2023 – a year in review
As we reflect on 2023, it has been a challenging environment for many scale-up companies. Management teams have increasingly faced headwinds in growing their businesses such as rising inflation and energy costs. Interest rates have risen significantly this year, although stabilised more recently, and all of these factors have served to knock both business and consumer confidence.
Although KPMG’s latest global venture report reveals that venture capital investment into UK businesses remained stable in Q3 2023, this was off the back of a 12% fall in deal volume in H1 and the market will have felt very slow for most sectors (1). For scaling companies looking for funding, raising capital has become more challenging and it’s more important than ever to plan your next fundraising round well in advance and work with the right investor to take your business to the next stage.
At Puma Private Equity, we’ve looked beyond short-term challenges and continued to facilitate investments into scale-up companies, with eight new companies added to our portfolio in the last 12 months. We have also supported our existing portfolio where appropriate, with a number of follow on rounds for strategic expansion.
For founders looking for funding in the current environment, there are several considerations to help support your investment case:
- Building long term relationships has remained key
It’s important that companies looking for funding understand the breadth of the investor landscape. There are a multitude of investors globally who all differ in their approaches and strategies to meet a company’s needs and funding stage. It’s worth building relationships with numerous investors and staying in touch because whilst your proposition might not be right now, it could be in the future. Over the years, we have invested in several companies that we have built long term relationships with.
For those companies that are in the process of securing funding, its important as part of your selection process that you consider how the relationships with your investors will evolve. All businesses go through ups and downs and its integral to have an investment partner that can support you through thick and thin. We believe that given current market conditions, rather than trying to achieve high growth at all costs, it’s about achieving long-term sustainable growth.
- Fundraise from a position of strength
In the current environment ensuring that you have good cashflow forecasting and management is more important than ever. Make sure that you have appropriate management reporting information in place that helps to evidence consistency, but also helps to identify areas where there are opportunities for improvement. For scaling businesses looking to fundraise, being able to evidence a strong commercial position that is primed for growth will help secure potential investors.
At PPE our active approach in supporting our portfolio companies has become integral in the current environment. Throughout 2023 we have focused on guiding our portfolio companies, ensuring they’ve got sufficient cash runway in place and the right team around them to take them to the next stage of growth. And where there has needed to be a strategy reset, we have worked with management teams tirelessly to put in place the right re-build strategies.
- Don’t be disheartened by setbacks
Growing a business can be challenging, but it’s important to persevere and be logical about the decisions you make. You know your business and your market, so any potential investors should recognise this and complement your businesses skills and experience rather than asking you to change direction to better fit their skills or area of focus.
You can’t be all things to all customers, so keep in mind your core purpose and the strength of your offering and remain true to this.
- Working with Puma Private Equity
At Puma Private Equity, we are a generalist investor and work across a broad range of sectors. We focus on sourcing companies with proven product market fit, demonstrated by the revenues they have generated from customers to date. We facilitate funding to accelerate their growth, helping founding teams achieve their business plans.
We believe companies become valuable because they’re able to deliver fast growth, good cash generation and the ability to dominate their sector. Ultimately, companies exhibiting those factors, or those able to demonstrate that they are en route to delivering them, have the highest probability of being valuable to a potential acquirer.
Post-investment we offer our portfolio companies an intensive partnership model, providing dedicated resources plus access to specialist functions across our Group, such as marketing and HR, and high quality networking with the rest of our portfolio. We also have a dedicated value creation team consisting of strategy and financial experts, who are focused on key commercial challenges and can provide hands-on, practical expertise that can make a difference quickly.
Focusing on investments across the UK, we have recently opened a dedicated office in Manchester to support scale-up businesses growing in the region. This follows the appointment of Mark Lyons as Investment Director for the North and new recruit, Investment Executive Emily Bourne.
If you are a scaling business looking to take the next step, please get in touch with one of the team.
1 KPMG Global Venture Pulse Report