Member Article

Startup Growth Beyond Borders: Raising Capital in Turbulent Times.

Key Considerations from the Nordic, the UK and Global Ecosystems.

An all-day regional summit organised by Startup Grind Nordics brought together the startup and investor communities from across the Nordics (Sweden, Finland, Norway, Denmark, Iceland, and Estonia) to discuss best practices when building startups and raising funding, especially in light of unprecedented turbulence in the global economy and venture capital.

The objective of the event was to highlight the extensive and well-established startup ecosystem of the Nordics, while also promoting broader collaboration with other regions. The event provided an overview of the global ecosystem of Startup Grind, and delved into potential avenues for improved inter-regional connectivity, which would facilitate accelerated growth for startups and greater deal flow.

In addition to presentations from leading venture capitalists and industry organisations, there were five main ecosystems explored by Shahar Matorin (Country Manager Startup Grind Israel), Patrycja Maksymowicz (Startup Grind Chapters Director in the North UK), Corey Hart (Chapter Director Startup Grind Greater Grand Rapids, Michigan Area, United States) Mo Salah (Chapter Director Startup Grind Muscat) and insights from the organisers, Naimul Abd, Regional Director Nordics Startup Grind; Kelvin Chikezie, Director Startup Grind Helsinki and Mehkar Sheikh, Partnerships Lead Startup Grind Stockholm & Regional Manager East at Venture Cup Sweden.

The panelists highlighted Silicon Valley Bank’s demise, and how it has raised concerns about the health of the ecosystem and the potential impact on investment and growth.

While providing highlights on the UK ecosystem, Patrycja Maksymowicz highlighted Tech Nation’s instrumental role in fueling the growth of many successful companies, including Monzo, Deliveroo, and Skyscanner. She also mentioned Barclays Eagle Labs, which have now taken over delivery of the UK wide support for startups and scaleups. She noted that the recent UK government’s pledge to invest in the technology and science sectors has received varied responses from the startup community. Some view it positively as a signal of the government’s dedication of the UK becoming a leader in these fields, while others are worried that the benefits are tilted towards bigger businesses and may not be as advantageous to startups.

The turbulence and financial crises are affecting startups and investors in the UK ecosystem. While there has been a slight surge in the number of startups founded in the UK over the last couple of years, the current climate has made things challenging for both startups and investors. Many startups are facing cash crunches right now, and those who are trying to raise funds are finding it difficult as investors are becoming more cautious and selective in their investments.

She discussed the differences between the startup ecosystems in the North and South of the UK. While there is a thriving Venture community around London in the South, the VC activity becomes less prevalent as we move towards the North East. In this region, the ecosystem largely depends on grants as there are fewer VC investors. She noted while the North East has its share of angel investors, they are also more generalist and tend to focus on lifestyle businesses. Many may not have the same level of expertise or understanding when it comes to complex technology ventures. Meanwhile, the Southern region has a wealth of experienced and daring angel investors who are well-versed in the latest technological advancements and are more willing to take risks on innovative projects.

She also mentioned some initiatives currently across the UK in terms of sectors and industry focus. One of the examples is the focus on fintech, with a number of clusters identified and the North East as an emerging one. Stakeholders in the regions are working together to attract talent and bigger companies and support fintech startups while promoting the regions as the right ecosystem to build a startup within a certain industry.

During his talk, Shahar Matorin addressed the current state of startup funding and shared his belief that entrepreneurs need to focus on developing their technologies in the early stages of their startup journey. Specifically, he suggested that they should aim to have a proof of concept (POC) or minimum viable product (MVP) with paying customers before seeking funding. Shahar also advised startups to seek out experienced business professionals as partners, who can provide valuable support and help them scale their business globally. By putting in the hard work and collaborating with knowledgeable mentors, startups can increase their chances of securing funding and achieving long-term success.

The panelists emphasised that founders should focus on founder market fit, get the basics right, and have a solid strategy and numbers before approaching investors. Startups should build strong relationships with investors, understanding their investment criteria, and communicating transparently and clearly about their business and market conditions. Most importantly, they should know how they differentiate, their unique value is what sets them apart from competitors.

Consensus has been reached among the panel experts that startups must now be fully prepared to undergo more thorough due diligence procedures as part of the investment process. This shift in investor behaviour means that founders need to be even more diligent in their own due diligence efforts, ensuring that potential investors are the right fit for their company’s success and that the right people are added to their cap table.

The current climate requires a pragmatic approach and a focus on the basics of building a strong startup. This means taking these key considerations into account:

• Focus on getting the basics right before approaching investors.
• Clearly communicate the company’s goals, target market, competition, revenue projections, and growth potential, as well as the unique value that sets it apart from competitors.
• Build a strong team with a mix of experience, skills, and backgrounds, and focus on revenue generation, profitability and cash flow. Be frugal and explore alternative sources of funding.
• Be prepared to pivot the business model if necessary and build strong relationships with investors by understanding their investment criteria and communicating clearly and transparently about the business and market conditions.

Unlocking Growth Potential: The Power of Connections for Startups

Well-connected regions often have a wealth of resources available to support, including funding opportunities, mentorship programs, and networking events. By tapping into these resources, startups can accelerate their growth and increase their chances of success. Startups that are well-connected to other regions can tap into new markets, both domestically and internationally and in turn, diversify their customer base and reduce their reliance on a single market, they can gain new insights into different markets, cultures, and technologies. This can help them to identify new opportunities, overcome challenges, and develop more innovative solutions.

The summit was a resounding success and received absolutely positive feedback from all the attendees. The event provided a platform for networking, sharing ideas, and fostering collaboration between the regions. Here in the UK we hope to see more opportunities for interaction and partnership between the Nordics, and other regions, and we look forward to building on the momentum generated by this event.

Author: Patrycja Maksymowicz

This was posted in Bdaily's Members' News section by Startup Grind - North UK .