A Change Of Mindset – U.K. Unicorns And Why They Matter

The breakthrough moment came at Series E. In September of this year, data transformation company Matillion secured $150 million in new investment, a deal that pushed the company’s valuation up to $1.5 billion. As such it became the latest British company to attain unicorn status.  

But does that actually matter?  You could argue that the $1bn valuation threshold is nothing more than an arbitrary number. A good company is a good company, regardless of whether it is valued at 900,000,000 million or upwards of $1bn. There is no special magic in a single figure. 

But that argument would probably be churlish. Over the past few years, the growing number of unicorns emerging in the U.K. – around 100, according to Tech Nation –  has come to be seen as a bellwether for the health of the domestic digital economy. More $bn companies is an indicator that the ecosystem is maturing. There was a time when startups struggled to raise the funds they needed to scale up. Today, there are more investors than ever before and those who focus on later-stage rounds are prepared to put in significant sums to back businesses with growth potential.   

And when I speak to CEO and co-founder Matt Scullion, he is clearly proud to have grown a what he describes as a “consequential” business in the North West of England – a business that has tapped into a global enterprise software market, securing sales from companies such as Amazon, Cisco, IKEA and Travis Perkins.

However, turning his attention to the tech economy more widely, he believes that U.K, ecosystem has some way to go before it can match the U.S. in terms of nurturing fast growth, high value companies. A change of culture is required.  

Matillion was established in 2011, originally to provide cloud-driven Business Intelligence services for companies that didn’t have the IT firepower to crunch the data themselves. To deliver on its offer, the company needed a so-called ETL layer (extract, transform load) to integrate data from multiple sources. After trying and failing to buy in a new ETL facility, the company developed its own. By the middle of the decade, helping companies to manage and analyse multiple source data had become the main business. ETL was the name of the game.

This is a hot sector.  As companies seek to become more data-driven, they face the challenge of integrating information coming from multiple touchpoints and systems – some in-house and some in the cloud. This is in itself a technical challenge exacerbated by the fact that most major companies have relatively little expertise. “If you are an industry like banking or pharmaceuticals, you probably spend most of your time thinking about banking and pharmaceutical products. Very few people within the organisation think about data,” says Scullion. 

So Matillion’s pitch is that it provides non-experts with a means to leverage data to improve performance. 

Enterprise Customers

Its customers are mostly at the enterprise level and 90 percent of revenues come from overseas. So how has a company determinedly headquartered in the North West of England found a market?

“The industry has changed. In the past, sales motion was top-down. The buyers were CIOs and CFOs. Today, the most important person in the buying process is the user.” Scullion says. 

That has given helped to provide Matillion a foot in the enterprise door. The system can be tried out cost-effectively by a department or individual and if it proves useful, usage can be rolled out across bigger swathes of the enterprise in question. As such operating out of a regional English city (Manchester) is not a disadvantage in the global market. “In fact, it is an advantage,” adds Scullion. “It is an entrepreneurial pragmatic city and there is a good supply of talent.”   

As Scullion sees it, fast-growth tech companies provide one important route to creating a  high wage economy, not just in the North of England but across Britain as a whole. He cites wages. “We pay on average 3.5 times the national average wage,” he says, adding that the work is also stimulating and creative.  

This is one example of the tech effect that policymakers would like to see. Equally, policymakers are also keen to see the U.K producing a digital economy company on a par with Google, Facebook or Salesforce. That hasn’t happened yet and Scullion thinks there needs to be a change of mindset.   

A Change Of Mindset

As a nation – from the white van driver to the pinstriped banker – I don’t think that we (the nation) really get the concept of the fast-growth businesses.” By that, he means companies that grow fast on the back of a forward promise. They won’t necessarily make a profit from their burgeoning revenues in the short or medium term and they need to lot capital to keep going, but they have the potential to become major players.  

“If a business is run well, if the unit economics work and if there is a large market,” it makes sense to fuel it,” he says.  In his view, people who pursue the fast growth route are often criticised rather than encouraged. 

Scullion would like to see more confidence in the UK. That’s partly about when entrepreneurs choose to sell out – very often,earlier rather than later – but also in terms of the capital available to support rapid scale-up.  “It would be great if we could get more capital into the system,” he says. 

It has to be said that investment in UK tech is at record highs, but at the later stages, much of that is coming from Asia, the US and Europe rather than Britain itself. Matillion’s own experience is of mainly overseas investment.  

And maybe that’s unicorns do matter. They put down a marker. Tech businesses are scaling up and they are attracting investment. That should boost the confidence of entrepreneurs and investors and create the change of mindset that Scullion wants to see.

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