A more recent survey by one of the UK’s top venture capitalists (VCs) found that the next funding round was the single most stressful thing for founders when it comes to life leading a start-up.
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These findings confirmed what many already knew – when you’re running a start-up, it can be a hand-to-mouth existence and it takes certain types of individuals and teams to tough it out.
You’ve got to spend the cash in the company account from the last funding round astutely on product and people, have the ability to deal with high levels of stress on a daily basis and all the time you need to be eyeing that next funding round. As you start to scale your start-up, the pressure only intensifies with more investors to keep happy, a growing workforce who need to be motivated and looked after, key partners and let’s not forget the customer base.
The Scottish Startup Survey identified investment from angels and high-net-worths, the Scottish Investment Bank (SIB) and VC or corporate venture funding as the most popular routes to funding, some way ahead of equity and debt crowdfunding.
While Glasgow-headquartered Scottish Equity Partners is the main exception to the rule when it comes to Scotland lacking critical mass in all things venture capital, Scotland gets high marks on the angel investor front and there are start-ups in other countries that would kill to get the kind of support ours get from Scottish Enterprise (SE) and its SIB.
For this reason, reports last weekend of a dip in SE funding for Scotland’s early-stage technology companies sent shockwaves through the tech scene. In addition to funding organisations like Scottish Edge and Informatics Ventures, both integral moving parts in the success of Scotland’s tech ecosystem in recent years, SE via the SIB, backs hundreds of our most promising young tech companies by co-investing with early-stage commercial and private investors including our most prominent angel firms.
Thankfully, it appears that news of a funding decline may have been somewhat exaggerated and an SE spokesperson responded with a reasonably punchy response that will allay concerns.
My reading of the situation is that there will be something of a shortfall in funding but it won’t be excessive. In current economic times, perhaps it shouldn’t be such a surprise that government-backed funding schemes are subject to the occasional trough like this anyway.
According to one tech start-up CEO I spoke to last week, the Brexit effect on Enterprise Investment Scheme funding is a real and looming concern for the tech scene in Scotland; never mind what Brexit is going to mean for our future workforce.
Equity crowdfunding remains in vogue in 2017 and it’s been encouraging to see the recent success of Edinburgh fintech player Money Dashboard who are well on their way to a £1 million crowd fund with Crowdcube.
StoriiCare, the health tech start-up founded by Cameron Graham, illustrates the earlier point about fundraising never being far away from a CEO’s thinking. As well as looking to raise around £300,000 with Seedrs this year, StoriiCare is already on track for a possible multimillion-dollar series A round next year backed by Silicon Valley-based VCs.
Closer to home, a formal announcement is not far off around an advisory business I have joined as a founding director. The venture is positioned to support start-ups who show the potential to scale, or have already started to scale, through the thicket that is fundraising and, in some cases, onto exits further down the line. So, as they say, watch this space.
• Nick Freer is founding director of the Freer Consultancy