businesses, a key area of focus for the Saver accounts and secured business lending for government investment arm, which is looking to small and medium-sized enterprises. bridge long-standing gaps in finance markets for The bank recently launched its first mobile smaller businesses by investing in small business mortgage product, allowing borrowers to manage finance providers and promoting greater diversity everything via an app. in the supply of lending. From rolling out facial recognition technology to “Our investment in Atom bank demonstrates log in, to flexible anytime-anywhere approach to our commitment to increasing the diversity of banking, Atom Bank has been championing the small business finance by supporting recently concept of banking-as-a-service through its tech- licensed and ambitious challenger banks,” said led offering. Catherine Lewis La Torre, CEO of British Business The second funding boost came in the form Investments Ltd. of a tier 2 eligible facility from British Business “We have seen challenger banks becoming an Investments (BBIL). This will help Atom draw on increasingly important source of UK SME funding additional capital in a flexible manner as it grows. and we believe a committed regulatory capital The £30 million capital facility is being made facility will not only support Atom’s growth under BBIL’s Investment Programme, which has trajectory but will also drive the bank’s ability to so far committed over £580 million to providers of lend to UK SMEs.” finance to UK SMEs.
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