Nick Freer: Smiling faces hide effort to grow start-ups

Nick Freer says an early-stage funding round is only the start of the journey to becoming a tech titan. Picture: Stewart Attwood

Nick Freer says an early-stage funding round is only the start of the journey to becoming a tech titan. Picture: Stewart Attwood

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One of Scotland’s most exciting start-ups made a splash in the press this month having secured its latest funding round, an investment allowing the team to develop its app and enter new international markets.

It was a great story but I wasn’t a fan of the photo that ran with it, which had the founders leaping for joy with pumped fists and ear-to-ear smiles – the kind of photo you see when someone wins the lottery.

An early-stage funding round is only the beginning of the journey from tech start-up to titan

Nick Freer

A picture tells a story and an early-stage funding round is only the beginning of the journey from tech start-up to titan. There is no doubting the massive amount of relief felt by founders when they get funding rounds over the line. The process can take months, is costly when you factor in advisory fees and takes the senior management away from doing the really important bit – running the business.

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Funding rounds allow start-ups to push on with the product roadmap, pay the wages and mean CEOs can take their families on the annual summer vacation without too much of a sweat on.

They also build credibility in the tech ecosystem as other start-ups embarking on their own investor rounds look on with a mix of congratulations and envy.

The funding allows start-ups to go into hire mode to bring on board the skills to develop the product and scale into new markets.

Another time you see the top brass fist-pumping in the business pages is on the occasion of initial public offerings (IPOs) on the New York Stock Exchange, when the ceremonial bell is rung to begin trading.

Who can forget Facebook’s 2012 IPO, which came in at more than $100 billion and was described by media commentators as a “cultural touchstone” for the ages?

Many predicted our very own internet sensation, Skyscanner, may have gone down this route but the recent Ctrip acquisition of the travel search site put an end to that particular narrative.

READ MORE: Chinese tech giant swoops on Skyscanner

A Skyscanner IPO would have been a more seismic corporate event for Scotland than an acquisition by a Chinese group that, in spite of a well-established position in online travel, is not that well-known outside Asia or the travel sector.

At the same time, the myriad of processes related to a stock exchange listing and subsequent life as a listed company are nothing short of onerous.

One of Skyscanner’s biggest competitors in travel search, Kayak, went through the thicket of an IPO in 2012 only to be acquired five months later by Priceline.com.

We may never know, but perhaps the senior team over at Skyscanner felt a straight acquisition made life a lot easier on a number of levels.

Irrespective of what type of exit takes place – IPO or acquisition – it is commonplace for a not-insignificant number of key employees to leave the building post-deal and we are already seeing this at Skyscanner with the departure of the COO and CCO, Mark Logan and Frank Skivington respectively.

For the Scottish tech ecosystem, the collective hope is that these guys and others – once they’ve taken a well-earned break on some far-flung desert island or mountain top – reinvest their know-how and hard cash in tech ventures that could become Scotland’s corporate success stories of the future.

READ MORE: Mike Welch resurrects fashion site Atterley

Last year, I became a equity shareholder in an early-stage fashion tech start-up called Atterley. With Blackcircles.com founder Mike Welch at the helm as chairman and majority shareholder, it was an opportunity that didn’t take too much time to decide on.

Due to something of an operational role thrown in as part of the deal, I now get to see start-up life on the coal face in a much more intimate way than as an adviser. What I’ve come to see is the brick-by-brick approach to building a start-up and all the blood, sweat and tears.

Atterley is on the verge of its first external fundraising round and we’re getting a lot of interest from the business and investment communities in terms of both investment and strategic support. I’ll tell you one thing though, I’ll be keeping tight reins on any press photo-shoot we do around the fundraising announcement!

• Nick Freer runs the Freer Consultancy and is chief marketing officer at atterley.com

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