Scotland’s ‘unicorn’ companies – the elite that soar to a $1billion valuation – are vital for growing the Scottish technology sector, a high-powered gathering of entrepreneurs and investors has been told.
The high-profile success of online travel engine Skyscanner and fantasy sports site FanDuel has inspired other start-ups and attracted the attention of Scottish investment institutions, the MBM Investment Conference heard in Edinburgh.
Paul Neeson of Scottish Equity Partners, which backed Skyscanner eight years ago with $6m, said: “With the unicorns Scotland is punching well above its weight but even steering a company to $100m is a phenomenal success and hopefully there are more of these operations coming through. For the right companies there is access to capital from a variety of different sources.”
Ian Ritchie, veteran sector investor, said: “The unicorns are important because they get a lot of publicity. Scotland has an enormous amount of investment money under management and very little of it has gone into early-stage technology companies. But ears are now pricking up, and I know that Baillie Gifford, Standard Life Investments and Aberdeen Asset are now seriously looking at this.”
He added: “It is not just the unicorns, there are a lot of other companies growing like crazy, I have been doing this for 30 years and I have never seen anything like this, it’s transformational.”
Gerald Brady, managing director of conference co-sponsor Silicon Valley Bank, cited life sciences giant GSK and retailers John Lewis and Tesco as leaders in corporate venturing, but said: “Germany has a lot more corporate incubators and corporate venture groups than in the UK. The UK has been shy about doing this and only in the last few years have they woken up to the fact that world they are in is changing dramatically.”
Cally Russell, founder of fashion shopping app Mallzee, highlighted its £500,000 fundraising 18 months ago from a variety of backers, its promotional tie-up with Samsung, and its recent £2.5m deal with corporate backer Royal Mail. “It was only the second start-up they have ever invested in, it gives us not juyst money and resources but access to retailers.”
Kenny Mumford, head of corporate at MBM Commercial, who worked with Mallzee on the deal, said: “It gives bigger companies access to technology, innovation and new thinking. The high growth firm get the kudos of working with an established corporate.’’
Mr Russell said shopping for clothes by mobile phone had jumped from six per cent to 38 per cent of the market in two years, the company barely two years old had grown by 500per cent so far this year and was now the top non-retailer shopping app in the UK. The team had grown from eight to 24 and was set to rise to 30.
Shane Corstorphine, chief financial officer at Skyscanner, said it was now the world’s fourth largest online travel brand with 52million visitors last month. He said companies aiming for ‘series B’ scale-up funding needed to demonstrate faster growth than other companies, and a big market to aim at.
Mr Corstorphine said: "Dont' be forced into raising money. If you don't need to, you are in a much stronger position. Build a business that sustains a £1 cashflow and you are in control."
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