It’s great to see that the UK is leading the way in Europe, with six, billion-dollar tech businesses created in the past year and investment at an all-time high, the UK should certainly feel proud of its position in the market. Especially when results suggest that the UK may soon be able to produce a titan. However, it’s true that UK tech companies sometimes struggle to realise their potential and make the step from start-up to scale-up and on to large a business.
Primarily, there are three challenges businesses face which impact the scale-up journey. Firstly, funding for UK companies in the UK tends to be slower and venture capitalists are more risk-averse than in the US. Secondly, investment is currently focused too heavily on start-ups rather than scale-ups, and therefore is not enabling companies to get to the next level. And finally, the uncertainty around Brexit has led to concerns around a possible skills shortage, as the UK relies deeply on the global talent pool and inward investment.
In order for UK tech companies to be able to scale at the levels needed to compete with the likes of Baidu and Uber, more investment is needed from government and the private sector to focus on our niche sub sectors, especially in areas such as fin-tech and creative-tech which have the potential to grow on a large scale.
Scale-ups also need to focus their efforts on long-term success, not being the biggest money maker. The risk is companies may lose sight of what they originally set out to do, a trap in which young companies can easily fall into, when not careful.
Leaders must take a methodical and responsible approach to fundraising, bringing in investment which matches their aims, rather than taking the first offer of funds. If scale-ups have all their finances in order and plan appropriately when it comes to finding investors they will have more chance of finding multiple offers instead of one. They can then choose the one that suits their needs most.
On the other hand, it’s important to understand that to be successful, not every company needs to be a unicorn. Business leaders who quickly sprint towards “unicorn” are unlikely to scale-up successfully. Entrepreneurs that know where their business sits, can and will sit amongst their industry, will be the ones who win.
Scaling tech companies must address and identify their sweet spot in the market and develop a business plan focused on which best suits their model. To gain this level of confidence and comfort in their own business model however, entrepreneurs need to be fully supported by all investors and advisors. Running a growing tech business is a stressful world and to thrive, they need to be allowed to grow in the right way, to the right scale. That way, scaling businesses can secure their success in the market, and grow in a way that is right for their business.