Industry events / 08 June 2021

BVCA HighGrowth 2021 - Day 1 key takeaways (part 3)

BVCA HighGrowth 2021 - Day 1 key takeaways (part 3)

Across the 2 day event Crestbridge will publish a brief rundown of key takeaways from each session as the event unfolds. 

The event, which is deemed to be the UK's leading event for growth companies partnering with venture and growth capital, took place virtually for the first time and featured entrepreneurs, management teams and investors as they share their thoughts and experience on what it takes to succeed in today's environment.

Read our key takeaways below from the third part of Day 1 at BVCA HighGrowth.

A marriage made in heaven: selecting the right VC for your journey

Panel moderated by Kerry Baldwin, Managing Partner, IQ Capital, and BVCA Chair 2021/22

Mina Mutafchieva, Principal, Dawn Capital

  • We invest in Series A and B. Only invest in B to B software. 
  • How to add value: at a minimum every VC should be helping you with your equity story: when to raise, milestones you should hit, how companies have been able to raise successfully. 
  • Can also help with hiring talent. 
  • How we have added value during pandemic: used to push funders, say are we being ambitious enough, but we have changed that approach During pandemic have had tailored approach, introduced personal coaches to CEOs, spent a lot of time as amateur psychotherapist. 

Maria Palma, Partner, Kindred Capital

  • We do pre-seed and seed funding, write about £1m in cheque sizes. Early stage. 
  • Type of value added different at each stage.
  • Pre-seed and seed it’s about helping founders with their journeys. As you scale it’s about how you help the broader management team – not just the founders.
  • Sometimes VCs can be value-destroying, say founders: they can create problems on their board. 
  • How we added value during pandemic: there were mental health problems, including suicide attempts. We had to be mindful of people’s mental state. 
  • Tip for how to engage with a VC: difficult to do warm intros when don’t know anyone. But sometimes when you think don’t have the network, can build it. You can hustle way into conversations, coffee chats, put together lunch or dinner, find a way to build your network. 

Maria Wagner, Investment Director, Beringea

  • We do Series A and B funding. 
  • Insights on how to add value from sitting on different boards and seeing trends: 
  • At Series A it is important to help build out the team: hiring CFO, COO, etc, making those hires at the right level at and at the right time is crucial for businesses. That’s something we can help with. Can give owners perspective, put them in touch with recruiters with right insights. 
  • We do interviews sometimes because do have inside views on some roles. Sometimes founders know how to interview for tech or product roles but not for sales, and they want second opinion. 
  • How value-add changed during pandemic: we saw ecommerce companies accelerating, but SaaS companies saw slowdown because could not get to decision makers. So we had a lot of webinars with COOs, people in charge of different functions, brought in experts to share insights. Then webinar focus changed to what happens after lockdown. 
  • Tip for how to engage with a VC you don’t know: check background, what the VC has invested in before, how that fits with your company. Better to get warm intro. If you have a connection, it’s easier. But LinkedIn is a great way to connect. 

Quick-fire Founder pitches

Hosted by Jonathan Hollis, Managing Partner, Mountside Ventures

Pitches by:

Yuri Andersson, CEO, ANGOKA

  • Founded by 4 serial entrepreneurs. Set it up 2 years ago because security for connected devices is the next big thing. Mission to ensure safety for smart cities by ensuring safe communication between devices.
  • Connected mobility will help us travel more efficiently, get hospital supplies more quickly. 
  • Will be about 1 trillion connected devices over next few years. 
  • But all this complexity creates more threats, as do advances such as quantum computers. 
  • We secure the devices rather than the networks. Includes fingerprint technology. 
  • Want to increase team through our Series A round to create a bigger salesforce.  

Nick Jones, CEO, Zumo

  • We offer a decentralised fintech platform bringing benefits of blockchain and crypto to people.  
  • Gives consumers secure access to blockchain and crypto so they can earn money and manage payments. Provides alternative to traditional savings accounts.
  • Our platform combines simplicity, security and functionality. 
  • Have over 10,000 users, trading about £3.5bn through our app in April.
  • Aiming for 150,000 users and over £4bn in revenue by end 2022.

Celia Pool, Co-founder, DAME

  • Problem with periods: not good for the planet but only 2% of the products are sustainable. Not good for people because the products have chemicals and because women and girls miss work and school.  
  • The period product market will grow to $63bn by 2026. 
  • We make our own sustainable products, combining ground-breaking tech and high margins for an FMCG product.
  • Only 2 years old but growing fast, with distribution through Waitrose, Ocado, Boots.
  • 200% growth last 12 months. Average 30% growth q-on-q.

Joe Lewin, founder and CEO of Zwings

  • Provider of e-scooter and e-bike rental schemes. We’re solving many key issues that will allow investors to act on social goals: social distance, clean air and carbon neutrality targets. Huge opportunity in 600 UK cities and towns. Schemes of our kind will be worth £5.5bn in 2024 revenue. On track to achieve £1m in revenue this year, will deploy to 17 cities next year, generating £4.3m in revenue.
  • We differentiate by going after smaller cities, and our products are made in Britain. Have unique technology.
  • Raising £1.5m. Have secured one third of that already. 

With greater international capital available, are round definitions changing and how to stand out in a crowd?

Panel moderated by Nina Searle, Partner, TLT

Matthew Goldstein, Partner, M12 - Microsoft's Venture Fund 

  • We’re B to B investors. 
  • With the pandemic, risk appetite has gone down, flight to quality. May see pullback on new funds being deployed in the asset class, but in short term prices are up.
  • If people say they’re raising £30m to £50m, I’m sceptical, because I want to know what they’re doing with it. 
  • Founders should think about how to derisk the company: what is the milestone and how much capital do you need to get to it?

Rob Moffatt, Partner, Balderton Capital 

  • Series A investor. We invest £5 to £10m. We are open to investing a bit earlier and a bit more, which is what our competitors have been doing on west coast of US for 15 years. 
  • Potential valuations are higher than before, so can think bigger in terms of how much money we can put in. 
  • With Covid, we’re trying to work out the difference between passing trend and long-term shift. E-commerce is example of long-term trend. But for food delivery, question about whether it will last or whether restaurants will go back to being eat-in first.
  • As investor in Series A, I want founders to take more about what they’ve achieved in the company, previous track record, rather than talking about vison and pain points.  

Namrata Turaga, Associate, Apple Tree Life Sciences 

  • Biotech industry has exploded with Covid: many more IPOs. 
  • Our tip for founders: often scientists come to use with really cool science, but don’t think enough about what the unmet need is. 
  • Bao-Y Van Cong, Investment Director, Target Global
  • Rounds are getting bigger. For example, a £10m fundraise used to be Series B but is sometimes Series A these days. All this means that sometimes founders don’t think in terms of whether it is Series A or Series B. 
  • Covid has supercharged sectors like e-commerce, creative economy. Other sectors hit quite hard. So high divergence between companies that have done really well and those that have been hit by Covid. 
  • Founders should think about what type of investor they want to bring in: don’t just think about the Series A round but about how they want to raise capital afterwards. 

Is more always better? The pitfalls of overfunding

Panel moderated by Jenny Tooth OBE, CEO, UKBAA

Hussein Kanji, Co-Founding Partner, Hoxton Ventures

  • Rounds have got larger. UK seeds ten years ago used to be £1.5m, but the top seed rounds these days are perhaps £5m.
  • Many VC investors being locked out of best companies at Series A or B are responding by investing at seed stage. That ends up distorting market. Means great time to be entrepreneur. Reminiscent of 1999. 
  • In 1999 companies raised a lot of money, but then did badly in public market. This has happened recently with Deliveroo.
  • Are we in danger like in 1999? One difference is that the companies that are good are excellent. But the Fomo behaviour that led to the Webvans of the world are exactly the same in 1998-9. This is very reminiscent of when capital was super-cheap back in the 1990s. 

Jon Lerner, Partner, Smedvig Capital

  • A lot of money is chasing venture deals, so companies are raising more at an earlier stage than ever before. But I don’t think ability to show exponential growth has increased in line with the amount of money being invested, so some companies will disappoint. On paper much easier to get unicorn values, but do the businesses justify this? 
  • I don’t get idea that lots of businesses are too ahead of their time, compared with 1998-9. Instead, I see constant wave of things that I think are sensible but overvalued. 
  • Should ask self, as entrepreneur, do you want to build VC-backed businesses? Might be better off taking smaller amount of funding. Am not huge fan of idea that not entrepreneur unless raising crazy amounts of money in round after round. 

Stephen Nundy, Partner & CTO, Lakestar VC

  • We are investing more at the seed stage than before. 
  • Don’t want a large VC on your cap table early if they are not the right partner for the next 12 or 18 months of your journey. 
  • There is a more diverse range of funding vehicles, aside from just VC and the bank, e.g., venture debt, Pipe models. 
  • There are many routes for an entrepreneur to go down. Sometimes founders are seeking public funding rounds as a badge of honour. The world is celebrating large amounts of funding and and valuations. Founders should think carefully about whether this is right for them. 

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