Tech ventures must focus on scaling sales, urges investor
● First in string of Dundee events hears from senior Foresight investor
Scotland’s tech companies must place greater emphasis on scaling up, while founders should try to achieve greater growth before exiting, according to a global tech investor.
Dan Halliday, senior investment manager at Foresight Group, advised around 60 guests as a key speaker at Johnston Carmichael’s inaugural Meet The Tech Investor event.
Addressing the session, held in the accountancy firm’s Dundee office, Halliday said that Scotland is producing many exciting tech businesses, but that these must focus on achieving “sales and scale”.
Halliday helps to operate the £20 million Foresight Growth Fund, which offers equity investments of up to £2m to growing small and mediumsized enterprises throughout Scotland, often contributing with fellow investment managers and other Foresight funds in rounds of up to £10m.
He said: “When seeking companies to invest in we are looking for businesses that have already achieved commercial traction. We’d rather companies had attained their first sales than creating the perfect product, because the market can move on in the time spent on research and development.”
He also recommended that tech entrepreneurs consider achieving greater growth rather than selling on a venture too early, adding: “There is lots of exciting early stuff happening at an early stage in Scotland, but Scottish startups tend to get sold at an earlier stage in comparison with their counterparts in London or San Francisco.
“As investors, we have to work out how to let founders get some equity while also incentivising them to stay on in the business and achieve scale. Success breeds success. Edinburgh, for example, has Skyscanner, which creates a large pool of developers that other technology businesses benefit from.”
The event was the first in the Talking Tech in Dundee series being offered by Johnston Carmichael to support businesses in the city’s growing life sciences and technology sectors.
Shaun Millican, head of technology and life sciences at Johnston Carmichael, added: “We’re extremely encouraged. Scores of business figures attended to hear more from our speakers from the investor community, and we hope that some rewarding connections were made.”
The next event is scheduled to take place April, with future topics set to include the journey from start up to scale up, innovation tax relief, employee incentivisation and international expansion.