Ian Waterfield, Partner and COO

Thought leadership

It won’t go back to how it was – why now’s the time to raise growth capital

The last six months have fundamentally changed the way we go about our personal and professional lives. The long-term trend of digital transformation has been accelerated by technology’s essential role in dealing with the pandemic – providing the tools for jobs, education and commerce to continue. While lives and livelihoods have been hit hard by lockdown, it could have been so much worse without the ability for colleagues to collaborate visually, for children to either see their teachers or access the amazing array of online learning tools, and for all of us, in some form or another, to shop and socialise online.

The ease with which these technologies have been embraced and become second nature makes it highly unlikely we’ll revert to what we did before – with this starkly illustrated by the regular news of blue-chip organisations downsizing their property estates and announcing long-term plans for working from home. At most, there will be a hybrid of old and new habits where we can aim to marry the dynamism and interaction of a physical environment with the efficiency and productivity of a virtual one.

Given this, it should be an exciting time for UK companies seeking growth capital to scale up and build on the achievements of 2019 – which Tech Nation reports broke the record for UK tech investment. Some may be tempted to put plans on hold, but for many this is the time to be bold. The venture capital/private equity ecosystem is mature, well-resourced and keen to support. It is able to take a long-term strategic view and willing to ride out the bumps along the way; while the unexpected acceleration of trends means there is a land grab for new consumers, new customers, new routes to market and business models – so opportunities need to be grasped before they’ve passed you by.

There are several areas we see as having strong growth potential (and the great thing is that there are many others we could have listed and are equally keen to explore opportunities in):

  • Supporting omnichannel consumption – while overall consumer demand may come under pressure, some retailers are thriving as they have responded to lockdown conditions. Excitingly, there is a burgeoning ecosystem of B2B2C businesses supporting this evolution – be it through analytics (e.g. footfall and other data for retailers) or other software/services in the supply chain, e.g. app-based ordering enabling hard-hit restaurants to reach their customers another way;
  • Digitisation of the go-to-market strategy – lockdown had a dramatic effect on B2B interaction with less physical contact and more screen time, making it essential for businesses to have clarity in their proposition and how they communicate. Video is likely to become more important, while technology can bring greater consistency, quality and personalisation to messaging;
  • Delivering automation and efficiencies – budgets will undoubtedly be under review across all areas of spend. Those businesses that can demonstrate a clear ROI to their prospective customers and a revenue model which matches the benefits as they are delivered will win in this increasingly competitive environment;
  • Harnessing data – the pandemic dispersed the workforce, accelerating the digital shift and move to the cloud. Remote working and management tools are driving a surge in data usage, meaning the outlook is even more positive for businesses involved in data analytics, security and communication that are looking to scale.

In summary, the long-term prospects for growth capital investing are as exciting as they’ve ever been – and ambitious tech entrepreneurs, supported by institutional investors, should help to drive the UK economic recovery.

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