The British Business Bank has pledged up to £50 million to Longwall Venture Partners' latest fund to support early-stage deep tech companies.

Founded in 2008, Longwall Ventures is a UK early-stage venture capital firm that's so far invested in more than 50 deep tech companies, ranging from medical devices to defence and aerospace applications.

"The UK's strong research base across academia and industry has created a rich seam of opportunities to turn ground-breaking science into valuable businesses, but these businesses often struggle to raise long-term capital to support them on their journey to commercialization," said David Denny, managing partner at Longwall Venture Partners.

"We are excited to find the next crop of deeptech investments for our new fund."

This new British Business Bank commitment to the Longwall 4 fund follows similar investments in Longwall's Oxford Technology ECF LP in 2008, Longwall Ventures ECF LP in 2012, and Longwall Ventures 3 ECF LP in 2017.

The first of these was one of the first investors in OrganOx, which was sold in 2025 to Terumo Corporation for more than $1.5 billion – making it the biggest acquisition of an Oxford University spinout to date, and one of the UK's biggest-ever medtech exit deals. It delivered a 19.2x return for investors, including the Bank.

And with five exits so far in OTECF, the fund's private LPs have received a return of six times on their original investment.

"British Business Bank's investment into Longwall Venture's new fund will provide a major boost to startups across key growth sectors and is a shot in the arm for the UK's thriving technology sector," said business secretary Peter Kyle.

"This news demonstrates how this government is using our Modern Industrial Strategy to deliver long-term growth and opportunities that support skilled jobs and raises living standards across the UK."

The British Business Bank is the largest investor in UK venture and venture growth capital funds. Its Enterprise Capital Funds program aims to increase the supply of equity capital to early-stage UK companies with long-term growth potential, and reduce the barriers to entry for fund managers looking to operate in the VC market. It's backed 54 funds to date, representing around £2.7 billion of finance.

"The Enterprise Capital Funds programme plays a crucial role in helping early-stage funds raise capital with a cornerstone investment, increasing the amount of scale-up finance available for high-growth early-stage companies," said Mark Sims, managing director, head of development equity funds at the British Business Bank.

"With businesses like OrganOx already pushing the boundaries of what's possible, our continued partnership with Longwall Ventures will help uncover the next generation of breakthrough technologies and UK success stories."

Working with the same strategy as its previous funds, Longwall 4 will continue to target UK-based startup and early-stage science and engineering deeptech companies across a range of sectors, including the Industrial Strategy sectors of Advanced Manufacturing, Clean Energy, Defence, and Life Sciences.

Fund 4 is targeting investing between £500,000 and £2 million into around 15 companies, with a 'significant' amount of capital reserved for follow on investments. It has already raised £86.2 million, and is targeting £100 million at close.

The UK government is launching a £500 million Sovereign AI fund aimed at boosting support for domestic AI companies.

While UK AI startups raised £6 billion in venture capital last year, the government said too many firms are failing to make the leap from breakthrough research to large‑scale commercial success.

To drive industry growth, a new Sovereign AI Unit will act as a venture capital fund within the government, making targeted investments in UK AI firms.

In addition to funding support, the unit will provide direct access to the UK’s fastest AI supercomputers, such as the Isambard-AI supercomputer in Bristol and Dawn in Cambridge, along with specialist R&D support and grants.

The unit will also offer opportunities to engage directly with the government on procurement opportunities, along with help to navigate and shape regulatory innovation.

The fund will be chaired by investor James Wise, who will remain a partner at VC fund Balderton. Other staff will come from the AI Security Institute within the Department of Science, Innovation, and Technology (DSIT).

“If we believe AI is absolutely critical to our economic prosperity and our national security, which I do, then this fund, and the even bigger ambition behind it, is one of the single most important things this government will do for the future of this country,” said technology secretary Liz Kendall.

“We believe in Britain and we are betting on Britain. We are backing our brilliant innovators and entrepreneurs so we seize the benefits of this technology to reshape Britain for the benefit of all.”

At the official launch of the fund this evening, Kendall is expected to announce the first companies to receive backing through the scheme.

The announcement comes as London-based autonomous driving firm Wayve - which started out as just two engineers with a smartphone attached to the roof of a Renault Twizy - announced that it had received an extra $60 million investment from AMD, Arm, and Qualcomm Ventures.

"We’re building an AI Driver that works across the full automotive compute ecosystem, from architectures already used in millions of vehicles today to the platforms powering the next generation of automated vehicles," said the company's co-founder and CEO, Alex Kendall.

"Expanding our relationships with leading silicon companies helps bring that into production at a global scale, and we’re delighted to have these partners actively working with us on integration and deployment.”

UK government targets AI leadership

The announcement marks the latest in a series of moves by Downing Street to drive AI innovation across the country.

Over the last year, the government has designated five AI Growth Zones across the UK, launched the Isambard-AI supercomputer in Bristol, and committed £2 billion to expand UK compute capacity twenty-fold by 2030.

Meanwhile, a new AI Growth Zone Delivery Unit has been launched to speed up the development of data centers in a bid to meet surging compute demand.

Last month, chancellor Rachel Reeves said AI is the “defining technology of our era” and underscored the government’s commitment to establishing the UK as a global leader in the technology.

"The choice is this: we can bury our heads in the sand and leave it to other countries - whose values may differ from ours - to shape and own this technology," said chancellor Rachel Reeves last month.

"We can leave it to the market alone, and let the balance of risk and reward be determined by a super-wealthy few. Or we can chart our own course."

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Microsoft has teamed up with Nvidia and WeTransact to launch the ‘Agentic Launchpad’ – a new program aimed at helping UK software companies build next-generation AI platforms.

As part of the scheme, successful startups and scale-ups will be able to work directly with Microsoft and Nvidia, gaining access to advanced AI expertise, technical sessions, and opportunities for joint innovation.

This will include a range of events, workshops, and summits, including the Microsoft AI Tour and industry briefings.

Marketing support is a key focus of the scheme, helping startups to access broader markets through media campaigns and executive sponsorships, the duo said.

Long-term, the aim here is to improve time-to-market and visibility. Microsoft said participants will be able to promote their agentic AI apps to key stakeholders and target customers through dedicated campaigns. They'll also feature in communications, blogs, and press releases from Microsoft and its partners.

“This is a really exciting opportunity for innovative and ambitious AI-first software companies to accelerate the growth of their agentic AI solutions with the expert help of Microsoft and Nvidia,” said Darren Hardman, CEO, Microsoft UK & Ireland.

“We are passionate about helping to build the agentic AI future and see innovation flourish in the UK.”

Nvidia to beef up training resources

Nvidia has pledged additional support for the program by giving access to its existing training resources for startups and smaller enterprises.

“Nvidia is ready to support the Microsoft Agentic Launchpad through the Nvidia Inception program for cutting-edge start-ups,” said Serge Palaric, Nvidia vice president of EMEA hyperscaler and ISV alliances.

“This collaboration will provide start-ups with access to Nvidia Deep Learning Institute training sessions and a network of experts. By using Nvidia AI infrastructure, software companies will be able to accelerate their AI development and enhance performance.”

The program builds on Microsoft's GenAI Accelerator, launched this time last year in collaboration with Nvidia and GitHub. Participants were given free Azure credits, membership of NVIDIA’s Inception program, and support from Microsoft’s AI ‘Black Belt’ engineers.

“The GenAI Accelerator provided invaluable access to technical advisors, partner managers, and experts at Microsoft,” says Sharad Khandelwal, cofounder and CEO of SentiSum.

“We gained visibility in critical AI and SaaS communities, and it gave us the credibility to partner with enterprise customers who value Microsoft’s stamp of quality.”

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Secure access service edge (SASE) vendor Cato Networks has announced the acquisition of Aim Security, an Israeli startup focused on AI security, for an undisclosed fee.

The deal marks Cato Network's first acquisition and follows a period of strong growth, with the company recently surpassing $300 million in annual recurring revenue and securing an additional $50 million investment from Acrew Capital, taking its total Series G funding round to $409 million.

Founded in 2022, Aim Security has quickly established itself as a leading player in AI security, with its focus on addressing the evolving AI attack surface.

Aim's security capabilities will be integrated into the Cato SASE Cloud Platform to help enterprises securely adopt AI agents as well as public and private AI applications at a time when SASE adoption continues to climb.

"AI transformation will eclipse digital transformation as the main force that will shape enterprises over the next decade," commented Cato Networks' CEO and co-founder, Shlomo Kramer, in an announcement. "With the acquisition of Aim Security, we're turbo-charging our SASE platform with advanced AI security capabilities to secure our customers' journey into the new and exciting AI era."

Aim Security AI

Supported by a unified and advanced core engine and underpinned by a dedicated research team, Aim Security's offering spans various use cases, working to secure employee use of public AI applications, private AI applications and AI agents, as well as the agentic AI development lifecycle using AI security posture management (AI-SPM).

Employees can leverage Aim to securely use public and enterprise AI agents such as Microsoft Copilot, develop with new AI coding agents such as Cursor, as well as utilize local agents with Model Context Protocol (MCP) servers.

The Aim AI Firewall also secures internal AI applications and agents against runtime attacks and enforces corporate security and governance policies on all interactions.

Additionally, the solution works to secure the entire development lifecycle, from training ML models to building custom AI agents, through continuous discovery, detection, and remediation.

Cato Networks said the addition of Aim Security will extend the capabilities of its SASE Cloud Platform to enable organizations to address the unstructured nature of AI interactions, while tackling threats across the evolving AI attack surface.

Cato customers with current AI security requirements can deploy Aim today, while the capabilities will be offered as part of its SASE platform in early 2026 along with a "seamless migration path" for those that deployed the standalone solution.

Matan Getz, co-founder and CEO of Aim Security, said many organizations are already benefiting from the solution's ability to secure AI adoption, including one of the world's largest financial services companies.

"Aim had purpose-built a broad AI security platform, grounded in cutting-edge research and patented technology, designed to seamlessly integrate into complex enterprise environments," he explained. "Aim's solutions enable businesses to securely reap the benefits of their AI investments."

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VC investors are shifting their attention from generative AI startups to later-stage companies, new research shows, with the average deal size having tripled year-on-year to $1.5 billion.

According to EY Ireland’s latest Generative AI Key Deals and Market Insights study, global venture capital investment in generative AI surged to $49.2 billion in the first half of this year, outpacing the total for all of 2024, at $44.2 billion, and more than double the $21.3 billion total for 2023.

While the US accounts for 97% of global deal value and 62% of volume, EMEA makes up 23% of volume but just 2% of deal value.

“While there was substantial concern at the start of the year with the launch of DeepSeek that investment in GenAI was likely to trend downwards, the results for the first half of the year point to a very different scenario," said Grit Young, EY Ireland technology, media and telecoms lead.

"We are seeing a clear pivot to less but more substantial investments, which are pointed towards more mature companies and platforms that can demonstrate they can deliver real-world impact and return on investment."

There's been a wave of high-value investment into some of the most established players during the first half of this year, including SoftBank’s commitment to OpenAI, which could reach $40 billion, and xAI’s $10 billion funding round.

So far this year, the industry has also seen major funding rounds for Databricks ($5 billion), Anthropic ($3.5 billion), Mistral AI ($600 million), and Harvey ($600 million).

Investor focus is shifting

Agentic AI has emerged as a key growth area, with Capgemini’s $3.3 billion acquisition of WNS and Berlin-based Parloa’s $120 million raise among the more notable deals.

The report highlights a clear shift in investor focus towards generative AI platforms offering specialized, real-world applications. Meanwhile, venture capital is increasingly flowing into companies building software on third-party foundation models, with use-cases ranging from cybersecurity to regulatory compliance.

"We would expect that the investment trajectory is likely to accelerate through the second half of the year and beyond," said Young.

"It would appear that GenAI has skipped through the traditional ‘trough of disillusionment’ for new technology adoption quite quickly and has now moved into another upswing cycle."

In Ireland specifically, 63% of startups are using AI and 36% are embedding it at the core of their business models, yet many AI startups are struggling with access to capital and infrastructure.

"For AI startups, the funding environment remains challenging, particularly in the €1 million to €10 million funding space. Many high-potential startups find themselves in a difficult middle ground, too advanced for early-stage support, yet not quite large enough to attract global VC attention," said Young.

"However, Ireland has a deep and well-established pool of talented entrepreneurs, and with increased collaboration between businesses, founders, academic institutions and policymakers there are plenty of opportunities to be seized."

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When the house of cards came tumbling down for Builder.ai, it may have shocked some industry stakeholders, but for others it was a sign of an inherently broken ecosystem.

The high flying startup was one of a number of companies looking to capitalize on the generative AI boom, particularly the use of the technology in software development.

The profession has seen an influx of AI tools over the last 18 months, and this is now a booming marketplace, with industry giants battling it out over who can deliver the most value for engineers and devs, and most importantly, drive productivity.

Builder.ai was, arguably, among the pick of the bunch in this regard. Founded in 2016 and formerly known as Engineer.ai, the company offered AI-powered tools that allowed users to create applications with little or no coding expertise.

With the generative AI gold rush gaining momentum in late 2022 and early 2023, the company had suitors scrambling to get involved. It raised over $450 million in funding, including from big-name investors like Microsoft and Qatar's sovereign wealth fund.

So, where did it all go wrong? In May, a viral tweet accused the company of hiring a 700-strong army of engineers in India to basically carry out the legwork that the so-called ‘AI’ was supposed to be doing.

The company strongly disputes this claim, and there’s little evidence to suggest there’s any credibility in the accusation.

It’s worth noting that a 2019 report from the Wall Street Journal claimed the startup admitted to using human engineers, rather than AI, to carry out coding tasks.

Notably, the WSJ report mentioned that employees at the firm said the company exaggerated its capabilities in a bid to attract both customers and investors.

It appears that the grandiose claims bandied around by the company continued after its rebranding, but the real damage lay in the numbers, not the tech.

According to reports from the Financial Times, the startup is believed to have “overstated sales by as much as four times” and was facing serious debt problems.

The FT reported that the firm owed Amazon Web Services (AWS) $88 million and Microsoft around $30 million, for example.

Meanwhile, separate reporting from Bloomberg revealed a lender seized $37 million after finding it generated $50 million in revenue. That’s by no means a measly figure, but that stands 300% lower than the firm’s claim of a $220 million revenue stream.

The Builder.ai collapse is an indictment of the industry

Carrie Osman, CEO of private equity advisor, Cruxy, said the startup is the “latest example of FOMO investing”, whereby venture capital firms and industry stakeholders alike rush headlong into throwing money at companies.

Ultimately, it’s an indictment of the state of the industry and the hype surrounding the technology.

“Technology like GenAI has been massively overhyped in recent years, and investors and boards are under increasing pressure to find the latest, sexiest uses for AI,” Osman said.

“Driven by FOMO rather than fundamentals, investors are rushing into deals with minimal scrutiny, inflating valuations, and sidelining due diligence.”

The hype saturating this industry has sparked some concerns in recent months, particularly over the viability of many startups emerging in the space.

Indeed, a report from Silicon Valley Bank (SVB) in May issued a warning over the rise of ‘zombiecorns’ in the ecosystem.

These are essentially startups that raise huge sums of money but fail to build sustainable revenue streams. Fresh on the high of a major fundraise, many of these companies actually prove to be chronically unprepared post-funding.

The combination of high infrastructure costs, sluggish revenue growth, and the incessant demand for a quick return on investment (ROI) means a concerning portion of companies in the AI space are destined to fail.

Many of these failing startups seemingly fly under the radar without so much as a headline - and it’s largely due to the sheer amount of cash pouring into the space, which, it has to be said, is being driven by the leading industry figures banging the drum for the technology.

Analysis from the bank shows around 40% of all investment raised by funds last year came from those that “list AI as a focus”.

Compare that to 2021 where just 10% of venture capital investment went toward AI startups, and it shows many investors are willing to take the chance on investing in firms that are essentially just enterprise software with a shiny AI wrapper.

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The UK tech sector is now worth an eye-watering $1.3 trillion, with AI firms alone hitting a combined market valuation of $230 billion in the first quarter of this year.

UK AI startups raised $1.03 billion during the quarter – the biggest fundraise in three years – according to this year's Tech Nation Report from the Founders Forum Group. Indeed, during 2024, AI startups accounted for 27% of all UK venture capital raised.

Most investment is going to companies in the enterprise software space – $4.1 billion over the past two years – with VCs investing more in business-to-business AI solutions than in consumer tech. And London raised more than ten times as much as any other UK region during 2024 – although the North West and Scotland did well too.

The $230 billion market valuation makes the UK bigger than France and Germany combined – Europe's largest AI market, and third in the world after the US and China, and with a compound annual growth rate (CAGR) of 22% over the last five years.

A lot of this is down to ARM, valued at $118 billion, although even when public companies are excluded, the UK AI sector is more than 55% bigger than its closest European competitors.

However, it's not all good news. AI startup leaders said they were struggling with access to capital and talent, with one-in-three saying they were actively considering relocating their company's headquarters outside the UK.

"While the UK excels at startup creation, we struggle to retain our most promising companies as they scale," said Carolyn Dawson, CEO of the Founders Forum Group.

"Homegrown AI champions like Wayve, Darktrace, and Deepmind must turn to the US for investment and exit opportunities."

Half of AI startup leaders said they wanted to see the introduction of government-backed funds, along with policies to directly reduce the cost of talent, such as tax credits or other incentives, along with better policies on immigration and remote work.

"To help AI companies scale, the government should expand visa access for critical AI skills by streamlining work visas and allowing AI graduates to stay longer, similar to Canada's Tech Talent Strategy and France's Tech Visa, which attract top tech talent," said Husayn Kassai, founder and CEO of Quench.ai.

"They should also allocate a percentage of government procurement budgets to startups founded in the past five years, following the model of Israel's Innovation Authority, which funds early-stage companies to drive national AI leadership."

These changes, he said, would help UK startups retain talent and get a fair crack of the whip at public contracts, rather than being locked out by legacy vendor restrictions.

"The UK has the potential to lead the global AI revolution," said Dawson.

"Our task now is to create the conditions where our companies can thrive and scale without looking elsewhere, and to champion, connect and support the innovators who are building our AI future right here in the UK."

Wordsmith AI, a Scottish startup specializing in AI agents for legal professionals, has raised $25 million in a funding round led by Index Ventures.

The investment, which builds on a $5 million seed funding round last year, brings the Edinburgh-based startup’s valuation to $100 million and will be used to scale out its AI infrastructure and drive global expansion.

Founded in 2024 by Ross McNairn, a lawyer turned engineer, the company aims to transform the profession by embedding AI agents within legal teams to support general counsels (GCs).

McNairn describes its flagship Legal Enablement Platform as “air traffic control for GCs and in-house teams”, and allows users to automate tasks and streamline manual processes.

“For the first time, AI infrastructure can be embedded across companies, with fleets of agents that you can train to support every corporate function - cutting deal cycles, answering queries, and processing complex workflows,” McNairn said in a statement following the investment round.

Since launching, Wordsmith AI has cultivated a strong customer base which includes major firms such as Trustpilot, Deliveroo, Multiverse, Docplanner, and Remote.com.

The company has recorded strong revenue growth in both the UK and US markets thus far and plans to open offices in London and New York later this year.

"We are helping GCs embed their legal intelligence across the business,” McNairn said. “Gone are the days of legal being seen as a blocker, it is now a revenue accelerator."

Wordsmith AI targets agentic AI gains for legal teams

Agentic AI has quickly emerged as the latest industry trend in recent months, with a host of major big tech providers launching their own AI agent services.

Notably, there are a number of key emerging use cases for this latest iteration of the technology, such as customer service and software development. As ITPro previously reported, Salesforce has even touted the use of AI agents for frontline trade workers in recent weeks.

The legal profession is also an area ripe for automation, with the technology expected to play a crucial role in transforming the sector and helping reduce manual toil for workers.

Research from Gartner, for example, predicts the global legal technology market will reach $50 billion in value by 2027 as a result of generative AI adoption.

The consultancy believes the use of AI tools will help streamline processes such as spend management, e-billing, and legal document management activities.

With this influx of AI agents, the Edinburgh startup says the industry will also witness the emergence of an entirely new role within legal departments, dubbed the ‘legal engineer’.

The rise of this new, AI-focused role will require new skillsets, according to Wordsmith, meaning investment in training and deployment support will be crucial in delivering success.

“We’re witnessing the birth of an entirely new role in legal: the legal engineer,” McNairn said. “These are the people training, deploying, and managing fleets of AI agents. We’re helping to re-skill an entire generation to do it."

Wordsmith has invested significantly in training and upskilling for legal professionals so far, and this latest funding round will help accelerate activities in this regard.

“AI is revolutionizing the legal profession, and Wordsmith is leading that charge,” said Hannah Seal, partner at Index Ventures.”

“They’re not just building a copilot, they’re creating the foundational infrastructure for how entire organizations interact with legal. This is about reshaping enterprise operations, not just supporting legal teams.”

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While cash is flowing into the AI startup space, alarm bells are ringing over the long-term viability of many up-and-coming firms.

A new report from Silicon Valley Bank (SVB) shows venture capital investment in AI firms has soared in recent years. Analysis from the bank found roughly 40% of all investment raised by funds last year came from those that “list AI as a focus”.

This marks a sharp increase compared to 2021, in which just 10% of venture capital investment focused on AI startups specifically. Indeed, AI companies now make up 45% of US venture capital investment in enterprise software, again marking a significant jump from 9% in 2022.

A key factor in this sharp rise in funding came from ‘megadeals’, according to SVB, which in this case it defines as raises in excess of $100 million.

There were 107 megadeals across Q1 2025, the most since the second quarter of 2022 at the height of the post-pandemic goldrush. Major industry players such as OpenAI and Anthropic were found to be “leading the charge” in this regard.

But despite the bullish outlook among VC firms, cracks could begin to show across the industry. The report noted that this sharpened focus on the technology means startups in other business verticals are finding it increasingly difficult to raise cash.

“Exclude AI investment and the story changes,” the SVB report stated. “There is no meaningful uptick for companies not leveraging AI, with investment from this group essentially flat for the last year.”

What this means is that companies failing to lean into the generative AI trend are missing out on a potential goldmine of investment.

But there’s more to the tech sector than simply AI solutions and software, and the venture capital obsession with AI could risk harming the broader ecosystem, according to Sam Hields, partner at early-stage tech VC, OpenOcean.

"The Silicon Valley Bank (SVB) data confirms what we already knew: AI is the gravitational force in venture capital,” he said. “As capital gets more and more concentrated into AI, we risk sucking the oxygen out of the room for other breakthrough technologies.”

AI ‘zombiecorns’ are becoming a serious problem

While the diversity of funding warrants serious concern, SVB also noted that cracks are beginning to show with regard to the long-term viability of some startups in the space.

The report noted that many startups are woefully underprepared post-funding, largely due to poor revenue growth and unit economics. SVB describes these companies as ‘zombiecorns’.

Infrastructure costs, dwindling runway, and sluggish revenue growth due to an increasingly competitive marketplace represent a confluence of challenging conditions for these companies.

“While new unicorn creation has been impressive in recent years, unicorn exits are a different story,” the report noted.

“The enterprise unicorn herd stands above 300, with few exiting, closing their door, or taking a down round below a $1B post-money valuation.

“With the growth of the herd, so too comes growing demand for liquidity. But with the IPO window effectively shut, and large-scale M&A being tougher to execute with the overhanging macro climate, many run the risk of ending up in no man's land.”

Tom Glason, CEO and co-founder at ScaleWise, said the SVB report highlights a “harsh truth” about the generative AI trend.

“The AI boom has fueled a wave of overfunded startups that look healthy on the surface, but are commercially hollow underneath,” he said. “These so-called ‘zombiecorns’ raise huge rounds but fail to build sustainable revenue or viable unit economics.”

This has become a common recurring theme in the market, Glason suggested, with founders “confusing capital raised with genuine traction”.

Ultimately, capital efficiency and go-to-market execution still largely determine whether a company graduates to IPO or fades out, he added.

Hields echoed Glason’s comments, adding that the hype surrounding the technology has resulted in a trend in which companies rapidly pivot to become an ‘AI company’ which ends up being nothing more than a shiny veneer on top of an existing tech solutions stack.

“Today, folding an LLM into your product is enough to claim an ‘AI badge’. That’s perfectly natural - and, in many cases, it’s trivial to implement. But it won’t deliver durable returns,” he said.

“SVB is right to warn us about the rise of ‘zombiecorns’. If we avoid the temptation to over-index into dead-end, ‘wrapper-ware’ startups and push against the crowding out effect on deeper R&D, we have a chance to channel enthusiasm for AI into solving real, structural problems. That’s where the real alpha comes in.”

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National Grid Partners, the venture capital and innovation arm of the UK utility firm, has unveiled plans to invest $100 million in AI startups in the energy field.

With pressure on the grid increasing, the investment division is exploring solutions that will help make the grid more efficient, resilient, and dynamic. This means improving efficiency, cutting customer costs, reducing emissions, and ensuring energy security.

"Power systems like National Grid's are seeing unprecedented challenges, with soaring demand driven by data centers and the electrification of heat and transport, as well as requirements for a more flexible grid with the rise of renewables and EVs," said John Pettigrew, CEO of National Grid.

"We are seeing artificial intelligence play a vital role resolving these issues and delivering compelling results across our operations. Scaling AI will continue to help National Grid provide the most efficient, modern grid available for our millions of customers in the US and UK."

The first funding pledge has been granted to Amperon, a provider of AI-powered energy forecasting and analytics solutions aimed at improving grid reliability, managing financial risk, and optimizing renewables.

"As the energy landscape becomes more complex and dynamic, the need for accurate, real-time data and predictive insights has never been more critical," said Raghuram Madabushi, investment director at National Grid Partners.

"Amperon's AI-driven approach to forecasting is a perfect fit with our vision for a smarter, more resilient grid – and this marks the inaugural investment from our new, $100 million commitment to AI solutions advancing our energy system."

National Grid eyes tangible use-cases

National Grid Partners said it's already invested $150 million in 18 AI companies focusing on energy innovation, with more than 80% of its portfolio companies strategically engaged with National Grid business units.

One such is Sensat, which uses AI to help owners of critical infrastructure visualize and collaborate via digital twins, thereby accelerating projects and lowering costs.

The utility giant is currently using the firm’s tech to speed up substation upgrades and connect data centers to the grid.

AI is a mixed blessing when it comes to energy. Late last year, an investigation by Schneider Electric into the possible future of AI’s electricity consumption over the next decade found 'significant concerns' over capacity.

The International Energy Agency (IEA), meanwhile, has forecast that the electricity consumption associated with global data centers will more than double between 2022 and 2026, peaking at over 1,000 TWh next year. That's equivalent to Japan’s national electricity consumption.

Data center operators are concerned about pressure from AI-driven demands, with seven-in-ten IT decision makers recently telling Cadence researchers that energy grids are being pushed to breaking point.

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The UK is in danger of becoming an 'incubator economy' whose startups move overseas as they scale, according to lawmakers.

The House of Lords Communications and Digital Committee says the UK needs to do a better job supporting UK AI and creative tech startups.

Committee chair Baroness Stowell said the UK has the potential to “be a powerhouse of growth for AI and creative tech companies”, but so far these efforts have failed.

"We are at real risk of becoming an incubator economy instead, where UK start-ups develop innovative products and services before selling out or moving abroad, so other countries derive the economic benefit,” Stowell said.

“Too often it’s a case of the UK begins, other countries cash in. That has to change."

In recent months, UK fintech unicorns Revolut and Monzo have both announced that they may list in the US rather than the UK stock market.

Barriers to successful scaling up in the UK include limited access to capital compared with other countries, the committee warned. There are also challenges in recruiting in-demand tech talent along with a business and investment culture that can be too risk averse.

The report also highlighted a complex array of well-intentioned government schemes, including financial reforms, tax credits, investment incentives, and innovation focused initiatives - all of which actually create further barriers and bureaucracy.

The committee said the government should resist the urge to launch new schemes and instead focus on consolidating and streamlining existing programs for maximum impact.

"Action must be taken to unravel the complex spaghetti of support schemes available for scaleups. Various tax credits, British Business Bank funds and investment incentives combine to be so hard to navigate that companies have to employ consultants to advise them," Stowell said.

"We urgently need to simplify the help available and ensure it is set up to support our most innovative scaleups to grow, while also offering value for money to the taxpayer."

The government’s industrial strategy should provide a coherent, cross-sector vision for how technology scale-ups will be supported to drive economic growth, while financial reforms should be accelerated to unlock domestic growth capital.

Similarly, more should be done to incentivize founders to stay in the UK to grow their businesses, and public support for innovation should be streamlined. The government should also commit to AI delivery and sustain investment in the creative industries.

"Every UK unicorn that gallops overseas to list, or sells out to foreign investors, is a blow to UK PLC and our aspirations for growth," said Baroness Stowell.

“The government’s new AI Opportunities Action Plan is a good start, but a plan in itself is not enough. The key is its delivery. The government will need to drive through change to address fundamental barriers such as limited infrastructure and comparatively low levels of adoption if it is to have an impact."

Password management startup Passbolt has secured $8 million in funding as part of a Series A investment round.

Passbolt specializes in credential management for organizations ranging in size from small businesses to large enterprises, and boasts more than 400,000 active daily users.

While focusing primarily on password management, the startup also provides security for a variety of organizational credentials. This includes support for root accounts, SSH keys, passkeys, and API keys.

Additionally, Passbolt is fully open source, providing enterprise users with both self-hosting capabilities and the ability to customize management practices to match company policies or regulatory obligations.

The funding will be used to accelerate product development, the company confirmed, and enable it to scale international sales and marketing activities.

Among the first key milestones for the firm in the wake of the investment will be its next major release, Passbolt 5.0, which it said will “extend capabilities” for users.

"Organizations are trapped between consumer-focused password managers and complex monolithic enterprise solutions that don't meet the need for secure collaboration of agile teams operating in digital environments," said Kevin Muller, co-founder and CEO of Passbolt.

"We're building a new type of credential and access manager for organizations of all sizes. It enables technical teams to collaboratively manage access to the organization’s IT, software development, and security infrastructure. At the same time, it allows the broader workforce to automatically log into productivity tools and to share access credentials with colleagues securely."

Passbolt capitalizing on market growth

Passbolt operates in a market which is expected to grow significantly over the next few years.

Analysis from Gartner, for example, predicts the privileged access management (PAM) space will grow to $2.8 billion by 2027, underlining the huge demand for solutions.

The consultancy noted that a key factor in this growth rate is a surge in demand for secure remote access by external contractors and the continued trend of remote and hybrid working practices.

The funding round, which brings its total investment to date to over $11.5 million, was led by Netherlands-based investment firm, Airbridge Equity Partners, alongside existing partners such as Expon Capital.

“Since the very first funding round, we have supported Passbolt in its mission to transform password and access management for modern teams," said Alain Rodermann, partner at Expon Capital.

“We are thrilled to see Passbolt achieve this new funding milestone and continue innovating to serve thousands of organizations worldwide.”

AI infrastructure startup nexos.ai has secured $8 million in funding in a round led by Index Ventures.

Founded in 2024 by Tomas Okmanas and Eimantas Sabaliauskas, the co-founders of Nord Security, nexos.ai aims to tackle one of the biggest challenges faced by enterprises in 2025 – traversing the ever-growing ecosystem of AI models.

Nexos.ai frames itself as the “orchestration platform” and “connective tissue” for enterprises ramping up AI adoption, enabling them to efficiently deploy, manage, and optimize their IT infrastructure.

Upon launch, the nexos platform will provide users with access to over 200 AI models through a single interface. This includes models from leading industry providers such as OpenAI, Meta, Anthropic, and Google.

Key capabilities of the platform include:

• Smart model routing and load balancing to streamline performance
• Intelligent caching to reduce repeat query costs
• Monitoring and analytics tools for AI operations
• Enterprise-grade security and compliance controls
• Automated performance optimization for AI models

The nexos.ai platform will launch in Q1 2025, the firm revealed, and is already being tested by partners exploring use-cases such as automated customer support.

The inspiration behind nexos.ai was based on Okmanas’ experiences integrating AI at enterprises he was involved with. In some cases, these organizations struggled with deployment despite spending over $100k each month on large language models (LLMs).

Enquiries with other enterprises revealed the same recurring issue: mainly that while firms were keen to deploy AI, they lacked the appropriate infrastructure to accelerate adoption.

The rapid growth of LLMs over the last two years has outpaced infrastructure capabilities, the company said, meaning enterprises are struggling to manage both costs and performance requirements.

“Companies know that AI is an operational and competitive necessity, but they’re drowning in the challenges of managing multiple models, controlling costs and ensuring accurate and reliable performance,” said Okmanas, who serves as CEO at nexos.ai.

“At the same time, AI models are becoming increasingly autonomous and capable of handling complex tasks with minimal human intervention,” he added.

“We’ve built nexos.ai to be the enterprise-grade platform that makes working with AI as intuitive as working with human teams – providing the infrastructure and oversight to make sure these models perform at their best while remaining cost-effective and secure.”

The funding round also saw participation from Creandum and Dig Ventures, alongside angel investment from Klarna CEO Sebastian Siemiatkowski through Flat Capital, Olivier Pomel, CEO of Datadog, and Avishai Abrahami, CEO of Wix.

Following the launch of the government's Scale-up Sprint initiative earlier this month, TechUK has launched its own Scale-up Group.

The tech trade association has identified more than 100 companies within its membership that meet the OECD definition of a scale-up, and will soon be inviting them to join. 

"The group will be a focal point for techUK’s engagement with government, the opposition, government agencies such as the British Business Bank and National Infrastructure Bank, as well as private investors, to provide an enhanced level of support to some of our fastest growing companies," it said.

The companies it plans to invite have grown their revenue more than 20% per year for at least the last three years, and are located across the UK – although, predictably, London features heavily in the list. Most were founded after 2014, with a significant proportion founded between 2016 and 2020.    

While most of these firms are operating in the cyber security, fintech, artificial intelligence (AI) and data infrastructure industries, the group also contains a wide range of companies across the semiconductor, payment, health tech, and quantum sectors. And while the vast majority are SMBs with 250 staff or fewer, 13 companies in the group have more than 250 employees.  

"In total our scale-ups employee 11,000 people across the UK. They have seen a huge increase in headcount, more than doubling the number of staff employed since 2019," said TechUK. "If trend growth can be supported, TechUK's scale-up members could employ over 20,000 people in the next few years." 

The new government support package was launched by the Department for Science, Innovation and Technology (DSIT) earlier this month, with a pledge to make the UK a “scale-up powerhouse”.

It includes a new Scale-up Forum aimed at allowing UK tech scale-ups to help co-design the government's future business policies, as well as a science and tech-focused scale-up support service targeting 20 of the UK’s most promising scale-ups with government support.

A new regulatory support service is designed to help science and tech companies to navigate UK regulation and innovate with greater certainty, while DSIT will make data held by government more accessible to scale-ups.

"Scale-ups have an outsized contribution to the UK economy - they make up just 1% of SME firms, but account for 8% of SME employment and 22% of SME turnover, according to an analysis from the Social Markets Foundation.  Supporting scale-ups is seen as a key economic growth opportunity for the UK and the route to developing future globally leading companies in science and technology.," said TechUK.  

"With the right support, techUK’s scale-ups members have the potential for significant growth, with techUK analysis on Data City estimating an average headcount growth rate of 36.6% for the group and the potential to reach over £2 billion in turnover in the next few years."

TechUK says that it will approach those members it has identified as suitable for the group, but that any other interested members should get in touch.

Raising investment as a startup founder can often be an arduous and stressful process fraught with challenges. But for founders in the LGBTQ+ community, this challenge is exacerbated by long-standing issues around visibility, openness, and, on occasion, instances of discrimination.

LGBTQ+ founders face a myriad of hurdles when raising venture capital, with founders from the community raising 16% less on average compared to their counterparts, according to US industry analysis from the StartOut Index. StartOut statistics also show less than 1% of more than $2 trillion in venture capital has gone to entrepreneurs and founders from the community. This comes despite the fact that, across the country, 7.1% of the population identifies at LGBTQ+.

These rates highlight a significant disparity between LGBTQ+ founders and their counterparts outwith the community, and raises questions over why many find it so difficult. 

A key factor in this, research shows, is due to long-standing cultural issues and a lack of visibility and awareness of the challenges faced by founders from what is a growing – yet traditionally marginalized – social demographic. 

LGBTQ+ founders often ‘conceal their identities’ 

A major issue faced by founders from the LGBTQ+ community lies in perception, research shows. Earlier this year, a study from Proud Ventures found nearly one-quarter of startup founders believe disclosing their sexual or gender identity could “pose disadvantages” when seeking investment. The LGBTQ+ Founder report suggested 18% of founders think their identity may negatively impact fundraising attempts, while 27% believe their identity could create a “general disadvantage” during the process. 

This culture of concealment isn’t restricted to startup founders from the LGBTQ+ community either. The study revealed that investors in the VC space also frequently withhold their identity from colleagues, which Proud Ventures said merely exacerbates visibility issues and adversely affects founders. 

Christian Tooley, CEO at i3 Investing, a UK-based angel syndicate which specializes in supporting LGBTQ+ founders, tells ITPro concealment is, unfortunately, a common tactic among many founders from the community. 

“They often conceal their identity and do not conform to certain ‘norms’ within investor circles - often reinforced by affinity bias,” he says. “Their identity should be seen as a positive, bringing unique life experiences and a level of grit and empathy that enhances their ability to build great businesses.”

Discrimination against LGBTQ+ founders was found to be a lingering issue, according to Proud ventures. Citing examples of discrimination, the firm’s study highlighted a specific incident where a bisexual founder was the victim of abusive slurs from an investor who subsequently backed out of a deal. 

Intersectionality and diversity as box-ticking

A frequently unacknowledged element of LGBTQ+ funding disparities also centers around the “intersection of sexuality and other identities”, Tooley adds. This reflects analysis from Proud Ventures showing gay founders raised a median of 2.25 times more than bisexual founders. Similarly, the disparity with lesbian founders is even more jarring, with gay men raising 22 times more. 

“Within the LGBTQ+ community, it is often the most privileged that still get funding. StartOut in the US has data showing that queer men still get more funding than queer women, showing the intersection of gender and sexuality.”

Tooley also notes a pervasive culture of diversity-related ‘box ticking’ in some investor circles is also an issue that must be addressed. All too often, he says, investing in LGBTQ+ founders is still seen as a “one-time investment to diversify a portfolio and tick some ESG boxes”. 

While Tooley says there has been a degree of improvement in this regard, there is still a long way to go. “There is greater awareness of this identity - and the underestimated nature of these founders- but it is still few and far between. Without queer voices on your IC, and without engaging with local communities and initiatives, you will not find or understand these founders’ experiences.”

How can LGBTQ+ founders be supported?

Although VC investors told Proud Ventures that they are taking “proactive steps” to address funding disparities and cultural barriers for LGBTQ+ founders, the report notes that there is still vast room for improvement on this front. 

A key recommendation was that VC firms should place a “stronger focus on hiring more diverse investment teams” to create a more welcoming environment for founders from this community. 

Across the tech industry, other efforts are being made to raise awareness of LGBTQ+ founders and companies. In June, for example, Crunchbase unveiled the launch of new LGBTQ+ ‘diversity spotlight tags’ which aim to improve visibility for founders in the community. 

The ‘LGBTQ+ led’ and LGBTQ+ founded’ tags were specifically launched to “help close the inequity gap” for the community, and builds on several years of work with diversity tags at the organization. 

Long-term, Tooley believes that a stronger focus on ‘intersectional investing’ and ‘queer investing’ may prompt closer ties between LGBTQ+ founders and the investor community – a drive i3 has been passionate about for some time. This will ensure that investors “have access to the innovation from these founders in our community” and maximize exposure and awareness for founders. 

The global startup landscape has changed markedly over the last 18 months, with deteriorating economic conditions prompting a dramatic dip in the volume of venture capital (VC) investment worldwide. In the first quarter of 2023, global venture capital funding stood at $76 billion, according to Crunchbase, marking a 53% decrease against the same period in 2022. This significant drop came amidst a backdrop of major funding deals, including a $10 billion investment in OpenAI, further underlining the decline witnessed in the industry. 

Inflation, rising energy costs and the possibility of recession have, to put it lightly, caused VCs to adopt a more conservative approach. The pre-pandemic gravy train has very much ground to halt, and VCs are becoming increasingly strict in allocating funding, according to Megan Wood, chief product and strategy officer at DigitalOcean. This confluence of higher operating costs, inflation, and a more stringent fundraising landscape is, in turn, causing serious issues for many startups. 

“Fundraising continues to be a struggle,” she says. “Expectations are much higher in terms of revenue, growth, path to profitability, and the diligence and underwriting process of VC investment is more difficult than it was five years ago. It's probably not more difficult than it was one year ago. But it just continues to stagnate. And that shows up in how founders are operating startups and SMBs – if it's harder to access capital, then they can't spend on growth in the same way they would always like to.”

Larger startups are feeling these changing conditions acutely, Wood notes. Some later-stage firms that raised funding at the peak of the cycle in 2021 with high valuations that find themselves in a fundraising scenario now can often end up in a precarious position. 

“I think later-stage companies are probably the ones struggling the most right now,” she says. “They have very high valuations, and for them to raise money again they either have to have grown precipitously or they have to eat a valuation number that they may not be excited about. That might be a down round for their investors, which is a very difficult proposition.”

These are uncharted waters for startups

The current conditions in the global VC market mean startup founders are now contending with an environment that many have never witnessed before, Wood adds. These are very much uncharted waters for many founders, which is placing significant strain on firms and forcing them to make difficult choices that could harm their long-term growth. 

Cashflow considerations are more critical than ever for a startup embarking on its growth journey. In years gone by, simple decisions such as allocating funds toward marketing are being re-examined in favour of diverting funds elsewhere in the business. 

“We just lived through a 13-year bull cycle in the VC market,” she says. “And so for a lot of founders this is a whole new world to them in terms of how you navigate it. We’re seeing a lot of people who haven't lived through a true recession before who are running companies, and there's a lot of different tactics involved.

“So you know, hard questions like ‘How much do I invest in performance marketing’, that may have been a staple of growth in the past, but it's a very costly channel of acquisition relative to things like SEO.”

Wood says considerations such as these are critical, given the levels of investment required and necessity of tangible growth and path to profitability as a staple requirement for future fundraising prospects.

“How much do I invest here during this time, knowing that growth is important?” she ponders. “It’s a case of knowing that if I don’t continue to grow, it will be hard to get fundraising in the future as well.”

Plugging critical talent and funding gaps

The importance of hiring right has long been a well-documented challenge for startups. With limited cash resources and a growth strategy that requires top talent, failing to hire correctly can be a critical hurdle many fail to pass. 

Research from the UK’s Department of Education this year found that nearly half (46%) of startups across the country believe a lack of talent is a key challenge for them moving forward. This prompted over 80% of those surveyed to invest in upskilling for existing staff to accommodate for acute talent shortages. 

These talent shortages, combined with potential cash flow issues, presents startups with a dire quandary; spend more and reduce your runway, or risk losing talent that is vital to your long-term success. 

“There’s been a lot of layoffs in the last few years,” she says. “When you think about operating expenses of people, which are critical to your business going forward, it’s been incredibly challenging. How do you grow with less people?” 

Many startup founders are also adopting novel approaches to ensuring their cash flow doesn’t impede growth in current conditions, Wood says.

“One thing I'm seeing is that a lot more startups are looking at prepayment, or minimum commits or things like that in their order taking process in order to de-risk their sales process and their investments,” she says.

These practices, Wood notes, do represent a way for startups to ensure that revenue streams are maintained and lessens the risk of reducing their long-term cash runway. “They’re focused on how they can get that cash assured up-front to fund their growth cycle,” she adds.

Fundamentally, however, this period represents an opportunity for startups to truly differentiate themselves from competitors. Having faith and confidence in the products and services they are developing is key, but many fall into the trap of underselling themselves. 

“Focus on the product and services, you're only going to differentiate yourself with your customers,” she says. “There can be this temptation to lower prices and compete in that manner, but I think as a startup and founder you have to think about what's your differentiating factor.”

Focusing on sustainable traction

One particular tactic Wood has observed recently has been a prevailing focus among founders to focus on ‘sustainable traction’. This concept, based on the ‘rule of 40’, allows firms to support long-term growth while ensuring cash burn isn’t reaching critical levels. 

The rule of 40 is a concept that the venture capital industry uses to measure whether a company is healthy or not, Wood says. This takes into account an organisation’s annual revenue, plus free cash flow as a percentage of revenue. 

“As an example, if your revenue was growing 20% year over year, and you were producing in profit 20% of your revenue, you would meet the rule of 40,” she explains. “The idea here is that it's not just revenue growth, but it's profitability and positive unit economics that matter to whether a business is healthy when it's in this growth stage.”

Reflecting on the previous VC cycle, Wood notes there were a slew of companies that reached IPO several years ago, but are still struggling to reach profitability. Founders now are keen to avoid this pitfall and the “growth at all costs” mentality prevalent across the industry in years gone by. The current economic environment simply creates too much risk. 

“I think that profitability is more of a hot topic with VCs than it used to be. And it doesn't mean that early stage companies have to be profitable, but it has to be something where you're building a path to profitability. And that's really important.”

Short-term pain and long-term success

Weathering the current economic climate will remain challenging for founders across the globe, Wood says, and there will likely be more casualties along the way. Data from Carta shows that Q2 of 2023 saw the highest number of startup closures ever recorded, highlighting the current environment is precarious. 

However, long-term, this predicament could create a more vibrant startup landscape, allowing serious players and those focusing on sustainable growth to differentiate themselves from competitors and cut the wheat from the chaff. 

“I think it’s good for us in the long run that we’re making sure we’re building scalable and sustainable growth startups,” she says. “While there may be a lot of startups shutting down right now, I think long term we'll see that this was an innovation cycle and that so many new startups are born out of it. So I'm bullish coming out of that.”

London and the southeast of England have always been a proverbial tractor beam with regard to venture capital (VC) investment in startups. 

Billions have poured into firms based in Oxford, Cambridge, and the capital in recent years while firms in other major cities have been forced to contend with a slower stream of funding in hopes that a ‘trickle down effect’ may one day benefit them. 80% of all UK VC funding has been absorbed by firms operating in the ‘Golden Triangle’, to be precise, highlighting a serious disparity in the allocation of funds across the country. 

It’s not just about funding, either, it’s about awareness. From a founders’ perspective, it must be tedious seeing top startups to watch roundups being utterly saturated with firms from the Golden Triangle. Are there no exciting, high-growth firms outside the region, or are journalists just stuck in the same ecochamber as their VC friends?

Now, that’s not to say that these startups don’t deserve it. The region is undoubtedly an economic powerhouse, produced a myriad of high-performing global companies, and has played a key role in helping the UK establish itself as a leading global tech hub. But if the UK has ambitions to retain its crown as the third-best performing tech industry in the world behind China and the US, then a redistribution of wealth appears drastically needed. 

There’s light on the horizon for Northern startups

Recent events show the tide could be turning and that a more concerted effort to champion regional tech startups is dawning. Better still, it’s more than just pandering to regional communities with empty promises – there’s going to be serious cash flowing into startups across the north of England and Scotland. 

Edinburgh-based venture capital firm, Par Equity, announced a new £100 million fund to support startups in the north of the country this week. The ambitious fund aims to support and nurture early-stage startups in the north and Scotland. This should be lauded from the rafters as far as UK startup support goes. Creating opportunities for high-growth potential firms and entrepreneurs in the north of the country could go a long way to bridging what has been a long-running gap. 

London-based startups receive eight times more in early-stage investment compared to their counterparts across the UK, according to the Startups 100 Index. Tech Nation rightly flagged the lingering issue of regional funding disparities before its untimely demise, suggesting that the lack of access to cash for founders outside London and the Southeast was a serious challenge for the broader UK tech industry.

Par Equity may not immediately put a dent in this, but the mere fact it’s seeking to tackle this disparity and focus on traditionally underserved regional ecosystems is a welcomed move and could shed greater light on these areas. This group isn’t alone in supporting underserved ecosystems either. To its credit, Barclays Eagle Labs has made clear its intention to focus on a broader array of areas across the country since taking over the Digital Growth Grant fund at the expense of Tech Nation.

Eagle Labs said 80% of the startups it plans to support will be from “outside London”, which should be applauded. 2021 programmes run by Tech Nation, by way of comparison, saw only 58% of participants from outside the capital.

An ode to the 'real' North

Looking at Scotland’s tech ecosystem as an example, there have been frequent complaints about the lack of VC investment over the years despite consistently strong performances by the country’s tech sector. Excusing my tartan-tinted glasses for a second, Scotland’s tech startup scene is perhaps the best example of a high-performing ecosystem in the North - the 'real' North, if we’re being pedantic – that has been consistently overlooked. 

There are institutional issues at play here, not least of all the fact that Scotland’s underlying startup infrastructure has required a government-backed cash boost to create dedicated tech hubs for founders. However, recent statistics from the British Business Bank speak for themselves. The state bank ranked Edinburgh as the UK’s top ‘innovation-led’ cluster for equity deals outside of the Golden Triangle. Evidently there’s a dearth of quality in this particular city, so any efforts to continue raising awareness and pour much-needed cash into the ecosystem will do wonders long-term. 

Glasgow, Scotland's larger, grittier city with a deep history of manufacturing and industrial excellence, is also making a strong case for itself. The city recorded 8% growth in VC funding during Q2 2023 amidst a period of torrid conditions for firms. It also now ranks third on a list of UK cities for VC investment, behind Manchester and Birmingham. It’s important that investors recognize the sector north of the border for what it is – ripe with opportunity and a chance to target a veritable goldmine of exciting companies. 

Scotland as a whole has also been punching above its weight in recent years despite macroeconomic challenges. While venture capital investment across the UK dipped in 2022, KPMG research shows that the Scottish ecosystem bucked industry trends and raised a record-breaking amount. If Scotland can do this, then there’s nothing to suggest regions in the north can’t do the same. 

Banking on regional strength

Manchester, Liverpool, Leeds, and Newcastle all boast strong tech ecosystems. The former of the aforementioned cities raised a record amount of funding across 2022 – £532 million in total. This marked the highest volume of VC investment in any city outside of London and the Southeast and secured Manchester’s place as the best-funded ‘northern’ tech hub. Better still, Manchester-based startups raised £1.8 billion in VC funding between 2018 and 2023, more than firms in major European capitals.

If the UK is serious about retaining its position as a leading global tech hub, its regional neglect needs to change. Investment will go a long way, but championing startups from regional ecosystems and acknowledging the merits of cities such as Manchester, or Edinburgh, is equally powerful. Whether or not London-centric investors, politicians, and industry talking heads will adopt this approach is another question entirely, but there are positive signs on the horizon.

Cyber security provider CrowdStrike has agreed to acquire Israeli application security posture management (ASPM) startup Bionic.

The addition will extend the company’s cloud native application protection platform (CNAPP) with ASPM tools to provide users with comprehensive risk visibility and protection across the cloud estate, including applications and services.

Announcing the move at its Fal.Con 2023 event in Las Vegas, CrowdStrike said the acquisition will make it the first cyber security company to offer complete code-to-runtime cloud security through a single unified platform.

“The cloud is cyber security’s new battleground, yet the industry’s answer to-date has been disjointed point security tools or ‘platforms’ with multiple consoles and agents,” said George Kurtz, CrowdStrike co-founder and CEO. “We are delivering what customers need: Modern protection to address cloud security risk comprehensively, through one unified platform. 

“We pioneered cyber security for the cloud era, and the addition of Bionic further extends our cloud security leadership on our mission of stopping breaches. Bionic shares our passion for customer-focused innovation and will make a great addition to the CrowdStrike team.”

CrowdStrike said it plans to offer Bionic ASPM as an independent offering as well as fully integrated as a capability of Falcon Cloud Security, which forms part of its wider Falcon platform.

Bionic will extend Falcon’s agent-based and agentless protection of cloud infrastructure by providing visibility into application behavior and vulnerability prioritization for both server-based and serverless infrastructure.

CrowdStrike said Bionic’s real-time application visibility will help facilitate the discovery and mapping of application services, databases, microservices, third-parties, APIs, and data flows across cloud service providers, as well as both hybrid and on-premises application deployments. The offering removes the requirement for sensitive source code access, with applications automatically deconstructed while seamlessly integrating with CI/CD pipelines.

Users can also leverage the solution to instantly prioritize application-level vulnerabilities, as well as gain complete visibility into serverless infrastructure such as Azure Functions and AWS Lambda.

Bionic was founded in 2019 and now has a team of around 100 employees based at its offices in Tel Aviv and Palo Alto, all of whom are expected to join CrowdStrike.  Company CEO Idan Ninyo said the firm was founded with the sole aim of providing complete visibility into application risk. 

“We have built a ‘Google Maps for your apps’, delivering a complete picture of application security risk in a truly frictionless way that does not interfere with the development process,” he said. 

“CrowdStrike has taken the mantle as the modern cyber security platform of choice and the company to beat in the cloud security market. Its strength and scale as a market leader and innovator will help us dramatically accelerate the adoption of ASPM by every business and organization on the planet.”

CrowdStrike did not reveal the cost of the acquisition but said the purchase price would be paid predominantly in cash, with a portion delivered in the form of stock. 

The acquisition is expected to close during the company’s fiscal third quarter, subject to customary closing conditions.

Venture capital (VC) funding has become one of the main drivers of the tech economy. However, new startups are exploring alternative funding options, as these may be more appropriate or offer greater flexibility that business founders are looking for.

When they start investigating, however, business owners can feel overwhelmed by the sheer variety of what’s on offer. It’s essential, therefore, that founders arm themselves with as much information as possible.

“When exploring alternative funding options, it’s important to have a strong understanding of what’s available,” says Jessica Bonner, head of origination at Capita Scaling Partners (CSP). “Whether it’s debt funding, grants, crowdfunding, revenue-based financing or others, each option carries its own benefits, risks, and criteria. It’s therefore crucial to determine the type of funding that best suits specific circumstances and aligns with long term plans.”

Types of alternatives to VC funding for startups

While not an exhaustive list, these are some of the main alternative funding options that startups searching for additional sources of finance other than venture capital should consider.

Government funding and grants

Central and local governments have offered startup businesses loans and grants for decades, although they often target a specific business process, such as research and developing a new product. Innovation grants are also available, as well as R&D Tax Credits, Patent Box and Creative Industries tax relief. For those aged 18-30, the Prince’s Trust Enterprise Programme is also an option and has supported thousands of young entrepreneurs.

The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) are closely linked to VC funding but could offer the funding level a new startup business is looking for. Detailed information is available on the Gov.uk website.

Bootstrapping

Self-funding your new startup business should always be considered first. Using your own financial resources will give you ultimate control over how the money is spent and the level of reporting that needs to be completed. Using family and friends should also be explored, as they can often be an untapped source of support for new businesses.

Angel investors

Wealthy people who want to support new businesses often invest significantly in high-risk companies. These early-stage investments are risky, but they can deliver potentially massive rewards to the angel investor. For your business, angel investors tend to be less stringent with their requirements than a VC, but may want more hands-on, day-to-day influence over your company. Locating an angel investor can take time. One of the most effective routes is to use one of the many angel investor networks.

Crowdfunding

One of the most active funding channels is crowdfunding. If your business has an innovative new product, asking potential customers to support its development for rewards – often significant discounts on the final price of the product – could help bring your idea to market, as it has thousands of other new products. Among the best known crowdfunding platforms are Kickstarter and Indiegogo, which are reward-based systems. An alternative is equity-based systems that offer a stake in your new business such as Crowdcube and Seedrs.

Be prepared to make what could be a significant investment in the explainer video; you will need to communicate information about your new product to entice backers to make a pledge.

Incubators and accelerators

Many of the most well-known tech companies were funded by incubators. These differ from venture capital as they usually only invest in a limited number of companies yearly. This means they can become highly competitive, but if you’re accepted expertise and mentoring are often also included. If your business needs more than money to start, these funding options, which include the likes of Entrepreneur First and Active Capitals among others, could be for you.

Debt financing

Borrowing the money you need to start your business can be approached in several ways: Startup business loans are always available from the leading banks and the British Business Bank for up to £25,000. You will need a detailed cash flow forecast and a detailed business plan, especially when approaching the big four retail banks. Peer-to-Peer lending could also be an option. Individuals back the businesses they like the look of by lending small amounts along with what could be many other lenders. You will sometimes hear these schemes described as debt crowdfunding. Platforms include Funding Circle and Crowdstacker.

Invoice financing

This method of financing uses the outstanding invoices your new business has to release the money needed to expand. The financing company pays the invoice value, which can give you the required cash. The improvement in cashflow could provide your business with the financial resources it needs. The low cost of these schemes has made them very popular. Options include The British Business Bank and SME Invoice Financing.

Understanding potential VC funding alternatives for startups

The funding landscape has many options to choose from. Sophie Lonergan, head of startup investment at Digital Catapult, advises that founders should fully understand each funding type and what the lenders’ expectations will be.

“Every funding option comes with its own set of pros and cons, but in general founders should look out for two key components of any funding option: control terms and economic terms. The former refers to what, if any, control a business or lender has over the company they’ve invested in, which a founder should consider carefully and assess on an individual basis,” Lonergan explains. “Economic terms refer to the financial implications of an agreement, and founders should make sure they understand what, if any, repayment or interest might be required as well as any other financial implications.”

“Startup founders should always seek their own legal advice before agreeing to any new funding options, and establishing a network with other founders can be a great way to share ideas and experiences,” she adds.

With so many alternative funding options available, it’s vital to understand how each one differs. Looking closely at what your business needs the money for will direct you to which funding options may be more appropriate than venture capital. Drawing up a shortlist for further research is always a good first step and always seek advice if unsure which option to choose and look closely at the costs. 

Data analytics firm Quantexa has committed to invest £125 million in funding for artificial intelligence (AI) development by 2027, as the company looks to cement its place in the UK AI ecosystem.

The UK-based firm will invest £85 million within the UK alone and is set to create 170 new jobs as it opens its new London AI Innovation Center.

Quantexa works in data and analytics, and aims to help firms pull out the meaning in their data stacks using its decision intelligence platform.

With its AI stack the firm has combined techniques such as machine learning (ML) and natural language processing to draw complex data together with added context, with the aim of empowering businesses to make more informed decisions.

Its new AI tool Q Assist, currently in tech preview, will allow business users query big data, both structured and unstructured, using natural language inputs. Quantexa intends for the tool to empower analysts to carry out investigations at a high skill level.

In an example, the firm stated that the AI assistant could allow a junior analyst to carry out a complex examination of potential financial crime and automate the creation of reports on any suspicious data.

Q Assist is large language model (LLM) ‘agnostic’. This means it can operate using popular models such as ChatGPT, open source models, or a firm’s own proprietary model.

“We are investing our time, money, and resources into the biggest technological breakthrough for generations as it will transform how organizations make decisions,” said Vishal Marria, CEO and founder of Quantexa.

“We’re proud to invest in London-based innovation but the impact will be felt by the global economy and will start a ripple effect that will unlock decision intelligence capabilities for our clients and their respective industries.” 

University of Washington analysis has suggested that the total £200 million in investment could lead to a £600 million benefit to the global AI industry by 2027, as a knock-on effect of innovation and job creation.

In April Quantexa became the UK’s first unicorn of 2023, with a valuation of $1.8 billion.

Singaporean investment entity GIC led an investment round that raised a total of $129 million for Quantexa.

The company’s success has come at a pivotal moment for the UK startup sector, with the growth rate of UK unicorns (companies valued at more than £780 million or $1 billion) having slowed dramatically.

Tech Nation’s noted in its recent How to Build a Scale Up report that UK unicorn creation across 2022 happened at a rate ten times slower than the previous year.

Despite the recent downturn in unicorn creation, the report’s authors speculated that the UK could soon see a “glut” of unicorns, driven by the persistent growth of sub-$1-billion companies with strong value potential.

The UK government has placed AI at the core of its strategy to grow the UK tech scene. Chancellor Jeremy Hunt used the Spring Statement to announce £1.8 billion ($2.3 billion) in tax relief credits for SMBs, as well as an annual £1 million ($1.3 million) prize fund for AI innovators.

“We want to ensure the UK remains the best place in the world to build, test, and use safe AI technology,” said Prime Minister Rishi Sunak.

“Quantexa’s new £85M London AI Innovation Centre will help cement this reality. It will create over 170 jobs, harness the extraordinary potential of AI as we grow our economy, and lead the way on responsible AI development around the world.”

This automatically-generated transcript is taken from the IT Pro Podcast episode 'Startup succession: From Tech Nation to Eagle Labs ’. We apologise for any errors.

Rory Bathgate

Hi, I'm Rory Bathgate.

Jane McCallion

And I'm Jane McCallion.

Rory

And you're listening to the IT Pro Podcast, where today we're discussing Eagle Labs and the state of startups in the UK.

Jane

Tech Nation has been a cornerstone of the UK tech industry since 2010, helping to create jobs and support businesses throughout the sector. But as of today, the government-backed organisation will close down due to a reallocation of crucial funding to Barclays Eagle Labs.

Rory

The government states that the £12 million digital growth grant will help spur investment in the sector, and is best placed with Eagle Labs. However, experts in the sector have expressed concerns about the decision, not least because of Tech Nation’s prominent support for tech visas, the status of which could now be uncertain.

Jane

Joining us to explain the current state of the ecosystem and the mood amongst small firms right now is Ross Kelly, IT Pro’s startups & small business specialist and staff writer. So for those listeners who are unaware, could you explain the situation as it stands right now?

Ross Kelly

So as of 31 March Tech Nation will essentially cease to exist. This has been a long running affair somewhat. Towards the end of 2022. There was a lot of speculation over whether or not the digital growth grant fund would be awarded to Tech Nation or re-awarded to Tech Nation, you could say. There was speculation at that time that Barclays Eagle Labs would be taking the reins to some extent, and this was obviously confirmed in January when the DCMS announced that they were going to hand this over to Barclays Eagle Labs. And it did spark a lot of concern in the startup scene across the UK. A lot of founders, a lot of companies, a lot of entrepreneurs expressed concerns about whether or not Barclays Eagle Labs would be able to essentially take over from Tech Nation and provide the same level of curated support for startups, which it's done for the best part of a decade now.

Jane

So what is the digital growth grant? And how did it relate to Tech Nation?

Ross

So the digital growth grant fund is a support package for startups across the UK. It's been led by Tech Nation for several years now. Since its inception, it's provided around just over £42 million and this is government backed investment to support startups and scale ups. It's been running since around 2016, so it's been viewed as a sort of key cog in the machine of government support for the tech industry in recent years. It's obviously a sizable sum. So for Tech Nation to have lost that, initially, there was speculation that this would have a major impact. And we later found out that it obviously did have a major impact on Tech Nation's ability not just to run startup support programmes, but keep itself afloat.

Rory

So what was DCMS’ reasoning for choosing Eagle Labs over Tech Nation?

Ross

So, DCMS stated openly that Eagle Labs' proposition for the digital growth grant fund offered better value for taxpayer money than that currently being provided by Tech Nation. And it seems that they've pinned a lot of their hopes on the infrastructure, the broad footprint that Eagle Labs has based on its involvement with Barclays, a major banking institution in the UK. The fact that this has been positioned as better value for taxpayer money isn't perhaps the key angle here, though, I think it's more of the fact that Eagle Labs does have a larger or a broader regional footprint across the UK. This was something that DCMS said, again, that they wanted you to improve as part of their support for the tech startup scene in the UK. So definitely seems like there's a combination here of yes, maybe it provides better value for taxpayer money. They viewed this as an exciting proposition when Barclays Eagle Labs pitched it to them. But there's also that other element there where it's a larger organisation with a broad reach.

Rory

So based on what you've just said, it sounds like maybe there was a concern around Tech Nation being too regionally focused particularly around London. Would that be a fair assessment?

Ross

I think there certainly is a degree of London centricity in the UK tech startup scene and the broader UK tech sector. The DCMS has clearly looked at this situation and said, "We would like a stronger footprint in regions outwith London and the Southeast, for example. Eagle Labs has a really broad national footprint, it has 30 locations across the UK, several in England, they have locations in Aberdeen and Glasgow for example, and the Northeast of England. So that's a far wider spread of locations that they can engage with startups with founders and entrepreneurs. The DCMS in its initial announcement for this said that increased support for regional clusters could deliver an additional £33 billion in value to the broader UK tech industry by 2025. They also said that it can create up to 678,000 jobs just by tapping into these often overlooked regional clusters. And this is something that entrepreneurs founders, startups in these clusters have been complaining about for several years now.

Jane

Those are some big numbers, Ross. And so what is the sort of feeling then amongst those in the startup scene about Eagle Labs taking over from Tech Nation and Tech Nation being wound up?

Ross

Well, we spoke to founders in the wake of the Tech Nation closure announcement earlier this month, and a lot of them did seem very concerned. This was obviously rooted in the fact that Tech Nation has, like you said in the beginning, been a cornerstone of the UK tech sector for the best part of a decade now. So there is a degree of concern there. But at the same time, there there are positive signs. Amanda Brock, chief executive at OpenUK suggested that this could be the beginning of or a fresh start of a new wave of increased support for startups and founders across the UK. Other founders that we spoke to are going into this with quite an open minded approach. Barclays does have deep ties to the technology sector, particularly through its work with fintechs over the years. They do have a unique position in having worked with organisations extensively. And there's a feeling that they will be acutely aware of what startups and what founders need, especially during what is quite a challenging period in the tech industry.

Rory

We spoke a little in the intro about visas. Could you explain some of the concerns surrounding that, and the precise role that Tech Nation played in securing visas?

Ross

Yeah, so that was obviously a key concern when Tech Nation voiced its own concerns about its ability to continue running in the wake of the grant funding being awarded Eagle Labs. The visas have essentially provided support for non-UK nationals to enter the country and obviously pursue careers in the tech sector here. I think crucially it enabled tech companies in the UK to access a wider talent pool from Europe and elsewhere. Obviously the situation with Eagle Labs threw this into the air, there's still a developing story somewhat. So I imagine there will be there will be discussions around how this can be continued. The government insisted at the time, the DCMS insisted at the time, that the award funding wouldn't impact this and that it would continue to run. So on face value, I think there is an argument to be made that it won't heavily impact this, but I suppose only time will tell.

Jane

So obviously the visas still come from the government, whichever way it is, whoever's involved. Was Tech Nation just kind of advocating for people or helping them fill in the forms and so on, or did they have a more kind of fundamental role?

Ross

I mean, it played a key role in promoting this, it played a key role in supporting it. Obviously, under the previous scheme, if you were applying for a global talent visa you'd need to apply for an endorsement as well as for the visa itself. And this essentially would be sent to the Home Office, and the Home Office would send this application to be reviewed by Tech Nation. So this was very much the case that Tech Nation played a key role in this process.

Rory

So when we're talking about it being value for money, as you said DCMS stated when it explained its decision, is there any sense that the government here could support both programmes? Is this an economic question? It sounds like it from the phrasing, or is this more of a competition space where too many players too many accelerators at once would just confuse matters.

Ross

It does seem on the surface of things that the government wanted to pursue a relationship with a larger organisation. I think that seems to be the general consensus around founders that we spoke to, it seems to be the general consensus with who we've discussed this with. I think it's worth mentioning that in a recent interview with Sifted, David Hamilton, who's the head of implementation for Barclays Eagle Labs basically confirmed that Eagle Labs plans to match the £12 million grant with £24 million of its own cash split across the two years essentially. This is obviously to support additional startup programmes but I think that in itself underlines that Eagle Labs has the financial clout there to really ramp things up a notch, compared to Tech Nation certainly, which relied very much on government grants. So there seems a best of both worlds situation for the government. They're able to provide funding, but they're working with an organisation that has its own financial weight to support additional programmes.

Jane

I think that one of the concerns seems to be though that this additional funding, because it's a difficult story, it's quite emotive, a lot of people had an emotional attachment to Tech Nation effectively. But Eagle Labs can do more and there's no two ways about that. But one of the concerns that I've had, and I'd like to know if there's any kind of validity to it as far as you know, or as far as we know at this point, is that extra funding might come with strings attached. Eagle Labs is part of Barclays, so are you going to have to for example open a business account with Barclays Bank versus enter the name of another bank or building society of your choice?

Ross

My understanding at present is that that isn't going to be the case. This very much seems like a situation where startups are going to have an opportunity to work with a very large organisation with broad international ties and deep roots already within the tech sector and the financial services sector, naturally. So it seems like it's a very mutually beneficial relationship for startups for founders to to be embedded within the fabric of that company.

Rory

Beyond the amount of funding involved on a functional level, are startups likely to see much difference in the services that they receive or is Eagle Labs intending to maybe fill much the same role as Tech Nation, maybe with better funding, maybe with more locations?

Ross

So Eagle Labs already runs a number of programmes itself, it has its funding readiness programme, it has its female founder accelerator industry bridge programmes. So these are already established programmes themselves. They've been very vocal about their ambition to expand the scope of their programmes, they plan on launching several new programmes; one focuses specifically on black founders, for example, the black founder accelerator, that's obviously a very positive move from from Eagle Labs, and gives an indication that they are very much aware of the challenges facing founders from diverse backgrounds, for example. There's also the element here where Eagle Labs has said that in terms of the startups it hopes to support, it would ideally like to support around 80% of those outside London. So 80% of all of the startups involved in their programmes, that's their ambition to have them outside London. Again, this is something that will really resonate with regional founders in the Northwest, the Northeast, Scotland, Wales, for example. So yeah, there's certainly an element here where Eagle Labs is looking to build and expand on what Tech Nation has done traditionally. Tech Nation's had some fantastic programmes over the years, though, and it's across quite a broad spread of fields. You know, they've had their rising stars, their upscale, they've had their future 50 programmes. They've also had Net Zero, cyber, their applied AI growth programmes. So if Barclays is looking to tap into this area, then there's going to be no shortage of 1) startups to engage with and 2) they definitely have the expertise and the financial clout behind them to accommodate for this

Jane

Will this be to the detriment of the startups in London then, if they've gone from receiving the lion's share of what Tech Nation was offering and just generally things are very focused on London, to only getting 20%. Is that going to be covered by the fact that Eagle Labs will have more funding available because it's more than matching what the government has through the through the grant? Or is it going to be like "Well, sorry other London startups, but you're not good enough, this isn't open to you"?

Ross

No, I don't think that's the case at all. I think when you look traditionally at how the the UK tech sector has been positioned, everything flows to London. Tech Nation highlighted this, in fairness to them, repeatedly over the years, the fact that the flow of venture capital just seem to gravitate towards London. It's that's not to say that, you know, startup founders in London and the South East, don't have difficulties in raising capital, in bootstrapping their companies and building and scaling their companies. However I think it is, you know, an overwhelmingly positive thing that we are seeing this focus on regional growth and regional support. I think London startups will continue to excel, I think the London tech scene will continue to draw in talent, draw in venture capital in years to come. But just almost levelling, that playing field can possibly be seen as a bad thing.

Rory

You name-checked the future 50 programme a few minutes ago. Something I'm wondering about is some of these established networks that Tech Nation helped to form. Is there any sense of what will happen to those? Are these companies expected to continue to operate as a network under the new banner of Eagle Labs? Or would you expect there to be reshaping of some of these startup networks in the wake of Tech Nation’s demise?

Ross

So there was a report from the Financial Times towards the end of February that highlighted the fact that was somewhat of a fire sale of IP going on at Tech nation as we sort of approached this closure. To my knowledge, there's been no acquisition of those specific programmes in terms of the IP there. So I can't comment entirely on whether or not Eagle Labs will be taking these on. It does seem like Eagle Labs has ambitions to run programmes in a similar vein, they will, you know, as I've mentioned previously, they already have their programmes, it certainly wouldn't be out with the realms of possibility that Eagle Labs will pursue similar style growth programmes.

Jane

So what if, for whatever reason, there's a startup that doesn't want to use Eagle Labs, they want to avoid it, or it just doesn't, doesn't attract them? Are there any alternatives out there? Or is Eagle Labs really the only game in town?

Ross

So obviously when Eagle Labs takes over, they will be stepping in from where Tech Nation has traditionally been. So they will be the go-to organisation for support in that regard, they will be the organisation that startups and founders look towards for opportunities to get involved in their growth programme. I mean in that sense, it is quite limiting. I don't think that's necessarily a bad thing, I think you need to have that focal point within the UK tech industry for startup support. If Tech Nation has gone and Eagle Labs wasn't there, it does raise the question of where the support would come from. So yeah certainly, Eagle Labs will be that go-to organisation, looking at different industry verticals within the tech sector, for example the FinTech sector. You do have support programmes, you do have growth programmes run by regional cluster bodies, for example, you have innovate finance as its own growth and start up and entrepreneurship support programme. So there are still options out there. But Eagle Labs certainly will be that go to figure.

Rory

We've talked a lot about how Eagle Labs will fill the shoes of Tech Nation, what's changing and what's not changing, has Eagle Labs itself given any indication of exciting new developments, aside from its pledge to match and exceed that initial funding? Is there any sense of what's to come?

Ross

So they've been very vocal since the grant award, and they've said that they intend to create two new product builder programmes. So I believe these will be focused largely on helping startups essentially develop a minimum viable product, which is obviously a key hurdle for a lot of startups in that early stage. They, as I previously mentioned, will have the black founder accelerator, I think that can only be viewed as an overwhelmingly positive thing for the UK tech sector. They have signalled their intent to launch two new scale-up focused programmes. So exactly what these will entail, we don't have concrete information on to my knowledge at this point. But again that shows that they do have ideas and how they plan to support startups, getting from that startup bootstrapping stage to that scaling stage and really unlocking growth and accelerating the growth.

Jane

I'll be honest, I'm not a startup founder or indeed a technologist of any description, but it all does sound quite exciting. You know, the demise of Tech Nation was definitely something that was received with great sadness. But what Eagle Labs is proposing and its place seems really very positive, from what you've seen, from what you've said, I'm finding it hard to pick out any particular negatives,

Ross

I think we'd be wrong to count Eagle Labs out at this stage. There was obviously a lot of sadness, a lot of emotion surrounding the Tech Nation closure, but I think they're very well placed to step into their shoes and really build on what they've done over the last 10 years essentially. They're going to create, I think, a more localised framework for regional business support and I think that can only be a good thing. The programmes that they've proposed seem like a very positive thing for founders in the UK, the programmes they already run have also delivered a lot of value to startups and founders across the country. So yeah, we would be wrong to count them out at this stage, they have a lot of clout behind them. They have a lot of expertise in this in this area, in this space. So yeah, I think it is an exciting time ahead. And it will be interesting to see how they can, how they can capitalise on this and really build.

Rory

So this contract with Eagle Labs is for two years, is there any sense of what happens at that two year mark? What happens following that?

Ross

The contract runs till March 2025, and there is obviously a potential for a third year extension. But there seems to be an indication that that would involve less cash, and less funding. But I think certainly, after the first year of this we probably will get a good indication of whether or not we could see an extension to this in the future. So that, to me, seems really dependent on whether or not Eagle Labs comes flying out the gates, so to speak, and really proves a point. And then I think at that point after the first year, we will see how the government views this as being whether or not it's a success, or whether they believe that Eagle Labs are best placed to continue carrying things on. But I can't personally see there being any major issues, especially given how vocal they've been, the excitement they have, how much excitement they have generated since the announcement.

Jane

Well, I await to see what happens over the next 12 to 24 months with interest. But Ross, thank you very much for joining us today to discuss what's happening currently.

Ross

Thanks for having me again.

Rory

As always, you can find links to all of the topics we've spoken about today in the show notes and even more on our website at itpro.com

Jane

You can also follow us on social media as well as subscribe to our daily newsletter. Don't forget to subscribe to the ITPro podcast wherever you find podcasts. And if you're enjoying the show, why not tell a friend or colleague about us?

Rory

We'll be back next week with more from the world of it. But until then, goodbye.

Jane

Goodbye.

What is business about? Executing a great idea maybe? Or perhaps delivering value to shareholders? Whatever your beliefs, the fact is that no business can run properly without an effective team. And, depending on what kind of business you're running, your team may be the most important physical resource you have.

Building the best team you can, then, is vital to your organisation's livelihood and success. But the job market, from a recruiter's point of view, is becoming increasingly competitive. Figures published in March 2018 by the Office for National Statistics (ONS) showed that the number of overall job vacancies in the UK between December 2017 and February 2018 stood at 816,000 10,000 more than September to November 2017 and 56,000 more than the same period 12 months before.

Businesses are therefore fighting over a smaller talent pool to try and build their perfect teams. So how can you attract the best talent out there from this diminished stock? And then, once you've attracted the right employees to your business, keep them loyal, engaged and motivated too?

Building a better workplace

Over the past 10 years, what people want and expect from their place of work has changed dramatically.

Thanks to greater mobility with the advent of smartphones and the cloud, increased knowledge of startup and Silicon Valley work culture and perhaps as a reaction to the instability wrought by the global financial crisis of 2007-2008, flexible and agile working have become more desirable to workers.

In a blog post, online recruiter Jobsite listed "the agile workforce" as one of its top trends for this year.

"The fact that organisations like Sky, Google, Facebook and the NHS are among agile working's earliest large-scale adopters says a lot about its potential. Its rapid rise as a software development methodology in the IT sector is also telling, and the value is not lost on candidates," Jobsite says.

Citing research carried out towards the end of 2017, the blog continues: "While 77 percent of recruiters say agile working hasn't significantly affected the hiring process, a massive 86 percent of candidates say they'd consider changing roles if it meant working in an agile environment. And, on average, candidates with an understanding of agile working said they'd give up 16 percent of their salary to make the same switch."

That's not to say wages count for nothing, though, nor is an agile working environment the only way to offer an "extra something" to entice workers to your business and encourage them to stay.

Responding to the ONS' January statistics, which covered the September - November 2017 period, Kevin Green, chief executive of the Recruitment and Employment Confederation (REC), said: "Employers who want an edge over the competition have to design new ways to attract people, like flexible work patterns. Some may need to go to specialist recruiters to get help sourcing talent in areas where there are very few candidates.

"Our data shows employers are increasing starting salaries in a bid to get applicants. However, this isn't translating into broader pay rise for current staff and workers are facing hard times as inflation continues to outstrip pay growth. Employers need to think about salaries and benefits for all of their staff otherwise employees could be tempted by better offers from rival companies."

This raises a key issue: building the best team isn't just about the high-flyers, it's about everyone who works within the business. After all, your organisation isn't just made up of those at the top of the tree, it's a contingent whole. As the Chartered Institute for Professional Development (CIPD) has pointed out, excessive pay and rewards at the executive level can have a negative effect on the rest of the workforce.

Guest stars

When deciding to augment their workforce, businesses don't necessarily have to look to recruit on a permanent basis.

For certain projects, taking on temporary contract workers or freelancers may be the best way to bring in the skills and expertise you need without creating what could be unnecessary permanent positions.

Indeed, according to a March 2018 report by the Association of Independent Professionals and the Self Employed (IPSE), the growth in the number of workers classed as self-employed over the past 10 years has been driven largely by more and more highly-skilled individuals opting to work this way.

This means that, while there is still competition among businesses for this kind of talent, its fluid nature gives organisations a greater chance of finding the right person for the role at the time you need them.

Additionally, contract work can act as a facilitator to finding a standout new team member. If one contractor fits particularly well within the business and did a great job in an area where you're likely to continue investing, there's always the possibility of offering them a permanent role once the project they were brought on to do comes to a close.

Bringing it all together

Underpinning all of this is the need for proper human resource management. No matter what size business you're running, choosing the right software or service is vital to managing remuneration and benefits, keeping track of absences and holidays, or knowing when contracts start and end.

Some of the more advanced platforms out there can also help with recruitment and onboarding, or even collaboration between different sites and locations.

So when you're considering how to build the best team possible for your business, it's worth also looking at the various cloud and on-premise solutions available to make sure your HRM system can keep up with your vision for the future of your company.

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If you want to start a business, first you need a great idea. Once you've got that idea, though, you need to invest and in this technologically advanced age we live in, there's a lot you need to invest in.

Similarly, if you want to grow your business, you're going to need to invest in people and core resources, of course, but also IT.

In the fairly recent past, this would have meant significant capital expenditure in your IT estate and all the services and expertise to go along with that. Even if you were a small or micro-business, you would need at least one server if you wanted to share files and do email. If you had larger aspirations, you would be looking at a server room or data centre.

The truth is, not every business or would-be entrepreneur could afford this level of upfront investment. If you could convince your bank for a business loan, you could start down that road, but you would be saddled with that debt for a long time. If you weren't able to raise those funds, at best growth stalled and at worst businesses died and ideas failed to even get off the ground.

About 10 years ago, however, all that began to change, thanks to the cloud.

The software buffet

For entrepreneurs of all stripes, cloud has removed many of the barriers to entry you can host your own virtual storefront on somebody else's infrastructure for a monthly fee and you probably don't even need a website designer (or not at first, anyway). You can use other cloud-based Software-as-a-Service (SaaS) applications to manage sales and customer relationships as well, rather than investing up-front for perpetual license software. Once you're ready to bring onboard other people, you can also opt for cloud-based payroll management and other HR software.

The popularity of SaaS among SMBs is demonstrated by figures gathered by market research firm Techaisle in February 2018. These showed that in the US the number of SMBs using at least one SaaS application increased from 27 percent in 2011 to 73 percent in 2018.

A September 2017 study by the same organisation found that customer-focused cloud services were most important to SMBs, with 76 percent expecting to adopt at least one of these applications during 2018.

The beauty of this software buffet is it allows businesses of all sizes, not just startups or SMBs, to mix-and-match services, selecting what they need in the moment and adding to it as they go along. The subscription nature of the services also means that if a given service doesn't fit the business' needs, they can drop it and go elsewhere, without losing money or falling into contractual issues.

Managed agility

For startups and small businesses, which face slim margins and greater vulnerability to market forces, the benefits of the flexibility offered by the SaaS model are fairly obvious. But larger businesses all the way up to the very largest enterprises, in fact can also benefit from it in the form of increased agility.

In a 2017 report called Cloud Strategy and Leadership, analyst house Gartner recommended: "As part of the cloud strategy, CIOs need to educate their CEOs and boards of directors about the need to invest in cloud as a style of computing that drives greater speed, agility and innovation."

Large businesses and their CIOs are no stranger to the cloud, though. It was in some of these organisations where cloud first started to take off, albeit in the form of "shadow IT", with the likes of Salesforce and Box making a name for themselves as companies that could deliver what the rank-and-file of an organisation needed faster and with less friction than their own IT departments.

Over time, such services have been legitimised as they have proven their value through greater productivity and ROI versus traditional software assuming there even was a perpetual license equivalent of the service in question. Indeed, although productivity software for word processing, spreadsheets and presentations existed previously, the collaboration elements of cloud-based platforms like G Suite and Office 365 are completely novel. And it's these types of features that can enhance agility, creativity and flexibility within a business and with external parties like partners and customers.

But the role of the CIO remains crucial when it comes to adopting cloud services, especially for agility.

As Gartner research vice president and distinguished analyst Janelle Hill pointed out in the same 2017 report: "Independent and uncoordinated journeys into cloud SaaS mean the goals, selection approach, initiation and ongoing implementation of services will be fragmented at best and siloed at worst."

"A coordinated, value-optimised approach has the advantage of enabling multiple business units to benefit from joint decisions and shared end-user support for all of the various SaaS solutions," she added.

Future trends

When it comes to running an agile business in the future, there are dozens of new trends gaining popularity that make use of the power of the cloud, with notable ones including DevOps and low-code/no-code (LCNC).

For these types of more technical trends, cloud is essential as it increases the speed of development and can also enable developers to offer a self-service catalogue of apps and code hosted on a cloud Infrastructure-as-a-Service platform (IaaS). The flexible scale-up, scale-down consumption model of IaaS is also a benefit to DevOps teams, and their more traditional development counterparts, for trialling and testing new initiatives without anyone having to commit hundreds-of-thousands of pounds to building out new on-premise infrastructure.

This isn't to say that on-premise IT is dead, though. As Gartner noted in spring 2017, the move among established, larger businesses is towards hybrid IT, which offers a more flexible solution to their needs. Indeed, the analysts predicted that by 2020 90 percent of all organisations will have adopted hybrid infrastructure management capabilities.

In short, cloud has levelled the playing field for organisations of all sizes, increasing opportunities for creativity, agility and innovation, and will continue to do so for the foreseeable future.

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There's one problem that virtually every company is guaranteed to run into over the course of its lifetime, and it's one that can have serious knock-on implications for a business' future if not addressed early on. The problem is, how do you maintain your company's culture and values as you transition from a startup to a scale-up and beyond?

The importance of maintaining a good corporate culture can't be overstated; it's one of the main ways you can attract and retain talent, and neglecting it can result in reputational damage. In 2017, the tech industry was faced with a cautionary tale in the form of Uber. Of all the numerous scandals, gaffes and mishaps that befell the company over the course of the year, the vast majority could be traced back to issues with its culture and values.

If you want to avoid following the same path, it's essential to ensure that your guiding principles don't fall by the wayside when the money starts rolling in. One of the best ways to do that is by firmly establishing a mission statement and a code of conduct early on in your company's life.

The right ethos

A mission statement is essential for any business, but don't fill it with nebulous, vaguely-worded pledges - get specific. Setting out detailed and focused guidelines provides a touchstone that you can continually refer back to to ensure you haven't lost your way.

Maintaining a strong culture relies on collaboration and co-operation with everyone in the business playing their role, according to LinkedIn co-founder Reid Hoffman. "If your only culture is top-down hierarchy and messaging and communications that comes from the top, that culture won't survive as you really balloon the organisation," he said. "Instead, you want a horizontal accountability. You want it so that everybody is keeping everyone else accountable to the culture that we're in." (Source)

He points to Netflix boss Reed Hastings' culture deck', a series of slides that detail exactly what Netflix's culture and values are.

Another crucial point to make regarding the transition from startup to scale-up is that you shouldn't mistake aesthetic for culture. If your only commitment to maintaining your startup values is a couple of ping-pong tables and some bean bags, it's going to be painfully obvious.

In fact, your working space should be the least important thing about your corporate culture. Instead, the foundation of your organisation should be the people within it. Staffing and recruitment are, naturally, very important when scaling a company, and you should welcome the ideas and fresh perspectives your new blood brings in - these keep a company agile and innovative.

"The most important thing isn't how shiny and full their CV is," Carl Reader, author of The Start Up Coach, says, "it's in whether their attitude is going to fit in with - and hopefully enhance - your company culture.

"Without a team that's on the same page as you, the coherent, growth-minded culture you have so carefully developed as a startup will simply dissolve."

As Hoffman points out, however, your hiring will need to change as your company scales, and you'll have to step back and trust your colleagues to hire well, something that will require you to systematise.

Cain Ullah, CEO of digital consultancy Red Badger, shares these views, saying: "As you scale you need to work out how to scale excellence throughout your company from culture to skills.

"It starts with alignment. To scale you need to be able to let go, empower others and give them autonomy to excel at what they do best."

But Hoffman advises that keeping a small role in it can be an excellent way to maintain control over the culture, ensuring that potential new hires are a good fit.

People problems

Unfortunately, expansion can also cause senior leadership to lose touch with the staff at the coalface. As the number of employees increases, the amount of time you can spend getting to know individual teams and staff members decreases, but you should make an effort not to lose touch with the trenches. Town halls and all-hands meetings are great, but as a company scales, it becomes harder and harder to get a true sense of your staff's opinions and values.

Tim Stone, COO for European IoT investor Breed Reply, says introducing more structured meetings, more sophisticated communication plans, CRM tools and clear roles and responsibilities for people can help keep that entrepreneurial spirit as your business grows.

Take time to meet with staff in smaller settings, and instruct all levels of leadership to do the same. Not only will this make employees feel like valued members of the team who can make positive contributions, but management can also keep its finger on the pulse of employee sentiment even as headcounts balloon.

David Levine, CEO of home interiors startup DigitalBridge, found success with a similar tactic. "To ensure that everyone continues to have a voice as we grow, we implemented regular company-wide vision and feedback sessions," he says.

"These meetings are driven by an ethos of creative friction', in which everybody is actively encouraged to put forward their own ways of working, perspectives and experiences. We can all offer something different, and the key to collaborative growth lies in embracing everybody's unique perspectives."

Y Combinator founder Sam Altman points out that it's worth taking the time to consider the place of early employees within a rapidly-growing company, to stop them leaving as their roles see them work less closely with the top brass.

"It's people that have gone from being absolutely on the inside to not, that leads to a huge amount of turnover," he says, "and I think it's worth thinking proactively if someone is special enough that I'm going to somehow include them in the executive team."

One tactic highlighted by Altman is that of Airbnb founder Brian Chesky, who spends around two-thirds of his nights taking early Airbnb staffers to dinner, talking about the state of the company, what issues they're facing and other subjects, which can help them still feel connected, even if they're not at the upper executive level.

The role of the cloud

Technology can also be an excellent way to stay connected. Cloud collaboration tools have obvious advantages in terms of connecting individuals and teams who are separated by distance, but they can also help foster a positive culture within your organisation. Using collaboration tools for discussing non-work topics can create a sense of community between employees outside of work, and ensuring that executives are both active and approachable on these platforms stops barriers forming between staff and management.

Adopting new ways of working, and tech that supports it, can mitigate some of the speed and responsiveness a larger company inevitably loses, too. Working agile in other ways, such as by using DevOps methodologies, as well as adopting cloud-based infrastructure and SaaS applications that unite and provide greater transparency across key functions such as finance, HR and marketing, helps.

Some chaos - both internal and external - is an unavoidable side-effect of rapid scaling though, Altman notes, and it's important that your business is flexible enough to cope with it. " You know, people that run these perfectly non-chaotic organisations somehow never build great companies," he says. "The trade-off is we're going to accept a little bit of chaos in exchange for a shot at one of these massive, great companies, and founders just have to sell that to their teams. It's hard."

However, while all this rapid change is going on, companies need to make sure that they're being careful with their money. Change can be good, but change for its own sake - particularly when accompanied by financial investment - can lead to companies burning through their cash reserves too quickly. Look at your existing resources and work out where you actually need to make investments, and where your existing operations will suffice.

Ultimately, culture is one of the trickiest things for any business to get right, but it's also one of the most vital. A strong culture can carry a company through countless rough patches, but a weak culture can undermine a seemingly-successful business from within. The key is to establish a good culture early on in your company's life, and to keep it front-of-mind as you grow.

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Scaling your business can be a tricky proposition for any startup. But once you reach a certain size, it can be easy to lose sight of your roots and forget the elements that made your company so dynamic when it was small.

There are many lessons that large enterprises can take from startups, which you can use to ensure your company is still agile and innovative even when it's home to hundreds or even thousands of employees.

Lead by example

One of the most common shared attributes of successful tech firms that have gone from being small startups to major industry players is that they're almost always helmed by a strong leadership team. Box, for example, is still headed up by its four co-founders, Aaron Levie, Sam Ghods, Dylan Smith and Jeff Queisser. Ghods and Queisser are focused more on the site's architecture and technical development, as opposed to Levie and Smith's C-level roles, but all four still have an active an integral role in the company.

Similarly, Dell Technologies is still led by original founder and namesake Michael Dell. Aside from a brief three-year period between 2004 and 2007, Dell has led the company for its entire lifetime. In both cases, the companies have benefited from the founders' clear vision and deep commitment to the long-term well-being of the business.

It's not just the person at the top, though; successful startups also benefit from an executive team with a wide variety of backgrounds, skills and specialisations. This is easy when you're a startup - the nature of startups is that they're generally fairly diverse. When your company starts making money, however, you may find your board comprised of an increasing number of carbon copy individuals.

Aside from being undesirable from an equality standpoint, this replication also means that your board won't bring the maximum potential experience to bear on problems. If you look at the companies who have successfully transitioned from startup to global powerhouse, they almost universally have board members with backgrounds in engineering, finance, planning, operations and more.

A strong leadership team also lessens the risk that the company will be subject to the whims of investors and other market forces, influences which can drive a company's strategy away from long-term growth in favour of short-term profits and stability. One of the hallmarks of a startup is its willingness to take risks and explore untested waters, but when a company matures, this adventurous spirit is often abandoned as businesses prioritise safer tactics.

It's important to remember, however, that increased risks can lead to vastly increased rewards. Google is an excellent example in this regard; the company has continually proven its commitment to invest in innovation, and fund the development not only of risky plays in its own market, but also wild moonshots into totally untested markets like self-driving vehicles.

Innovation can be risky, certainly - but Google provides an excellent blueprint for how to leverage the resources, talent and capital of a large enterprise to maintain the cutting-edge mindset that it had when it was still a startup. According to Dan White, CEO of insurance-focused digital transformation consultancy Ninety, adopting the concept of innovation labs' can help big companies recapture some of that startup magic.

"Some of these are failing, but those that are helping the whole employee base learn to innovate, and giving them a platform on which to do so, are succeeding in embedding startup practices and values in their day-to-day operations," White says.

The same sentiment is echoed by Tim Stone, the COO of European IoT investor Breed Reply. "As well as the founder, successful businesses have many internal entrepreneurs," he says. "Evangelists for new ideas that need to be empowered and not stifled by process. For bigger firms, allowing innovation and ownership of ideas outside their responsibilities, which startups do more naturally, is vital."

Failure can be a good thing

One of the inevitable consequences of innovation is failure. No company will have a 100 percent success rate when it comes to new projects and ideas, and some of the products and initiatives you attempt will be disasters. The important thing is not to be put off by those failures. Apple is the best proof of this; despite being one of the biggest tech companies on the face of the planet and arguably the gold standard in hardware design, the history of Steve Jobs' company is littered with bloopers.

Take the Apple III, for instance - a famously poorly-designed product which overheated so badly that chips would actually melt out of their sockets. Then there was Apple's ill-fated games console, the Pippin, which had a $559 price tag and sold a measly 40,000 units. Neither of these failures (or the many, many others) succeeded in denting Apple's passion for innovation, and Jobs' dedication paid off when the iMac, iPhone, iPod and iPad all became the pinnacles of their fields. Incidentally, it's worth noting that Apple is another company whose success is thanks in no small part to the work of a talented and visionary leader.

Carl Reader, author of The Start Up Coach, is a big proponent for allowing businesses to make mistakes. "As with any corporate culture, embracing failure positively has to come from the top and become part of the fabric of the organisation," he says.

"The leader has to not only give permission for their teams to fail, but also admit failures of their own, and demonstrate how the learnings from any failure have been used."

It's no big surprise that tech companies aren't shy about making use of the latest and greatest software tools in order to maximise their efficiency and productivity, but it's nevertheless an example that all large enterprises can learn from. Startups are great at jumping on new, innovative tools and processes as soon as they're available, which can pay dividends in terms of output.

Remember to think small as well as big

Larger businesses, on the other hand, can often fall foul of the sunk cost fallacy'. This particular logical error means that the more you've invested in a particular thing - in terms of either time or money - the more unwilling you are to abandon it and move on. It's the thing that convinces your brain that because you've put so much into it, leaving it behind would be a waste.

This fallacy frequently leads large businesses to stick with complex, unwieldy legacy IT tools, simply because they've spent so much money on them. In actual fact, however, moving to newer cloud-based SaaS tools can actually end up saving your business money. Not only are they often cheaper in the long run than the cost of maintaining legacy systems, the man-hours that can be saved with more intuitive and fully-featured tools add up quickly. According to a 2017 Forrester Research survey, cost reduction was a top factor for over half of organisations that are currently in the process of migrating to the cloud.

"Of course, stay true to your business and your clients," advises Reader. "But don't get stuck in the this is how we do it' mindset. A common word in the startup lexicon is pivot' in other words, look at what isn't working or isn't serving your business best, and adjust accordingly. Listen to what your staff and clients are telling you. Inaccuracies and inefficiencies all impact the customer experience negatively, so take advantage of feedback, new ideas and advancing technology to improve your service and systems."

Thinking like a startup also necessitates a change in which metrics you use to judge success, White says. "One way of driving startup behaviour within large corporates is to emulate some of the things that startups measure. For instance, a real focus on what are called traction metrics'. These are a form of leading indicator', i.e. a metric that tells you what the future might contain, rather than what the past achieved. Examples of these are user sign-up rates, engagement time, attrition rates, et cetera."

By taking these elements into consideration and tactically borrowing from the startup playbook, larger companies can re-integrate the energy and passion of a startup back into their business, which can fuel future growth and innovation. Becoming a large enterprise doesn't mean that you need to become boring, predictable and risk-averse. Remember, when it comes to your company, it's not the size the counts; it's how you use it.

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The startup scene has become one of today's most exciting and fluid industries to be a part of. The constant stream of innovative and disruptive ideas coming from east London, Manchester and Bristol - to name a just a few cities full of entrepreneurs - has transformed the way modern business is conducted, and there is scarcely an industry that hasn't been revolutionised in some way by an upstart with a small team and a big idea.

There's plenty that established enterprises can learn from what startups are doing, so let's look at exactly what makes the next big thing' the next big thing.

A unique idea is an easy sell

Despite Uber's chequered history, its success proves that a unique idea sells. Many startups today are almost guaranteed to succeed - at least initially - purely because the idea they have is so strong. While the concept of ride-hailing existed previously, Uber married it with an easy-to-use smartphone app, producing a multi-billion dollar product.

Make it cheaper and simpler

Some startups aren't able to rely on a unique idea - instead they focus on creating something that's more marketable. The virtual and augmented reality industries were near non-existent a few years ago, yet today the likes of Microsoft, HTC, Sony and Samsung are all competing for control of a highly lucrative market. Instead of joining that fight, startup firm Mira has created an AR kit that's cheap enough for the mass market, and simple enough to use with your smartphone, earning itself a place on many lists as a firm to watch.

Attract investment by attracting talent

A sure way to generate interest in a new idea is to showcase the talent that's behind it. Startups such as self-driving car company Aurora, or analyst firm Periscope Data, may be categorised as new companies', but in reality their teams are a collection of former talent from some of the world's largest companies, including Google, Box, Microsoft, Tesla and Uber.

It's this careful selection of minds, brought together to achieve something brand new and innovative, that excites investors - and it forms a significant part of their sales pitch.

Be savvy about social media

Attracting investors to an idea is one thing, but building a loyal customer base is something else entirely. A great deal of startups to watch in 2018 aren't necessarily doing anything particularly disruptive, nor do they have entirely unique ideas. What makes them stand out is their superb ability to speak the language of their audience.

The most backed project ever on Kickstarter remains a fairly simple card game known as Exploding Kittens' that managed to raise nearly $9 million across more than 200,000 backers. Aside from a sensational name, the game's creators, which include former Xbox chief design officer Elan Lee, produced a superb marketing campaign, creating animations and videos that could be easily shared on social media, targeted at those who wanted something that was easy to play, but risque enough to be hit among groups of friends.

It also appeared around the same time as the similarly successful Cards Against Humanity series, and was able to capitalise on customer appetite for the genre.

Refine your idea for the target audience

You don't need to have a mass audience to be a disruptive force in the startup industry.

In fact, some of the most exciting projects in 2018 are those that are highly specialised. One to watch this year is Shippo, a startup that aims to provide small to medium-sized businesses with Amazon-like shipping capabilities. It's a partnership borne out of necessity, as many businesses have suffered as a result of Amazon's Prime next day delivery service, which offers unrivalled convenience to customers.

Shippo's platform allows customers to compare routes, times, and prices from private delivery companies, such as FedEx and UPS, and has even developed an API that can be integrated into a business's network. It's an example of a startup accurately identifying a precise problem, and working with the rest of the industry for the benefit of its customers.

Be imaginative with funding

No matter the company, and regardless of how great an idea is, every startup needs two things: funding and a guiding hand. One of the reasons why innovative British banking startup Revolut made many lists of companies to look out for was not only down to its superb product, but because of its diverse funding portfolio.

Revolut's launch was bolstered by an initial $10 million investment as part of its association with European investment firm Seedcamp, later achieving a further $66 million in series B funding. Yet it also allowed customers to participate in its series A funding round, putting 1 million in equity up for grabs. Perhaps even more important than the money it generated was the buzz this created among potential customers.

Being quirky in a saturated market

It's very easy for startups to drown in oversaturated markets. With so many new companies entering the field at once, you're almost guaranteed to find more than one provider offering similar solutions to a single problem.

To thrive, startups need to stand out. For example, there are a number of startups within the cosmetics industry that alternative products to those offered in stores, yet Function of Beauty is a company allowing customers to create bespoke shampoos and conditioners based on the type of hair they have. Customers also receive their creations in personalised bottles, meaning each product is entirely unique. It's this incredible attention to detail that has made it a startup success worth over $110 million today.

Be receptive to feedback

The startup industry can be as unforgiving as it is lucrative - there's far greater pressure on companies getting products right early on than in traditional enterprise, and if something goes wrong, it's near impossible to recover.

Successful startups therefore listen to their customers very carefully, and in some instances, invite them to participate in the design process. Airbnb, one of the industry's biggest success stories, was able to triple its user base by simply hosting an afternoon session with early backers to listen to feedback on its platform. It's a proactive style of customer interaction that investors admire, rather than asking for feedback once a product breaks.

Get creative with your business operations

A major advantage of brand new, relatively small companies is that you can be inventive with the way your business operates. Zapier, a workflow automation startup, is highly unusual in that it's never established a company headquarters and its workforce operates entirely remotely. Not only does this mean it's able to hire people easily from anywhere in the world, it also has none of the overhead costs of a traditional business.

Last year the company made an even bolder move by setting aside a $10,000 "de-location" package in order to incentivise employees to move away from the incredibly expensive Silicon Valley area.

Respond quickly to market trends

Perhaps the biggest edge startups have over traditional businesses is their ability to respond quickly to new market demands. In fact, the unprecedented growth of recent technology trends such as AI and the internet of things has been underpinned by the work of startups.

For example, Chicago-based IoT firm Uptake, which reached its $2 billion valuation faster than any other startup, is able to gather and analyse data from connected machinery and sensors. This means that traditional companies can take advantage of improved efficiency of smart hardware, without having to hire the expertise needed to interpret data.

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It's never been easier to fund a good idea, but choosing the best route for your business can be a minefield.

Two decades ago, the choices were simple but limited: you'd need a bank, benefactor or redundancy cheque. These routes are still possible, of course, but they're poorly suited to unconventional startups. Bold ideas from ambitious entrepreneurs need agile funding to match.

Modern, non-traditional sources of finance let today's founders think big from day one, building the kind of cashflow that businesses of yore had to build over a period of many years.

Less interested in past performance, the investors that today's startups attract buy into the stories behind them, many of which promise to build a happier, healthier, better-connected world.

Traditional, non-traditional and personal funding explained

Traditional, non-traditional and personal funding have fundamental differences, many of which relate to the level of risk to the startup, as much as they do to the source of the finance itself.

• Traditional funding, like a bank loan, often requires that businesses have a proven track record, which is rarely an option for a startup. Alternatively, the founders may be asked to use their home as collateral. This makes truly revolutionary ideas or anything facing established competition, such as Mycroft's Alexa rival, too risky to get off the ground.
• Personal funding, like cashing in a pension or spending your life savings, may be too great a sacrifice for the first-time entrepreneur. Family and friends will often pressure them not to gamble their life's achievement against an uncertain reward.
• Non-traditional funding, like peer-to-peer lending, accelerators and business competitions, spread the risk across multiple micro-investors, or call on venture capitalists that can easily sustain a loss. They free the entrepreneur to focus on developing their idea, rather than chasing further funding or worrying that they're about to be out on the street.

It's this latter category we'll be looking at here, with five non-traditional sources of funding all flexible startups must consider.

The different types of crowdfunding

Kickstarter is often credited with inventing the concept of crowdfunding, but that particular accolade goes to Marillion, after the band raised 43,000 through donations in 1997 to fund its US tour.

Since then, we've seen the rise of Indiegogo, Unbound and Patreon, which have developed a framework for entrepreneurs, authors and ambitious online creators.

Oculus Rift and the Pebble watch were both crowdfunding successes. Positive News, a magazine that majors on constructive journalism, crowdfunded its transition from a newspaper to a magazine in 2015. It's now a co-op, owned by 1,500 micro-investors in 33 countries, each of whom can influence its direction.

But crowdfunding isn't for everyone. Marillion and Positive News each had a following; you'll be starting from scratch. Oculus Rift and Pebble were standout products. Is yours?

Successful campaigns need thought-through ideas, achievable milestones and crucially a plan for delivering tangible products or services. Your investors are your first customers, after all.

If your idea is conceptual, a slow burner, or promises to grow your supporters' investment rather than send them hardware, books or music, you'll have more luck with a dedicated business-funding platform. Crowdcube (which financed the Sugru mouldable glue) and Seedrs (which helped Tossed expand) let you pitch to a different kind of investor one who is less interested in your product than your business fundamentals.

Accelerators vs incubators

If you crowdfund your venture, you're largely on your own. You'll be free to run things however you choose, but might end up spending capital on support. Consider an accelerator instead or even an incubator and that support will be built in.

"An incubator is more about the physical space," says Nesta's head of new technology and startup research, Chris Haley. "Accelerators major on advice and support, with a cohort of ten or 20 companies coming together for a fixed period typically six months to benefit from peer learning."

Accelerators are often funded by businesses who want to get in on the ground floor by investing in ventures that will later deliver a profit.

Nesta has identified more than 200 incubators and 160 accelerators, which support around 7,000 UK businesses with 33 million of annual investment.

Seedcamp, the UK's longest-established accelerator, appears in the Nesta list and has invested in 250 ventures. It typically exchanges 100,000 plus the time it spends advising the founders and introducing them to its network of advisors for 7.5% of the startup's equity. Sia Houchangnia, a Seedcamp investment partner, describes the figures as "pretty standard in the industry there's not much of a question of modelling to understand if it's the right price".

It's this equity swap that distinguishes accelerators from incubators, the latter of which offer advice and support in exchange for rent and fees. By necessity, incubators invest close to home, while more than half of the UK's accelerators are in London.

Pitching to an accelerator isn't easy, but there are ways to increase your appeal. "Having a strong team in place, with an edge and an ability to address the problems you're going after, is crucial," Houchangnia says. "You might not have all the resources you need, but if you understand your market and have executed on similar products, that's important. We're looking for companies with global ambition."

"Accelerators and incubators typically take on companies at about the same stage," says Haley. "It's wrong to think that accelerators are always super-early-stage investors and incubators later ones. Some will be, but some accelerators do want you to have proved yourself."

Accelerators and incubators typically take on companies at about the same stage. It's wrong to think accelerators are always super-early-stage investors and incubators later ones

Houchangnia agrees. For Seedcamp, the right time to invest is determined by several factors and it's not always day one.

"If you're technical, going after a well-defined problem like early stroke diagnosis, we'd be comfortable investing years before your first commercial contract. If the technology has less of an edge but the team has operational expertise, we might want to see proof of demand for the product. In some other cases, we might be looking at companies that already have early revenue."

Accelerators won't usually sign non-disclosure agreements (NDAs) as they need to discuss your idea with their partners but, says Haley, it's rare to come across a rogue operator.

Haley advises talking to potential cohorts and previous applicants, as well as the accelerator's own team. Most accelerators trumpet their successes on their websites which in Seedcamp's case includes 161 operational companies, of which two are now valued in excess of 1 billion.

Business competitions

Failure to engage an accelerator may suggest you need to rethink your idea or that you need a more specialist route of finance.

Funding competitions, sponsored by big business, accept applications from startups in the same or a complementary field.

Shell Springboard is open to applications from low-carbon businesses, and awards a single 150,000 grant per year, plus five additional grants of 40,000. When we say grant, that's exactly what we mean: Shell doesn't take equity in the winning businesses. The money is backed by business-development feedback from low-carbon advocates.

It's just one of dozens that open for limited periods every year. Innovate UK which itself offers between 25,000 and 10 million for innovative products, processes and services maintains a list of available funding opportunities and advice on applying for both funding and loans online.

Peer-to-peer lending

If your venture doesn't align with an existing competition, your product isn't suited to crowdfunding and you can't attract an accelerator, is the bank your only option?

Not necessarily. Peer-to-peer lending could be the answer.

You may findpeer loan providers, like Funding Circle, to be more flexible than your local bank. They'll still need to see a viable business plan and proof you can repay the loan, but by spreading the risk among hundreds or even thousands of individual investors, they're often willing to take a punt where a single financial institution may not.

Your level of risk is naturally reflected in their rates, but for a good prospect with viable plans to repay the investment, they start at less than 3%. This is broadly the same as a high-street bank.

Beyond banking as usual

However you choose to finance your venture, the initial cash injection will likely mark the point where your idea becomes a viable startup. Where you go from here is up to you and your investors.

You may well discover that sourcing your capital was actually the easy bit. Check out how fintech can help you grow your business, and the one money mistake that all bad businesses make and how you can make sure you don't fall victim.

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What's the one money mistake every failing business makes? It's not setting the wrong price or paying its staff too little: it's a failure to understand the various types of debt and debits passing through its books from day one.

When you're starting out, getting a fix on your accounts is no small task. Well-funded startups hire full-time accountants, but that's rarely an option for the 5.4 million British businesses employing fewer than nine staff. For them, choosing appropriate software is the best way to go.

But where do you start?

A profit or loss analysis

Few companies last long if they're not turning a profit, but that's not the whole story. To work out whether your business is viable, you need to separate your fixed and variable costs, the latter of which have a greater impact on your chance of success.

Variable costs, which include postage, tax and manufacturing, increase with every sale. Subtract them from your sale price, then divide your fixed costs by the result to discover how many sales it will take to turn your first profit.

A business with fixed costs (rent, utilities and wages) of 52,500, selling 8.99 books that cost 4.82 to print and post, would need to ship 12,590 copies to break even:

52,500 / (8.99 - 4.82) = 12,590

If the market won't support those sales, the business will need to re-price, cut costs or find a new venture. No amount of playing with its accounts will change that.

"We can only support a business in doing business," says Chris Wade, VP of product for accountancy software firm Sage. "If a company makes poor choices about what it wants to do or how to go to market, the best solution in the world can't support them."

This is where the likes of Sage Accounting and Sage Financials software comes in. These programs are designed to help the business spot where the pain points lie, and identify whether they really are problems at all.

Speculate to accumulate

Tesla lost more than $4,000 on every car it sold a couple of years ago, but with $4 billion cash on hand, it could keep the production line running. How has it done since then? At first glance, not well. Despite selling just over 100,000 units in 2017, its latest SEC filing showed that its revenues of $11.8 billion delivered a net loss of $2.2 billion.

Divide that by the number of cars it's sold, and the losses appear to have widened to $22,000 apiece. So if things aren't improving, why hasn't Musk shut Tesla down to focus on flamethrowers full-time?

The answer is that Tesla is about more than just cars, and if you only look at the headline figures you won't see the whole picture. These figures include one-time costs, such as air-freighting hardware to Jamestown, South Australia, to build Tesla's 100MW battery array. The array will feed money back into the company over the longer term, financing its ongoing research and vehicle production.

It's easy to forget that Tesla, founded in 2003, is still a relative startup beside Ford (1903) and Mercedes-Benz (1926), making this the perfect example of a company taking early losses for the sake of longer-term success.

Sales are only for show

It's tempting to follow Tesla's lead, keeping prices comparatively low in the hope of generating buzz but this is a dangerous game. Paper-thin profits don't leave room for error and don't build in contingency. Growing your sales feels good, but unless you're doing it for the right reasons, the figures alone are meaningless.

IBM's second president, Thomas Watson, is often misquoted as saying there was a global market for "about five computers". He was actually talking about the 701 Electronic Data Processing Machine, rather than computers in general, but the point remains that even on so few sales (it actually took orders for 18), it still made sense for IBM to invest in research and production.

There's no magic bullet for formulating a sales plan, choosing the right price and attracting customers and although software can help you monitor what's happening in your business, it has to be used alongside your business sense.

"Having a system in place gives you that intrinsic visibility into the underlying performance, so you know where the money has gone, where it's coming from, who your customers are and who owes you money," says Wade. "All of that means you're no longer relying on the most unreliable thing: the human brain."

Profiting from proof

If you've cut your costs as far as you can, and can't sustain losses for as long as Tesla, what next? Raising additional capital is one option, but it's only open to businesses that can prove they can pay it back.

Tracking your accounts from day one in software that was designed for the job gives you an overview of your business performance and lets you project into the future. Both are crucial when pitching for additional funding and deciding how to spend it.

"You can make better decisions more quickly," says Wade. "We hear about access to capital being a limiting factor to small businesses, but it's much easier to secure funding if you've got a system that helps a financier understand the health of your business at the push of a button."

Having this information to hand, in Wade's words, "lets the owner worry about doing business, rather than managing a business".

The one money mistake all failing businesses make

If all failing businesses have one thing in common, it's not necessarily that they're spending more than they're making. As we said at the outset, it's a failure to understand the implications of the various debts and debits that pass through its books. If they don't have the tools they need to identify that imbalance and understand what it means it can quickly become an issue.

"It might not be the most fundamental mistake that an entrepreneur makes, but failing to prepare for a future where they need to know these things is preparing to fail for that future," says Wade. "Systems give a business longevity and the confidence it needs to take things forward."

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If you've recently ordered a takeaway, picked up a beer or had your DNA sequenced, you may have encountered one of the UK's "unicorn" companies.

Unicorns are a rare breed of company, hence the playful moniker, billed as startups that have eclipsed a valuation of $1 billion (around 720 million). They're companies making the impossible seem possible, acting as disruptors in their fields.

The term unicorn is not clearly defined, so there is a bit of contention over its use. Some argue publicly listed companies shouldn't count, while others say companies that have moved to the UK from abroad should be excluded.

As a result, top-level estimates suggest Europe has more than 50 unicorns; others suggest slightly less, with around 22 of these behemoth firms originating or being based in the UK up from 18 in 2016. In fact, more than a third of European founders are said to be based on our fair isle.

Deliveroo

One particular success story is Deliveroo. Founded in 2013 by Americans Will Shu and Greg Orlowski in London, it became a unicorn last year. From just five employees, its office now spans 50,000 square feet and its employees number almost 2,000.

The technology behind Deliveroo has allowed the company to grow at a rapid pace, reaching a valuation of more than $2 billion (around 1.4 billion) in just half a decade. Justin Landsberger, the company's UK and Ireland commercial director, highlights the prominence of the iPhone in the early days as being "super important" in allowing the company to grow.

"When we first began, we were operational in one postcode in West London," he says. "Fast-forward five years and we're now in over 200 cities, we're creating one of Europe's biggest tech hubs, and we've created work for 30,000 riders."

Just Eat

Deliveroo isn't the only unicorn in the food industry. Valued at around $7.7 billion (5.5 billion) in November last year, Just Eat is worth half a billion pounds more than the UK's second-largest supermarket, Sainsbury's.

It revolutionised takeaway food by letting people easily order online, and in 2017 it reported 21.5 million customers and 172.4 million orders worldwide worth around $4.6 billion (3.3 billion), an increase of 26% on the year before.

First launched by five entrepreneurs in Denmark in 2001, the company moved its headquarters to London in 2008 and now employs almost 3,000 people. Last year it entered the FTSE 100 for the first time.

Improbable

It's not all about food, either. Elsewhere on the unicorn list you'll find Improbable, a virtual-simulation startup co-founded in 2012 by three graduates. In 2017, Improbable raised $502 million (around 360 million) in a round of funding led by Japan's SoftBank Group, the largest ever round of venture funding for a private British company. This earned it a valuation of more than $1 billion.

The company is using this money to develop its main product, an operating system called SpatialOS. It's designed to allow the creation of massive simulated worlds, some the size of entire countries, earning comparisons to The Matrix. The team is hoping to release a game based around this OS, called Worlds Adrift, in the near future.

Oxford Nanopore Technologies

Launched out of the University of Oxford by a handful of people in 2005, Oxford Nanopore Technologies now has more than 350 employees and is revolutionising the market of DNA sequencing with its low-cost and easy-to-use devices. Worth an estimated $1.7 billion (1.25 billion), its lofty goal is to "enable the analysis of any living thing, by any person, in any environment".

DNA sequencing involves reading strands of DNA that can be used by doctors and researchers to diagnose diseases, see how organisms evolve, and more. Oxford Nanopore is shaking up the industry with its inexpensive products, such as the pocket-sized MinION priced at $1,000, compared to its competitors priced in the millions.

BrewDog

BrewDog was founded as a brewery in Fraserburgh, Scotland in 2007 by James Watt and Martin Dickie. Struggling after the first year, the duo hit the jackpot when it won all of the top four places at a bottled beer competition organised by Tesco.

The company set out to make a more exciting beer for pub-goers, and it has certainly done that. From humble beginnings, the company is now worth $1.4 billion (1 billion), thanks in no small part to its striking branding that separates it from the crowd.

BenevolentAI

In London you'll find BenevolentAI, a biotech business founded in 2013 to disrupt the pharmaceutical industry. It uses artificial intelligence to mine research papers to find new compounds or molecules for medical uses.

The approach has been hugely successful. It is now the biggest private artificial-intelligence company in Europe, valued at more than $1.8 billion (1.3 billion), with 19 active drug research programmes. Later this year it will conduct its first clinical trial, another major stepping stone for the company.

Skyscanner

Beginning in 2003 in Scotland as an Excel spreadsheet, Skyscanner now welcomes 60 million monthly visitors to its site every month. It's one of the most recognisable flight-comparison websites in the world.

The site is now available in more than 30 languages, offering users an easy way to compare prices from all commercial flights. In 2016, Skyscanner was sold to China's Ctrip for $1.7 billion (around 1.4 billion), meaning it is no longer a unicorn in the strictest sense although it certainly has been a major disruptor.

The UK's next unicorns

A number of companies has already been tipped to join the exclusive club of UK unicorns. One is London startup TrueLayer, an open-banking platform fintech firm. Another is Cardiff-based tech company Amplyfi, a prospective Welsh unicorn thanks to its artificial-intelligence platform that supports strategic decision-making.

The digital bank Monzo is rapidly making waves, being valued at about $336 million (280 million) in November 2017, while Perkbox hopes to make the jump by offering employers new ways to provide incentives to their employees. And Performance Horizon, which provides real-time insight on data analytics, is being billed as the first future unicorn in the North East.

How to become a unicorn: Tips from the top

So with a number of successes and rising stars, what's the key to unicorn success in the UK?

"It's a clich, but most founders make hundreds of mistakes," David Buttress, the former CEO and co-founder of Just Eat, tells Alphr. "The important thing is to move on quickly. Good entrepreneurs are honest and not afraid to take risks.

"I can't think of any successful founders who've started off by saying I want to build a unicorn'. You need to grasp hold of something more meaningful, that you truly care about, otherwise no-one else will want to be a part of it."

Justin Landsberger, meanwhile, says simplicity has been the key to Deliveroo's success. "We've always done the same thing since day one," he says. "We never deviated from our initial plan, and such a singular focus allowed us to truly focus on what we were about."

Skyscanner CEO Gareth Williams says it's important to maintain an uplifting environment. "As companies grow, they can bloat [and] become inward-facing, political and static.

"That doesn't need to be the case, though, and I believe that with the right policies and the right people, you can maintain a rewarding, fun and positive workplace."

Getting there will be no mean feat. But if the companies mentioned here are anything to go by, there's plenty of opportunity for success. No matter how big you get, though, it's important never to forget where you started.

"Will [Shu] still makes deliveries, and I don't think he'll be stopping any time soon," says Landsberger.

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You've developed your idea, secured funding and finally launched your startup. Now you need to triage your venture and consider which tools will help you grow beyond a rented desk.

Chief among them will be how you process, track and chase payments. This used to mean a weekly trip to the bank, but now fintech the technology of storing and moving money has knocked digital finance into second gear, and left the traditional players looking unwieldy and out of date.

Fintech in the cloud

"The cloud is fundamental to the changing economic model," according to Chris Wade, VP of product for UK accounting software firm Sage. "It makes success more attainable to more businesses and gives them the freedom to try something at relatively low cost. If it doesn't work for them, they can change."

Sage has been transitioning its products from local apps to cloud-based ones for some time. Requiring no capital outlay or investment in hardware and training, Wade believes this shift removes the imperative to persevere with a platform that doesn't suit or grow with your business.

"The cloud lets you make better choices about which technology works for your business. The whole collaborative, remote working experience applies in both management and delivery now, so if you've got a solution designed with that in mind, it'll support you in ways a desktop [application] with an embedded workflow won't."

But accounting in the cloud does more than track your expenses. APIs open your books to a new generation of fintech tools, bringing to startups the kind of facilities that were once the preserve of the minted multinational.

Disruptors like Stripe integrate with Xero and other accounting apps so that solo and micro-businesses can now accept card payments. Yodlee is bridging the gap between banks and their customers, downloading business transactions and streaming them into cloud-enabled bookkeeping tools. FreeAgent will even reconcile the results subject to your approval based on the invoices you've sent, bills you've received, and what it's learnt about how you run your business.

"These flows would historically have been on paper," says Wade, "but no cloud is an island now, and no element of the workflow has to be solved exclusively by one vendor. That means you can make decisions based on what your bank account contains, not what your mistyped accounts suggest."

Banking across borders

Sooner or later, a growing business will need to consider foreign exchange. Whether you're buying supplies from China or selling goods to Europe, you'll quickly discover the cost of doing business through a regular bank.

Why? "[While] the world is now very global, the financial system hasn't caught up," says Stuart Gregory, head of business for TransferWise. "It's still pinned down to single countries with old, clunky ways of doing things. I don't think that meets anyone's expectations of what an online banking service should be."

TransferWise saw this as an opportunity. With funding from an accelerator, it set up a cross-border transfer service, charging low fees and using standard inter-bank rates for every transaction. Seven years on, TransferWise now offers a borderless business bank account that simultaneously holds 28 currencies. With native IBAN codes for the UK, US, Europe and Australia, it lets customers pay in and out as though they were locals in 60 different countries.

"We've been focused on solving a specific customer problem, rather than seeing it as an opportunity for margin, which is perhaps where a lot of banks [have been focused]," Gregory continues. "Everyone travels, phones and works across Europe. This is a wake-up call. Banks need to respond to changes in the market and changes in expectations."

Regulated by the FCA on a licence that covers the whole of Europe, TransferWise is moving more than $2 billion a month and, at 15%, its share of the UK market for cross-border transfers is closing fast on the largest traditional banks.

Its offering lacks some of the features you'd expect of a regular bank account, such as direct debits and a debit card, but these gaps are plugged elsewhere. Revolut, which handles both international and crypto currencies, offers personal and business borderless accounts linked to prepaid cards. Monzo goes further, with debit cards and direct debits, but as it offers only one account type, it may appeal more to the freelancer or sole trader.

Do I need an office?

If you're happy with virtual banking, you probably don't need an office, either.

Slack, Trello, VoIP and web apps mean there's little you can't do remotely even if you have colleagues. Hire a distributed workforce and you're free to choose the best person for each job, regardless of where they live. They'll be easier to recruit if they don't need to relocate, and you might save on salaries, attracting higher-calibre candidates who are happy to offset potential earnings against the freedom of working from home.

You can still have a central number on your email footer, though. Answering services such as Lincolnshire-based Miss Moneypenny will pick up a virtual number using your company name and redirect enquiries to whoever is most appropriate. On the rare occasion you need to host team meetings, office-rental services such as Regus lease space for an hour at a time.

Scaling your IT investment

Reducing your capital outlay at the start lets you redirect your limited funds into marketing and hiring staff, so leasing hardware rather than buying makes immediate sense. You'll preserve as much of your startup capital as you can, and in doing so, sustain your operation through the lean early months.

Birmingham-based Geex offers a standard three-year business hardware leasing option, at the end of which businesses can either buy the leased equipment, or upgrade. It also offers shorter-term leases but, says director Steve Khela, "anything less than two years and the numbers don't really add up".

Leases are typically only available to credit-worthy businesses, but Geex will loan to startups if the directors sign personal guarantees. With the era of quantitative easing at an end, and central banks increasing rates to counter inflation, leasing will lock in potential savings, as the repayments won't go up in sync with the base rate. There are tax benefits, too, as the repayment can be offset against corporation tax.

Smarter money management is vital in the launch phase of any new venture, whether it's through leasing, or leveraging fintech to reduce your exposure to fees and commission. While your ambition may be unlimited, your funds aren't, and every penny held back as well as each minute saved through automation will help your business along the road to becoming a fully fledged enterprise.

Sooner or later, a growing business will need to consider foreign exchange. Whether you're buying supplies from China or selling goods to Europe, you'll quickly discover the cost of doing business through a regular bank.

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Getting a startup off the ground is hard. It's said that nine out of ten fail within the first year but, once those baby steps have been made, the next challenge arises scaling.

Going from a startup to a "scaleup" may sound like a simple process. It does mostly require expanding workforces, growing your clients and spreading your marketing message, but it's actually quite a difficult time for any startup. Transitioning into a scaleup requires planning, and it's a great time to consider mentorship programmes to help work through the problems that may potentially be holding your business back from greatness.

To find out what moving into the scaleup phase is like, we've been following insurance-tech startup SPIXII winner of the Alphr and IT Pro 01/10/100 pitch-off award on its journey with Samsung's business mentorship programme. Three months ago, SPIXII had just started its mentorship scheme with Samsung as it looked to move into the next phase of its growth. Since then, SPIXII followed the advice of Samsung's hand-picked business experts and has made huge strides towards becoming the scaleup it deserves to be.

Now, halfway through the six-month Samsung mentorship programme, what does SPIXII need to do next, and how's it found the experience so far? We spoke to SPIXII co-founder and CEO Renaud Million alongside marketing executive Emma Pegg to find out.

"The most significant improvement [to SPIXII due to the mentorship programme] has, most definitely, been on our focus," Million explains. "We're now clear about our processes, our marketing, getting our new website live and finding the right tagline.

"On the product side, we've also learned how we can grow with large companies. We've started to work with BUPA, and that's also helped lead to an understanding around implementation of client customisation and how it should be part of the roadmap for our standard product too."

Pegg agrees, driving home the point that mentorship has helped SPIXII's goals especially in regards to marketing become a lot clearer. "We now have a plan that looks at how we can scale within the next six months," she explains.

With these goals and plans in mind, SPIXII is best place to move into its scaleup phase. "In the coming weeks and months, SPIXII's plan is to expand with our clients like BUPA and Allianz to reach new global markets," Million explains. "We're bringing in support for new languages, and we could be opening offices in France and Italy so we can be closer to our clients there too."

We also gained a chance to hear what Samsung's business mentors had to say on SPIXII's progress, along with their hopes for the company's future over the next three months of mentorship.

How did mentorship help SPIXII reach new markets?

Samsung's business mentorship helped SPIXII build itself into a position where its goals aren't pipe dreams, but are actually achievable. After SPIXII's first mentorship sessions, mentor and Hive co-founder Leon Gauhman believed SPIXII needed to build a road map and stick to it if it wanted to grow. Three months on, and he thinks SPIXII is on the right track.

"The insurance industry is something that tech has just started to chip away at," Gauhman explains. "The opportunity is huge and I think SPIXII's biggest challenge is that its clients are still trying to understand what to do with their innovation [in the sector].

"I think the way SPIXII is looking at a particular part of the insurance market opportunity is the right way. It's not about growing [SPIXII] outwards, it's about solving that particular part of a customer's problem well. It's about seeing what other opportunities lie within that specific problems and creating solutions that fit its customer's needs."

Does mentorship improve focus and discover new ways of working?

As Samsung B2B's head of customer marketing, Anna Perkins believed that SPIXII needed to clearly understand who its audience was, and then create a consistent marketing message that was both relevant and appropriate. This advice led, over the past three months, to the launch of a brand-new website and the honing down of its message to a snappy tagline of "help more people, get better protected".

Now, though, Perkins has seen the fruit of SPIXII's labour and can see how much the company has developed. "I think SPIXII is doing great," she remarks. "People buy people and yes, you've got to have an amazing product and engage with those business drivers, but you have to have that emotional connection. SPIXII [is made up of] amazing people and that's starting to come through in its content and marketing.

"It's about getting back to those fundamental basics that every good marketer needs to get right in order to grow and develop. These fundamentals gain traction with audiences and help engagement grow it's something I'm seeing happening in SPIXII's posts and in getting its website live."

Can mentorship really help you position yourself for success?

As MD of Rooster Punk, James Trezona is all about driving growth and partnership with clients looking for more powerful ways to engage customers and employees based on storytelling and purpose. His desire to help SPIXII lies in making sure their prospective customers connect emotionally with them by defining the purpose of the company, making them far more likely to become loyal buyers and advocates. Critically, clarifying that purpose which came out of the last mentorship session also means company culture will be more resilient during times of growth, with the team aligned and energised by this emotionally powerful core mission of helping more people become better protected.

"SPIXII's ultimate purpose is to make sure more people are covered by insurance and protected," he explains. "They're already starting, with incredible speed, to put into practice what we outlined in our first mentorship sessions.

"There's a real sense that SPIXII isn't going to let go of its entrepreneurial spark, and that's exactly what I want to see. It's been lovely to be on this journey with the team and see that they're passionate about helping people and they have the intelligence and staying power to become and remain successful."

Would SPIXII recommend mentorship so far?

As SPIXII crosses the halfway point in its Samsung mentorship programme, I was curious to know how it's found the whole experience so far."Working with Samsung has really changed the way SPIXII operates," Million explains. "It's not just educated us in how to anticipate what comes one step ahead, but a few steps further.

"It's allowed us to have the foresight to see what's coming and prepare for it by going through the right processes and asking the right questions."As a process, it's also been a rather eye-opening experience. Instead of feeling like the mentors are simply there to do a job and move on, both Million and Pegg have been surprised by how attentive the Samsung mentorship has been.

"The most surprising thing about the mentorship programme is the level of care and commitment we've seen from our mentors," Pegg admits. "We can reach them at any point, and that's been so helpful."

"It's been great to keep in touch both directly and indirectly," Million adds. "For example, seeing all the mentors commenting and liking our posts is encouraging as it enforces the marketing moves we decide to make."

We'll be following up with SPIXII and Samsung's business mentors again at the end of the mentorship in three months' time. Until then, you can discover more about how Samsung can help create more good days for small businesses.

Meet the mentors

Anna Perkins Head of B2B campaigns, Samsung

Leon loves technology and intuitively understands how it can be deployed to solve problems. He founded Hive where he combined technical expertise, creativity and business knowledge to oversee the development of new products for Hive's ventures and corporate clients. Additionally, he mentors at Wayra, Seedcamp and is an occasional investor. Leon is also a member of the Super Club.

James Trezona Managing director, Rooster Punk

@j_trezona

Discover more about how Samsung can help create more good days for small businesses

There are few things worse than going through the rigmarole of buying insurance. Nobody really enjoys filling out those forms, ticking boxes, moving sliders or entering bank details. In an age where technology is making our chaotic lives more straightforward and simple, why is something that is so essential to many so unbelievably cumbersome to obtain?

Enter SPIXII, a startup dedicated to making the process of buying insurance quicker, easier and more personal than ever before. Thanks to the power of an automated intelligent insurance agent, customers can find out which insurance is right for them in an instant and take out a policy there and then. No more forms, no more tickboxes, no more confusing jargon or headaches -- just straightforward insurance.

SPIXII co-founder and CEO Renaud Million summarises SPIXII as "the bridge between insurance companies and their customers". The company's vision is that, by replacing online forms with a chatbot, SPIXII "allows for insurance companies to interact in a personal way with customers".

But as great as that sounds, SPIXII needs to grow before it can really become the powerhouse it deserves to be. Enter the 01/10/100 pitch-off, a collaboration event hosted by Alphr and IT Pro, in association with Samsung, in which the startup with the winning pitch can bag itself a six-month mentorship programme with Samsung's business division.

READ NEXT: How to take your startup to the next level with Samsung's hand-picked business experts

SPIXII's clear presentation, persuasive messaging and obvious applications in insurance and beyond made it a surefire winner of 01/10/100 and of Samsung's coveted mentorship programme. These mentorship sessions are intended to help SPIXII successfully achieve the next steps needed to propel the business forward.

Samsung's team of hand-picked mentors comprises Rooster Punk MD James Trezona, Samsung UK head of customer marketing Anna Perkins and Hive founder and Supper Club member Leon Gauhman. Trezona's expertise in brand storytelling can help SPIXII position its product and ethos in the best way possible, while Perkins' deep understanding of vertical markets will help SPIXII really target the right people to grow its business. Finally, Gauhman's role is to hone the appeal of the product in a world beyond insurance -- to help consider diversification options and plan for growth.

You can see how Samsung Business UK and its mentors got on with helping SPIXII start its journey to insurance-industry greatness in the first part of SPIXII's story.

Naturally, the discussions had during SPIXII's group and one-on-one mentorship sessions are entirely confidential. However, the skills and tips learned from Trezona, Perkins and Gauhman are invaluable to any young business looking to successfully move onto the next phase -- which is why they've also provided us with their three top tips to improve your business.

Now that the first session of Samsung's six-month mentorship programme is done and dusted, it's time for SPIXII to reflect on this advice and start working towards the next stage of its business development.

That's not the end of our time with SPIXII, however: we're going to check back in with the startup in a couple of months' time and see just how well it's progressed as it enters the next round of Samsung's mentorship.

Discover more about how Samsung can help create more good days for small businesses.

Monday 12 June marks the start of London Tech Week, and this year the Alphr/IT Pro 01/10/100 event takes place the following day. After last year's hugely successful networking event, this year, in association with Samsung, we are doing something a little different...

This year we have invited four amazing technology companies to a pitch-off. Each will have three minutes to persuade our crack team of judges that they should win a brilliant prize of a year's worth of mentoring from Samsung on business, technology, marketing, or whatever they need most.

And both Alphr and IT Pro will be following the companies over the course of a year, telling their story as they develop their business. Each one of the companies that have made the shortlist have the potential to be big, profitable businesses -- but which one will be our winner on the night?

Who are they?

Entertainment Intelligence

Entertainment Intelligence (Ei) is changing the way the music industry collects, views and utilises data. Not a generic reporting platform, Ei builds tailor-made, ever evolving solutions to help the industry truly understand the market, to save time and to increase efficiencies.

MovieSweep

The fun film app for movie buffs, MovieSweep features film clips and trivia and challenges players to test their knowledge of the industry.

SoundVault

SoundVault is a highly efficient, secure music 'synchronisation license (sync)' and performance royalty payment gateway. Designed by industry experts and technologists to revolutionise the sync licensing process. Exceptional usability for both buyers and uploaders, allowing music to be instantly identified, tested and purchased, broadcast ready.

SPIXXI

Spixii is a digital app dedicated to making insurance quicker, easier and more personal than ever before. With a simple conversation, find out what insurance would be right for you in an instant. Finally no more form-filling. No more confusing jargon. This is insurance made simple.

Who are the judges?

Anna Perkins - Head of B2B campaigns, Samsung

Anna Perkins has more than 20 years' B2B marketing and communications experience. She has worked with some of the world's largest brands including Vodafone, HP, Equifax and Arup as well as small start-ups offering innovative and game-changing solutions to the world of work. Anna has a passion for challenging the traditional view of B2B marketing and finding creative ways to engage with business audiences through every customer channel and touch point. She has a love of branding and an advocate of clear and concise communications: B2B should be brilliant, never boring!

Ian Betteridge - Editorial director, Alphr.com

Ian has been covering the technology market since 1995, all the way through the rise of the internet, the dotcom boom (and bust), and the takeover of the market by mobile technology since the early 2000's. He's currently editorial director of Alphr.com.

Leon Gauhman - Founder of Hive

Leon says he "loves technology and intuitively understands how it can be deployed to solve problems. I founded Hive where I combined technical expertise, creativity and business knowledge to oversee the development of new products for Hive's ventures and corporate clients. Additionally, I mentor at Wayra, Seedcamp and am an occasional investor."

Maggie Holland - Editorial director, B2B (Channel Pro, Cloud Pro & IT Pro)

Maggie has been a journalist since 1999. She became Group Editor across IT Pro and Cloud Pro in 2012 and was then appointed the editorial director of all three B2B tech sites (including Channel Pro) in 2016. Her areas of particular interest, aside from collaboration and the cloud, including how technology is changing the shape of business, environmental issues, careers, innovation and diversity.

Paul Cash - Chief rooster

As chief rooster at Rooster Punk, Paul is passionate about helping the leaders of ambitious and visionary companies communicate their ideas and products through the power of story. Paul is an author and leading thinker on creating meaningful brands. He's also a big believer in business as a 'force for good'. Prior to founding Rooster Punk, Paul co-founded multi-award winning technology agency, Tidalwave. Follow him on Twitter: @Zagology

Samsung is bringing businesses around the UK the good days they deserve. Throughout June, we've got events, prizes and offers coming your way - learn more here