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Startups Rate Personal Chemistry with Investors Above All Else in New Survey to Determine their Hierarchy of NeedsLONDON, March 23, 2017 /PRNewswire/ --
A new survey has today revealed the true investment needs of the UK's early-stage startups. The research conducted by UK Innovation Hub and Tech City UK showed that the most important factor for companies considering raising external investment was personal chemistry and trust with the investor. The UK Innovation Hub, a new startup programme from Innogy the Germany-based energy company, is focussed on investing into early-stage startups. Together with Tech City UK, the government-backed initiative to support the growth of the country's digital startups, and community partners Seedcamp and 500 Startups, both early-stage investors, the survey highlights what UK startups really want, creating it's own Hierarchy of Needs. Key findings included:
Thomas Birr, SVP, Innovation & Business Transformation at Innogy, commented: "With a huge array of different startup programmes and investment options available, we wanted to get to the heart of what really matters to Founders when considering funding. With the majority looking to Angels and VC's for funding, and just over two-fifths looking to accelerator programmes, finding someone they liked or trusted with an understanding of their product and vision, was incredibly important. Access to further funding and a great track record were also key considerations, while the add ons many programmes provide - such as free office space and pitch training - were a low priority." Birr continued: "At the Innovation Hub we're eager to challenge convention and develop dynamic partnerships that advance the ambition of our founders. This research has provided us with a guide to ensure we can work with our future investments in the best way possible - as determined by them." Other findings include:
While the startups were bullish about their growth ambitions, over two-thirds were pre-revenue in the last financial year. 36 per cent have already raised funding, with a majority funded by family and friends or a pre-seed programme. Only 9 per cent of funded businesses had received a Series A equivalent investment. Gerard Grech, CEO of Tech City UK, added : "As the UK's digital startups have continued to develop over the past decade, we've seen a huge support network of investors develop alongside them. From crowdfunding to accelerators, and angels to large VC's, there is a huge array of options out there for Founders to consider. Our Future Fifty, Upscale and Northern Star programmes are filled with role models for these early-stage Founders to look to. It's no surprise that this survey has highlighted the global ambitions of our next generation of companies, who have developed in the shadow of some of the UK's leading unicorns. It's reassuring to see that with so many options before them, they consider personal relationships, trust and previous success to be key when considering an investor." Tech City UK's Tech Nation 2017 survey found that just over half (51 per cent) of business founders or CEOs cited lack of supply of skilled workers as a challenge, whilst just over two fifths (42 per cent) mentioned access to finance. In this survey, however, access to capital emerges as the number one growth challenge for entrepreneurs and aspiring entrepreneurs. Nine in ten say this is a challenge, some way ahead of marketing, sales and access to talent. With the majority of survey participants being early stage businesses where they perform all the important tasks with the help of a small team, cash flow and sales are pivotal, while the challenges of growing a larger team are some way off. Carlos Espinal, Partner at Seedcamp, commented: "At Seedcamp, we've been supporting European entrepreneurial talent for the past ten years through our community of support, global network of reach and efficient access to capital. We know how critical it is to build a strong and functional relationship between investor and founder at the earliest stage and are proud to have supported over 250 companies who've gone on to raise significant follow-on funding and scale valuable, global businesses." "When looking for investment, it's critical to identify your point of need (in excess of capital) and ensure the investor or fund you're approaching is the right fit; they understand your stage of development, invest at the right stage for you and have a proven background to support you. We are incredibly proud to have built strong relationships with the founders we've backed over the past ten years and in a time of crisis or when looking for advice or counsel, our founders know they can talk openly with us. It's certainly not a case of investor injects capital and then the relationship ends. It's critical that both founder and investor feel they have a fair deal that will allow them to work together for a long time after the investment is complete." Matt Lerner, Venture Partner at 500 Startups, added: "These founders are dead-on. Taking money from a VC is like a ten-year marriage. It really has to come down to trust and chemistry. That's why it's great to reference check your VCs before you take their money. My old roommate used to say 'I only trust God and my Mom. And with my Mom, I cut the cards.'" Just over half of survey participants (54 per cent) were based in London, while 12 per cent were located elsewhere in Southern England and 20 per cent were from the Midlands or Northern England. Men outnumber women by almost four to one in our sample, which is broadly representative of the profile of tech founders in the UK. Over half (52 per cent) are under 36 years old. UK Innovation Hub is welcoming applications for startups on an ongoing basis. Already running in Berlin, Tel Aviv and Silicon Valley, the UK Innovation Hub will be investing in developing partnerships across three key stages of growth, pre-Seed, Seed and series A. The team, backed by Innogy, will invest into five core areas;
Thomas Birr, SVP, Innovation & Business Transformation at Innogy, said: "We're excited to open in the UK and to work alongside brilliant startups developing products and services that could make a huge impact. We believe there is a great opportunity to support more startups across the country and work with them closely to support them as they scale to find product market fit and accelerate their customer acquisition." For more information on the survey findings go to: http://innogy.techcityuk.com/ For more information on UK Innovation Hub go to: https://www.ukinnovationhub.com/ Notes to Editors Press Contact: Press Kit: https://drive.google.com/open?id=0B-F66bhJnenodU9zVTk0YjZOWWs |