Top Tech: Relationships key to raising finance

We are yet to make a profit, who will fund our growth aspirations? How do investors value an early-stage business? How can I successfully pitch for funding?

These are questions often on the lips of fast-growing technology firms. In a move to help dispel the many myths surrounding investment, technology firms were given the opportunity to question a panel of funding experts at Mills & Reeve’s Top Tech: Yorkshire roundtable on raising finance.

Securing investment is one of the biggest hurdles faced by fledgling companies. One young entrepreneur who has successfully overcome many of the hurdles is Dr James Gupta by putting relationships with investors and stakeholders at the heart of his business.

James set up online learning platform, Synap, with fellow Leeds University student, Omair Vaiyani, after spotting an opportunity to create a platform where groups of students could learn from and with each other.

James said initially the pair used crowdfunding to raise small amounts from friends and family as well as offering a paid premium version of the platform.  They went on to complete their first round of funding with Yorkshire-based funding and investment group Venturian which, along with tech investor Dr David Pearce, invested £100,000 into Synap.

After graduating in 2017, James and Omair began working in the business full time, growing the team. They have implemented Synap across several universities and leading brands including Daimler, The University of Law and The Medical Defence Union.

Synap has recently raised a further £500,000 from its investors, giving them the opportunity to expand the team and product range and relocate to new premises in Leeds.

James says that securing investment can be difficult and believes it is essential for companies to get their business model in place and start building relationships with investors from the outset.

He said: “Getting investors to buy into your vision is difficult and often your own valuation is very different to that of a potential investor’s. It is essential to get your business model right from the start and don’t just chase revenue. Investors want to see scalable businesses with recurring revenue streams. For pre-seed companies, I believe business angels are an excellent starting point and it certainly worked well for us.

“For them it is a great way of investing in fast-growing businesses that offer tax advantages through investment into SEIS and EIS qualifying companies, while for start-ups they can provide a wealth of experience and knowledge and will work with companies at a closer level.

“However, at whatever stage of the investment cycle a firm is at, my advice would be to build relationships with investors at an early stage, so investors know you and your business before you approach them for funding.”

Paul Johnson

The event, which was attended by technology companies from across the Yorkshire region, featured an expert panel who discussed the various investment options and processes.

These included  Mills & Reeve corporate partner Paul Johnson, Richard Faulkner, managing director, technology banking at Silicon Valley Bank, Mick Morris, founder of Compellor which facilitates investment relationships between companies and investors, and Damian McGann, corporate development director at Praetura, which provides alternative equity and debt funding solutions to SMEs.

Damian also stressed the importance of relationships: “For companies seeking venture capital finance ensure you speak to other companies within the VCs portfolio of companies and understand how the firm’s ethos would fit with your own. This is clearly going to be one of the most important decisions a business makes and finding a partner who can help you along the journey is as fundamental a decision as the initial fund-raising process.”

Paul Johnson added: “Securing expansion capital raises many questions for growing businesses and can be a difficult process. The event took delegates through all the various finance options and helped dispel many of the myths surrounding both debt and equity funding. When we launched Top Tech: Yorkshire our aim was to play a vital role in the region’s tech community in helping companies to achieve their growth aspirations. The roundtable was a huge success and we look forward to our next event which will look at trading in international markets.”

Mills & Reeve launched Top Tech: Yorkshire in 2018 in a move to celebrate the achievements of Yorkshire’s dynamic and innovative technology companies. Along with the annual Top Tech: Yorkshire report, Mills & Reeve also hosts its monthly Tech Tuesday drinks which provides an opportunity for people in the Yorkshire tech ecosystem to meet up. The next event will be at the Brewery Tap on 17 March from 4.30pm and will be partnered by Leeds Digital Festival.