The whole journey of a tech startup was covered at day two of Sifted Summit.
The event brought 3,000 people from the tech and startup worlds to Magazine London in Greenwich.
iplicit was there for a second day to demonstrate its award-winning accounting software and listen to some of the talks that encompassed everything from pitching to exit.
Sifted Summit has already heard how much “dry powder” there is in the fundraising system – money that’s available but hasn’t been invested yet.
An event called Behind The Money Curtain: Decrypting the VC World heard how venture capital funding had declined in recent years. “We used to see over 1,000 deals a quarter just in early stage and now it’s about 400,” said Maria Rotilu, Founding Partner of Openseed VC.
She said “pre-seed is the new seed”, as funds invested in promising start-ups that might look like they were ready for seed funding.
Jörg Goschin, Co-CEO of KfW Capital, which invests in European VC funds, agreed that the funding environment had been tough but it was getting “a little bit better than it was three or four years ago”.
Antigoni Lymperopoulou, CEO of Hellenci Development Bank of Investments, said investors were focusing more on specific sectors – and she spoke about the quality of pitches investors were looking for. “
“We need more data-based pitches,” she said.
“We need teams that can start out in a crowded environment and focus on ability, not just on growth and expansion but fundamentals are coming into the picture again.”
Sandeep Bakshi, Head of European Investments at tech investor Prosus Ventures, was also looking for quality pitches when it came to AI.
“Given the focus on all things AI, we’re also seeing a lot of companies with pretty thin GPT wrappers that are building a workflow on top of one of the foundation models from the large platforms,” he said.
“We are typically looking for businesses that focus or build defensibility by building clear customer and product positions. Those thinly veiled GPT wrappers are somewhat tougher for us to fund.”
The talented people who got your business going might not have the ideal skills when it gets bigger.
That was one of the challenges considered at an event called Ready, Set, Grow: The Hiring Roadmap for Growth.
Alan Price, Head of Talent at HR platform Deel, put it this way: “You have to have athletes who can switch from long jump to high jump to 100 metres. It’s about shaping not just the current responsibilities but future responsibilities and hiring those athletes.”
Lena Hackelöer, Founder and CEO of Brite Payments, said: “When you start a business, you have no idea how it’s going to go, if it’s going to be 10 people or 100 people and how long that’s going to take. Some people thrive in that environment and others need more security.”
Noor van Boven, Co-Founder of investment management business Invested, said: “There’s a really difficult balance to strike because you’re going through so many different stages. You cannot afford someone who’s only suitable for one maturity stage. You need them to be able to stretch.”
But she said it was also important to build a company where people felt safe to say what stage suited them the best. “If that becomes safe in the culture, it doesn’t mean someone needs to leave your organisation. They can do a different role,” she said.
Alan said businesses should consider “emotional payments” as well as financial rewards for their efforts. “It’s really important for the culture and the people you bring in,” he said.
And he had some advice when it came to hiring salespeople: Hire a sales team who have experience in selling “a ‘would-like’ product versus a ‘must-have’ product”.
When is the right time to consider expanding into overseas markets – and how should you go about it?
An event titled Ready to Go International? heard that this is a subject coming up earlier in a business’s journey.
Sahar Meghani, Partner at the early stage VC business Visionaries Club, said: “There are not that many markets where you can build a 10bn dollar outcome just in your own market.”
She said companies seeking series A or series B funding were increasingly expected to address this issue. “It’s no longer good enough to say ‘We have a plan to expand internationally’. There needs to be some evidence of that already in the more competitive processes,” she said.
“I really feel this is a founders’ decision and a CEO decision,” she added.
Duncan Clark, Head of Europe for Canva, said an international remit was contained in the company’s mission to “empower everyone in the world to design anything and publish anywhere”.
“That vision of it being a global aim was built in from the beginning. If you’re clear about that, you’re less likely to have investors saying, ‘Maybe your next market should be X’ – it becomes more tactical,” he said.
The panellists urged caution about mergers and acquisitions intended only to get a toehold in other markets.
“As a market entry mechanism, I think it’s quite tricky,” said Sahar.
Duncan added: “If there’s a company you want to acquire for other reasons, it can be a brilliant way to establish a mechanism in a region. But I think acquiring a company simply to get a market will very rarely be a good idea.”
Eshita Kabra-Davies, Founder and CEO of the rented clothing business By Rotation, told of being targeted for acquisition by an overseas competitor.
“We were expanding abroad and that company that will not be named approached us, trying to acquire us because they were worried we were entering their market,” she said.
But she said the visions of the two companies were not aligned.
Acquisition approaches could happen “when you try and disrupt an entire space and the incumbent is getting worried that you’re entering the market and shaking things up”.
When is it time to exit, by selling or taking a business public? That was the theme of a session called To Sell Or Not to Sell?
Sanjot Malhi, Partner at the VC fund Northzone, said IPO activity had fallen in recent years.
“The bar for going public is much higher and we find a lot of companies staying private much, much longer,” he said.
The alternative of founders exiting via mergers and acquisitions made up more activity but less value.
Lisa Picardo, Chief Business Officer UK at the online pension provider PensionBee, told how the business had been taken public even before turning a profit, injecting funds into the company for investment and for marketing activity in particular.
She said: “It’s absolutely possible to go early. The key is to be able to articulate your story well. Why are you public? Why do you want to be there?
“Being a trusted and transparent brand is very important for us so it was an easy transition to become a public company.”
She warned founders eyeing an IPO to prepare “not just for the process but for your life thereafter”.
“I think you should really try and act like a public company even before you are one,” she said.
iplicit’s award-winning accounting software is ideal for tech businesses as they become too complex for the limitations of entry-level finance packages. Get in touch for a demonstration.