How have Bristol’s unicorns impacted the city?

Growth | Reports | South West

A ‘unicorn’ has become the buzz-word within business in recent years, as the tech start-up space has risen to prominence. The phrase relates to a privately-owned start-up company that is now valued at
more than $1bn (c.£700m).

Across the world, there are reported to be just short of 400 of these companies, with 16 of them based in the UK – predominantly in London. However, leading the tech emergence in the South West in recent years are two Bristol firms that have reached this status.

Ovo Energy and Graphcore are the crown jewel in the treasure chest of tech ingenuity within the city, with several other major tech businesses hot on their tails to reaching the billion-dollar milestone.

Ovo Energy

The tech-enabled energy provider, Ovo (founded in 2009), is unique in the UK list of unicorns as it has largely not relied on any substantial venture capitalist or private equity funding to achieve its unicorn status.

In recent years, its turnover has soared from around the £311m mark and has rapidly rose towards the billion-dollar valuation mark. Earlier this year, Japanese car firm Mitsubishi bought a 20% stake in the company for £202m – which pushed it over the finish line. This is impressive considering the backdrop of tighter regulations, price cap controversies and monetary fund issues for firms within the sector in recent years.

A spokesperson from Ovo said: “For the past 10 years, we’ve been investing in technology and customer services to build the energy system of the future for our customers.

“Our purpose as a business is to power human progress with clean, affordable energy for everyone. We believe that our progression need not come at the expense of the planet. We are constantly innovating to ensure we are well-positioned to grow and take advantage of the changing market. From smart data capabilities to connected home services to domestic vehicle to grid chargers.

“We put technology first – our software engineers are developing a proprietary technology platform that delivers outstanding customer service. OVO now has a team of over 1000, serving over 1.5 million customers across six brands with revenues now exceeding £1bn.”

Graphcore

Graphcore specialises in artificial intelligence (AI) and machine learning applications. Despite only launching three years ago, the company has experienced exponential growth within its market. The company creates semiconductors and microprocessors that include advanced machine learning tools. It has received hundreds of millions of pounds of funding from the likes of Microsoft, BMW, Samsung and Dell.

Earlier this year they announced a new $200m (£155m) funding round which led to a subsequent valuation of the company at $1.7bn (£1.3bn).

Nigel Toon, CEO and co-founder of Graphcore, said: “Machine intelligence marks the start of a new age of computing which needs a radically different type of processor and software tools. This new, fast-growing market creates the opportunity for Graphcore to build a major global technology company that can help innovators in AI achieve important breakthroughs.”

What have they meant to Bristol’s high-growth ecosystem?

Despite being two very different businesses, Ovo and Graphcore have established themselves as leaders within their respective fields – but how did Bristol play into their growth? And is it a great city to scale a tech business?

Ovo stated: “Bristol was the best place for OVO to grow the business. We moved to Bristol in 2012, with its headquarters located at 1 Rivergate. Moving to Bristol seemed like a natural step. Bristol shares many of OVO’s values – a vibrant culture and tech community, entrepreneurial flair and challenger mentality.”

According to Beauhurst, Bristol-based businesses have secured 24 announced equity deals worth a combined £256m in 2019 so far, with funding in the region growing year-on-year since 2016. This represents 1.8% of deals and 2.7% of total pounds invested in the UK so far this year – not bad for a city that is home to just 0.7% of the UK’s population.

Henry Whorwood, Head of Research and Consultancy at Beauhurst said: “We’ve seen a growing number of both seed and venture stage investments happening each year in Bristol. The number of deals made at the growth and established stages remain steady year-on-year. This shows that the high-growth ecosystem in Bristol is effectively nurturing young and ambitious companies through progressive stages of growth.”

The impact of Bristol’s tech companies, and its leading companies like Ovo and Graphcore, cannot be understated, and the city has created an ecosystem of exponential growth.

Robin Halpenny, Business Growth Partner and leader of the University of the West of England’s Scale Up 4 Growth (S4G) programme comments: “Bristol and the surrounding region has a well-established ecosystem of quality and relevant support for fast-growing and scaling businesses.

“The universities in the region provide a large range of services for growing businesses. The support includes leadership and skills development, access not just to graduate talent but also academic expertise, research and specialist facilities. They also provide business space, incubation services and access to some really great networks.”

Bristol doesn’t just provide the universities and talent, but there are many programmes and scale-up entities that help promote rapid growth within the tech sector. One of those companies is SETSquared.

Monika Radclyffe, Centre Director for SETsquared Bristol said: “We have two excellent unicorn businesses already in Bristol and many others that have successfully scaled, including those from SETsquared Bristol. There’s already been some talk of Ultraleap – formerly Ultrahaptics – becoming the city’s next unicorn so there’s definitely more potential for opportunistic businesses. This is great news for Bristol as the more scalable businesses we have, the more attractive the region is to investors and those considering relocating to the city. It also creates a stronger business community as a whole.”

Which Bristol business is the next unicorn?

As Radclyffe alluded to, haptics and augmented reality firm Ultraleap are one of the companies looking to join Ovo and Graphcore.

But, what does Ultraleap believe the future holds for themselves? And has Bristol provided them with the opportunities to grow?

Steve Cliffe, CEO at Ultraleap comments: “When you compare Bristol to other tech hubs like London, Cambridge, San Francisco and other places, Bristol really does tick all of the boxes.

“The Bristol business ecosystem provides great opportunities to scale. Our own growth trajectory was successful in large part thanks to our beginnings at the Engine Shed. We were able to grow our initial team pretty quickly there as there was a lot of support for start-ups on hand, such as lawyers and accountants in residence. Once we grew too big for that space, we were able to use IBB (Invest in Bristol & Bath) to find ourselves a new home and we have continued to grow ever since.

“The city has a brilliant tech community, a great business hub, world-renowned universities and great links to the rest of the UK. The heart and soul of our company is, and will remain, in Bristol.”

When asked if Ultraleap are Bristol’s next unicorn, Cliffe said: “That’s the plan.”

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