How To Find Exciting Early-Stage Companies
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At Beauhurst, we know that there are many roads to success. Because of that, there are also many different signs that an early-stage company is likely to be successful, providing a good return on investment and proving a great client to have on your books.
Whilst some data providers only monitor companies when venture capital, private equity firms or angel investors have provided financial backing, we have eight triggers for tracking a company, so that our subscribers don’t miss out on any exciting early-stage opportunities.
Each of these is a sign of validation that a business is either actively growing or creating ambitious growth plans. If a business meets one or more of these “triggers”, our Data team begins collecting information to build a detailed company profile on the Beauhurst platform. We then track these companies continuously to ensure the data is reviewed and updated frequently.
Our subscribers can find out everything they need to know about the business, from a description of its products, services and target markets to its finance and funding history, and all of the key people at the company. They can also search across all of these details in our search tool, so they can find companies that they’re interested in, even if they’ve never heard of them before. Want to see how they go on to win these companies as new clients? See our case studies here.
Our tracking triggers
We track any company that has received equity or venture debt funding from any source.
By equity fundraising, we mean the issuance and sale of new shares by a company to fund its growth. We are the only data provider that tracks every equity deal at all investment stages– even those that are never made public. 70% of UK equity fundraisings are unannounced and we are the only data provider in the world to track these.
Why do we track this?
These investments show that a company has ambition, is ready to scale, and that investors are confident enough to back it. So far, we’ve tracked 55,737 fundraisings, with many of our subscribers using these to spot new investment opportunities within different sectors across the high-growth ecosystem. Recent unannounced fundaisings we have identified include £5.63m equity fundraising in July into consumer services company DNAnudge and a £15.5m in August into biotechnology company MiNA Therapeutics.
How do we source this data?
We know when a company has secured equity or venture debt investment when it is disclosed publicly or to us directly that it has secured new funding. The bulk of these are found through our news monitoring tool, which uses machine learning to identify within press announcements when a company has secured equity fundraising. We also monitor fund portfolio pages to see if they have any new companies listed.
In the case of unannounced equity fundraisings we use Companies House filings to find evidence of new equity investment into a company. Our proprietary technology monitors all SH01s filed and decides whether these forms are likely to contain a genuine investment. To ensure data integrity our analysts then investigate whether the algorithm has correctly identified a genuine investment. We are then able to calculate the date and value of the investment, amongst many other characteristics of the raise.
An academic spinout is a company that has been spun-out of a UK university or Higher Education institution. Typically this is off the back of university research that has been developed and commercialised by the institution’s enterprise team.
Why do we track this?
Academic spinouts have a lot of potential, benefitting from intensive research into product development and guidance with business plans from the institutions they are born out of. We currently track all academic spinouts from any recognised UK university, of which there are currently 1299 active, private companies. Many of these companies have gone on to achieve significant commercial success, including Exscientia, which was spun out of the University of Dundee and has secured £82.7m in funding to date. A little further south, University of Oxford spinout Oxford Nanopore Technologies has raised £571m in funding. Our data shows that spinouts from Oxford and Cambridge secured the highest number of investments in 2019, with 56 deals received by each university.
How do we source this data?
Over the years we have built partnerships with many of the UK’s leading universities, who have used our platform for research and technology transfer projects. These universities and their Technology Transfer Offices (TTO) often provide us with data on their spinout companies directly. On top of this, we acquired Spinouts UK in 2018, the project and dataset run and collected by Jonathan Harris, which has helped us acquire further information on all of the UK’s spinout companies and build long lasting relationships with them.
An accelerator graduate is a company which has been through an accelerator program and joined a cohort of high-growth and ambitious companies.The number of accelerators has been steadily growing since our records began in 2011. These programs are a vital part of the UK’s early-stage company ecosystem, especially for startups in the seed stage as they help them grow. Household names such as TransferWise, and Monzo have attended numerous different accelerators.
Why do we track this?
There is no denying that the UK’s top accelerator programmes consistently produce some of the country’s most promising young businesses. We track the entire graduating cohorts of 282 competitive accelerator programmes across the UK, because many of them go on to greater things. In fact we found that startups that attend accelerators raise 44% more money than those that don’t and that are also 75% more valuable.
How do we source this data?
We source the data on accelerators by using our proprietary news monitoring tool to identify press announcements that mention when a company has graduated from a particular accelerator. We also monitor changes to accelerator cohorts pages to see if they add new companies to their lists.
With the breadth of accelerators and related programs like incubators, startup studios and co-working spaces on offer, we want to ensure we identify actual accelerator attendances that offer a true indication of company success. We therefore have strict criteria that define an interesting accelerator programme, including whether the accelerator has a start and finish date, structure, competitive application process and charges low or no attendance fees. Once on our platform, you can browse the profiles of every accelerator and their alumni.
An MBO occurs when the existing management team at a company is looking to obtain controlling interest so purchases the majority of company shares. On the other hand, an MBI involves the existing management team being replaced by a team from outside the company as a result of them purchasing a controlling stake.
Why do we track this?
After an MBO/MBI has been conducted, companies typically increase their value, performance and growth rate as a result of new, ambitious management. Examples of companies who experienced an immense increase in financial performance following an MBO/MBI include de Poel and On the Beach.
How do we source this data?
As it currently stands we track over 1,844 companies that have undergone an MBO or MBI and have created profiles for each of these. These events are indicated to our data team through press announcements. We also monitor the portfolio pages of private equity firms to see if a firm is backing a new MBO/MBI. Often companies claim that they have been acquired when in fact closer inspection of the transactions uncovers that they have actually gone through an MBO/MBI. This works vice versa, when companies publicly announce a deal as an MBO/MBI but management has taken no shares within the company.
We use this trigger for any company which has been listed on one of the UK’s top high-growth lists. These lists are important as they are milestones that validate the ambition and growth potential of the companies featured.
Why do we track this?
Featuring on a list like the Fast Track 100 or Tech startups top 50 indicates a company is growing quickly and is gaining visibility. We currently have data on 212 high-growth list cohorts. Companies which featured on these lists in the early stages typically achieve further success. For instance Deliveroo has been featured on seven high-growth lists since it was founded in 2012, and has now gone on to be a global pioneer in the takeaway industry. Likewise, challenger bank Revolut has been featured on nine high-growth lists, achieved industry recognition and £690m in funding.
How do we source this data?
We currently track 42 high-growth lists across the ecosystem and update the platform as each list is published. We also actively monitor the high-growth space for any prestigious new lists and take these into account in our tracking.
Innovation grants are a great way of providing the financial fuel to help companies undertake research and development projects to expand their business.
Why do we track this?
Winning a grant from organisations like Innovate UK, FP7, Horizon 2020, Scottish Enterprise, the Development Bank of Wales and Invest Northern Ireland shows that a company is ambitious, innovative and has been validated by demanding third parties. These grants also attract attention and support to help a business accelerate, helping us to identify high-potential businesses.
How do we source this data?
We source grant data directly from the awarding body. We then create profiles for all companies that have formally accepted a large innovation grant. To qualify, the a company must receive £100k/€100k individually (participating in a project that has received £100k/€100k overall is not enough). The project’s primary focus must be fostering a ‘new-to-the-market’ innovation, as opposed to other aims such as job creation or capital equipment.
Plus, we also separately have data on all grants awarded by Innovate UK, even those below £100k and accepted before January 2011. This is incredibly useful as Innovate UK provides the majority of grants in the UK’s high-growth ecosystem.
Okay, so technically these companies are unlikely to be early stage, but we wanted to let you know about this trigger anyway, on the off chance that you’re also interested in fast-scaling businesses.
We class a company as a scaleup if it meets the OECD’s definition of a scaleup – 10% or 20% average yearly growth in employee headcount or turnover, over a three-year period. We have two separate triggers for scaleup companies so our subscribers can easily identify the type of company they’re interested in.
Why do we track this?
Meeting the definition of a “scaleup” is a clear sign that a company has a good track record and is growing quickly over a sustained period. We currently track 9284 scaleups, including unicorns Deliveroo, The Hut Group and Gousto — which have all been classed as meeting the 10% and 20% scaleup triggers. Many of our subscribers use the different scaleup triggers to find and partner with companies at the most appropriate level of growth suited to their business. Want to learn more about the makeup of the UK’s scaleups? Read the latest edition of The Scaleup Index.
How do we source this data?
We have proprietary technology that checks the annual accounts of every UK company registered on Companies House and decides whether it meets the definition. A particularly clever aspect of the technology is that when companies occasionally file accounts that cover a period shorter or longer than 12 months, it can construct 12-month comparable periods out of all of its accounts in order to ‘smooth’ them. This data is then manually reviewed in house and added to the company profile. This allows our subscribers to search across the platform for companies with gradual or sudden growth.
Why you can trust our data to find you exciting early stage companies
When finding exciting early stage companies you want to ensure that you are finding quality leads. We pride ourselves on the reliability of our data, and with manually checks and regular reviews by our intelligent in-house data team.
Our rare combination of state of the art technology and human verification and curation ensures quality information, so you can find everything you need to know about a company. Our platform is updated daily, offering you a steady stream of fresh, reliable information so that you can find more leads, perform comprehensive research and make better investment decisions.
Want to see the platform for yourself?
The Beauhurst platform provides you with data that can help you make data-led decisions and win new business. See for yourself how you can investigate exciting prospects with ease by using our intelligent set of monitoring and analysis tools in a 30 minute demo of the platform.
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