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UK tech founders planning swift exits




By Ryan Weeks on 10th November 2017


But don’t worry! They hope to return.

 

A new report from equity crowdfunder VentureFounders has found that most tech founders in the UK intend to exit within 2-5 years, despite recognising the risks of exiting too early. Fully 56 per cent of the entrepreneurs surveyed by VentureFounders expect to sell their business for £50m or less.

 

The report has been compiled in conjunction with research firm Beauhurst and Coutts, the private bank. Its respondents include Justin FitzPatrick of DueDil.

 

Bizarrely, the longer a company has been generating revenue, the lower the valuation entrepreneurs expected to see on exit – hence the rush. The results are indicative of the somewhat perverse valuation methodologies that are often applied in disruptive technology.

 

But James Codling (pictured), CEO and co-founder of VentureFounders, sees no cause for alarm. He emphasised that UK tech founders are not short on ambition, despite their hurry.

 

“Our report highlights the challenges faced by scale-up entrepreneurs and how critical it is for the UK to continue to nurture the scale-up ecosystem,” he said. “While UK founders do expect to exit earlier, 80 per cent of them want to go back in to the ecosystem and support it, after they've exited their own business. We hope the government's Patient Capital Review will address some of the key findings from this report.”

 

Codling added that VentureFounders is commissioning a further piece of work which will assess the cost of scaling a tech startup in the UK, while also highlighting the funding gap faced by would-be scaleups.

 

100 tech CEOs and co-founders were surveyed for the report, supplemented by interviews with 20 of the UK’s leading founders and venture capitalists.

 

“At Beauhurst, we have observed what I suspect are the beginnings of a shift in the funding landscape,” said Toby Austin, CEO of Beauhurst. “Late-stage companies have been able to find the support and capital they need in the UK recently, although much of the money has come from foreign investors. The findings of the report support my belief that the UK is brimming with exciting, ambitious businesses and the ecosystem simply needs to catch up – hopefully it has already started to do so.”

 

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