Mark Pearson is the founder of investment fund Fuel Ventures, which specialises in early-stage companies and offers a London-based incubation studio to its start-ups. Fuel Ventures currently has more than 20 start-ups under its umbrella and delivers a 70x average return on investments in the European e-commerce sector.
The investment fund recently closed a £20 million round from multiple high net-worth investors and corporate institutions, which span China, the Middle East and Europe.
He previously sold Markco Media (parent company of My Voucher Codes) to the publicly listed mobile payments firm Monitise plc in a reported £55m deal.
In his first column for Business Leader Magazine, he talks about the trend for many UK businesses to build quickly and sell.
If I asked you to name some of the world’s largest or most valuable brands, which names would spring to mind first and foremost? Google? Definitely. Apple? Almost certainly. No doubt Facebook, Microsoft, Amazon and Twitter would also be on the list.
These companies have dominated the global business landscape for more than a decade, topping lists on the likes of Forbes and Inc.com, and they all have one thing in common – they were founded in the United States.
That’s not to say that UK businesses haven’t had their share of global success – Royal Dutch Shell, the Legal & General Group and BP are among the largest companies in the world. However, SMEs have typically been and still are the engine room of the British economy, accounting for 99.3%* of all private sector businesses at the start of 2018.
So, why aren’t UK entrepreneurs competing with their US counterparts?
Historically, this has come down to a lack of funding. Business owners will often launch start-ups with their own personal investment or will raise a small amount of money in their first round of funding.
However, growing a business is difficult and expansion is expensive. Many businesses struggle to access the cash needed to develop, leading many to become stuck at SME level.
Last year, research from Liberis** revealed that more than half of UK businesses are unable to access the funding needed to grow, attributing this partially to the lack of understanding of available funding. Without funding education and vital cash injection, business growth becomes stunted, prompting CEOs to sell quickly.
Small business education is desperately needed; entrepreneurs need to be made aware of the funding options available to them. And the reality is that there has never been more funding available.
One option that we are increasingly seeing is equity investment – money that is invested by way of buying shares. It’s often overlooked by founders, but offers some serious benefits to small businesses and is generally encouraged by investors after four-six years, if managed professionally.
Growing a business can be difficult
I’ll say again that growing a business can be difficult, and there are some real challenges facing entrepreneurs at the moment. The uncertainty surrounding Brexit has prompted almost a third*** of UK business leaders to consider moving operations abroad, while international firms are taking advantage of the cheap pound to snap up successful start-ups.
Despite all of these challenges however, I believe that entrepreneurs can build great businesses in times of adversity – the best business leaders become resilient despite surmounting difficulties and while we are mere weeks away from Brexit, the UK remains the start-up capital of Europe.
The ambition is certainly there, especially in the tech sector. Spurred on by the success of US giants like Google and Facebook, the UK has become the clear leader of Europe’s unicorn start-ups, with Farfetch, Funding Circle, Zoopla and ASOS among the many businesses that have grown out of London’s start-up scene in the last decade.
The future is exciting for tech entrepreneurs and the opportunity for the UK to create even more exceptional companies has never been stronger. The best is yet to come.