The pandemic, Brexit, political uncertainty, economic uncertainty, Covid-19 discounts on valuations, changes to state aid, government intervention in the VC space. I think we can all agree 2020 was a dreadful year. And yet…we advised and accelerated our clients to raise £30m+, including securing funding from VCs and entrepreneurs we have only ever met on Zoom. But still, it’s been a hard year for the whole entrepreneurial community, as planning has seemed ever more difficult.
Thankfully 2020 comes to an end with vaccines in sight and a hint at a return to some form of normality. What does this mean for the founders and management teams of tech scaleups? For companies at the magic £1m net revenue mark, or around / approaching, we firmly believe that 2021 is going to be an excellent year for ambitious growth tech entrepreneurs. Some normality is returning to the investment landscape and cash that has been cautiously held by VC funds will be looking for great opportunities to back. It is likely that cheque sizes will trend upwards too. Even as 2020 closes there are weekly announcements of new VC funds launching and this combination of catching up on a lost 2020, backing great companies that have perhaps cut costs and doubled down on innovation and customer fulfilment to refine their proposition will appeal.
However, companies wanting to raise VC funding in 2021 would be wise to not get too excited by the positive noises from the VC ecosystem. Whilst that’s great for the sector generally it doesn’t necessarily translate to backing your company. Why not? Because the usual investment decision making process still needs navigating (remember the process of an institutional raise is substantially different to seed rounds). Plus, we are increasingly seeing VCs run more detailed due diligence processes and the decision-making process remains elongated – perhaps that trend will stay as VCs tread a more cautious line for the next year or so.
So, how can your business win in this complex funding environment? Getting (wholly contingent) support from people who are immersed in this ever-changing world is clearly the best way to ensure a successful outcome. We believe that our “24 hours to VC readiness” approach, delivered through The ScaleUp Accelerator (in a half day per week, over 6 weeks format), creates the right path to ensure VC document readiness, and careful crafting of your investor proposition. We provide expert guidance around your growth plans from exited entrepreneurs and our trademark “VC Voice” sessions and “Funded Founders” real life insights. This creates up-to-date tips on ensuring the best deal for your company and the thoroughness of preparation that will help you ensure the greatest chance of a successful VC fundraise in this challenging period. Beyond the preparation, our partners at White Horse Capital are on hand to provide investment support throughout the year, until the VC funding (usually £1-5m) is in the bank!
The programme covers other key areas that will be essential for success, especially in 2021, topics such as:
- Planning Ahead for Fundraising – Cash flow and sufficient runway
- Preparing for Scaling Growth – Getting in place the Systems, Processes, Team and Tech you need to grow (as validated by the VC contributors in the programme)
- How to Grow Sales, especially in challenging times
Remember, businesses built in difficult times (as 2020 undoubtedly was!) often go on to achieve the best success. Think Airbnb and Uber in the 2008 recession, Netflix in 1997 financial crash and subsequently the 2000 dot com crash. Many of the successes of this decade will look back on 2020 as a pivotal year in helping them find real product market fit, achieving scalable unit economics, building teams from less obvious locations / backgrounds etc. Let 2021 be the catalyst you need to develop a plan to get from £1m to £10m revenue, and beyond, with great value adding VCs in your cap table.
If this matches your ambitions, get in touch with us, have a chat to see if you can use The ScaleUp Accelerator to ensure your plans for success are aided by accessing the growth capital you need.