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UK to US Technology Scale Up Opportunities
- 1. Transatlantic Scale up Opportunities for Great British Technology
- 2. What We’ll Cover … US Market Statistics Advantage UK – Seed Investment & Scale up Costs Advantage US – Exit Valuations The Transatlantic Opportunity Avoiding the Transatlantic Pit-Falls
- 3. $3.4 Trillion Global IT Market 34% 23% 28% 7% 8%
- 4. US Market by the Numbers All Global top 10 companies 54 of the Global 100 companies 220,000 businesses with > 50 employees … v 37,000 UK 20,000 > $100M turnover 3,000 > $1Bn turnover 21 of the top 30 global acquirers
- 5. Advantage UK - Seed Investment UK US Median Entry Valuation £2.4M £3.2M Investor Tax Relief Up to 64% 0% Capital Gains Tax Rate 0% 38.8% A UK Angel Investor nets 6 times the after-tax return of his American counterpart
- 6. Advantage UK - Development Costs Software Engineer UK US Annual Salary £50,000 £110,000 R&D Tax Credits 26% 0% Net Salary £37,000 £110,000 UK Startups have a 3 fold R&D cost advantage versus their American competition
- 7. Advantage US - Startup Acquisitions US & EU Exits since 2010 by Acquirer (Crunchbase & European Commission, Sept. 2017) 23% by EU Companies 77% by US Companies
- 8. Advantage US – Exit Valuations EU Company $85M US Company $105M US Company Acquiring: EU Company $29M US Company $122M EU Company Acquiring: Exit Valuations 3 times higher in the US versus EU Median Exit Valuations across 12,000 acquisitions since 2010
- 9. 4 Stage Transatlantic Opportunity 3. EXPLOIT : 6:1 Market Size 4. EXIT : 3:1 Exit Valuation 1. INVEST : 6:1 Advantage 2. SCALE : 3:1 Cost Advantage
- 10. Avoiding the Transatlantic Pitfalls FAILURE POINT * HOW APTITUDE HELPS #1 - Poor Market Fit Expert US Market Qualification & Localization #2 - Ran out of Cash Low Cost US Market Entry Programs #3 - Hired the Wrong Team Diverse Team of Senior US Mentors #4 - Poor Sales Execution US Agile Sales Best Practices * Based on 2016 CB Insights Study of 2,000 Startup Post Mortems
- 11. Gary Cooper, Managing Partner gcooper@aptitudeventures.com
Editor's Notes
- EIS as an engine for international expansion to America Been in US 23 yrs, valley for 6yrs We have nothing like EIS in the US >
- So my goal in the next 20 mins … first – for investors to make very happy compared to your American c’parts and, 2nd – if you’re a company founder give you the confidence to leverage the ecosystem and go for it across the Atlantic sooner rather then later Joining global dots – outstanding opportunity to max returns
- Single largest global market
- All the numbers back that up … or as our Prez would say ... Very Bigly. By far & away the biggest acquistion market for startups >
- SO let’s look at the UK – US comparison – first for angel investment
- Now from an operational cost basis And also from an investment perspective .. Hedge against dilution with 1/3 burn rate Too many US founders consumed by continual fundraising v driving the organic business
- Similar populations but 3 X M&A
- However, where the US comes out on top is in exit valuations …. And let’s Break down – the exit valuations
- 1 & 2 – leverage to attract in the best globals
- Cost of sales guys, VPS #3 .. Plenty that could talk the talk but the only thing they walked was the golf course #4 - and re sales execution it’s the subtleties that can trap ….