Investors Insight: How I Met My First Unicorn

I confess, one of my favourite ways to while away a little time is watching the long-running TV property show, Location, Location, Location. However, when I turn to professional matters, I forget the catchy mantra because it means absolutely nothing outside the world of real estate.

Bizarrely though, I still see private equity funds giving potential investments the cold-shoulder because they’re not based in a major city or high-profile innovation area. I was bemused by the parochial mindset which sees people put geography ahead of potential, long before our digital era – and in 2024 it simply makes no sense.

There’s no better example than our relationship with Matillion, which began eight years ago, when its co-founder and MD, Matthew Scullion, was looking to access growth capital.Today, they’re a global giant of cloud services, having achieved ‘unicorn’ status in 2021 when their valuation passed the £1bn benchmark, and have won an array of international clients for the speed and accuracy of their data integration services.

Matillion’s imposing European head office at Salford’s Two New Bailey scheme mirrors an equally impressive North American HQ in Denver. Both come in at a chunky 28,000 sq ft, making the point that they’re corporate siblings … not a mothership and its distant satellite.

Back in 2016 though, the company was still a fledgling enterprise based in a small market town in Cheshire, though its location was of zero relevance to me or anyone at YFM Equity Partners. The Matillion of 2024 is heading for 600 people. In 2016, the workforce was just a few dozen, but its scale was also of no consequence.

All I knew was that Matthew had identified the immense potential to deliver cloud-based data-integration software to companies – of all sizes and across all sectors – eager to utilise their own data to make better decisions to achieve their desired growth trajectory.

There’d been much chatter about the huge potential of SaaS, but it was a fast-evolving niche where many grand projects had soaked up cash, missed deadline after deadline, and simply failed, which had made some observers nervous.

However, I’d studied Matillion’s trading record since it began life as a start-up in 2011, could see their cloud-based model was genuinely innovative, their YoY revenue growth was undeniably impressive, and they’d also broken into the US market.

When I’m analysing potential partnerships, I’m not looking for a product or service which can solve everything for everybody. However, Matthew had a model which could be used by all industries, and horizontal always trumps vertical for me.

We’ve since invested just over £5m of growth capital into Matillion, but at the time it wasn’t certain we’d even meet, as I’d heard that they’d had held early-stage discussions with other private equity firms, who had bigger war-chests and higher profiles than ourselves.

Still, I’d always believed in the ‘nothing ventured – nothing gained’ adage, and so drove down to their offices in Knutsford to learn more about their model, their ambitions and their capital requirements.

I immediately realised that Matthew had a gift for plain-speaking. He could talk SaaS jargon for hours with the best, if required, but he also knew when precis and precision mattered.

We had a rapport from that point, because my ideal CEO has a vision, which they can articulate with passion and purpose, but they’re also still self-questioning and have humility.

Years later, I noted that Matillion had included that aspect as one of their core values. “We are confident – but without arrogance. We take pride in what we do – but stay humble”.

For many corporates, those words would be just window-dressing created by consultants, but I know from experience that they’re straight from the heart.

To be honest, I was sold on Matillion at our first meeting, though we naturally needed subsequent discussions to learn about each other and discover how our strategic investment relationship could work.

YTM was only a small northern-based fund at the time competing with the global giants of our industry, but it was satisfying to discover Matthew shared my opinion that geography and scale didn’t matter.

I’ve also always believed that you shouldn’t ignore your organisation’s achievements, whether that’s the first 100 employees, your first £1m sales or your first overseas order.

I tell colleagues who are new to our industry to remember to mark those moments. Take time. Have a look around. Enjoy where you are. Admire the view … but then move on.

There will always be times, whether for internal or external reasons, that the going becomes more challenging, and that’s the time when you benefit from the relationships you forged in the good times.

One aspect I particularly admire in Matthew and his executive team is that they’ve been capable of steadily evolving as Matillion has grown, and they’re always looking ahead.

Some founders and CEOs become overwhelmed when their business grows so large that they can’t remember everyone’s

However, as Matillion continues to demonstrate, size simply requires a different approach to communication and team-building.

They still do company-wide meetings, which are virtual, and once a year all the investors and executives sit in front of the employees and take questions about anything.

We call it the ‘Fireside Chat’, and it works really well because there are no deflections or diversions, it really is straight-talking just as it was when everyone could fit into a small room in the company’s early days.

It might be 30 years since Bob Hoskins appeared on our TV screens nightly, telling us: “It’s good to talk’, but it’s still just as valid even in these digital times.