From start up to high growth business in 4 years
Veeqo’s Business Finance Journey
Four years ago, in a co-working space in Wales, an entrepreneur named Matt Warren had a vision: to create a new type of software company that would allow retailers to automate their business activity.
Fast-forward to today, and with offices in Swansea and London, and teams already in place in Texas and Australia, Veeqo is a highly successful business in its sector.
Matt has big ambitions for Veeqo. His vision is to build a £100 million company, and lead the market in retail software – and right now, he’s on track to achieving his dream. In this article, we’ll explore Veeqo’s business finance journey, with its highs and lows, from seed finance to crowdfunding and angel investment – and the path towards IPO in a few years’ time.
How Veeqo started – initial business finance
With a vision to help retailers automate many aspects of their business, Matt Warren knew that in order to build his business – Veeqo – he would need to attract investor funding. Typically, software development is seen as high risk by the traditional banks, and Matt knew he did not want to secure debt against his personal assets such as his home.
Matt invested his own money – a few thousand pounds – to build the most basic possible version of the software. Just enough to attract investors.
“With any start up you’ve got these moments where you are on the edge of your seat and you don’t know if you are going to make it through to the next month. But then equally when great things happen, because you’ve got a small team working so closely, and you are so passionate about wanting the company to grow, you get those rewarding moments when things go right.”
When a new business venture is based on a piece of technology or an idea that has no physical form, it can be extremely difficult for a start up business to secure investment. The most important element for many is to build a working prototype or MVP (minimum viable product).
Not only does this allow the company’s founders to go to the market for funding, with a working proof-of-concept, but it also allows the business to test different routes to market, and to explore how to both price and promote their solution.
Stages of business finance funding
At around the same time that Matt was working on his prototype, crowdfunding was starting to become more commonly available to growing businesses, and the crowdfunding platform Seedrs had recently launched.
It was a completely nerve-wracking time for Matt. In his own words, “It’s very public if you fail”. Matt asked friends and family for funds of £30,000, raised on the Seedrs platform – and achieved his goal in just 19 days from launch.
With the money raised through crowdfunding, Veeqo was able to hire some of the most talented people in the sector, and grow the team in the right way, without cutting corners. This allowed Matt to build the first functioning version of the Veeqo platform.
Marc Girdlestone, Head of Support at Veeqo, remembers a particularly challenging time in the early days of the business, “When I first started, leading up to Christmas, we were waiting for the investors to confirm they were going to invest in Veeqo. At the same time, we had a big drive to get loads of new features out and to really push the company and show that we were profiting. We were at a point where we were going to run out of money unless these investors were going to invest again. They did, they invested, and this gave us the funds to be able to grow”.
Seedrs is just one of many platforms now available – see the UK Crowdfunding Association website for more details of the different platforms available.Many providers these days specialise in particular types of business or opportunity, so it’s important to get the right fit for your business.
You can find out more about preparing your own investor pitch with our short video about equity crowdfunding. Many of the crowdfunding platforms in the UK also have useful information, such as this pre-investment guide by Seedrs.
Equity investment – more than money
When a business goes out to find investors, the pitch is vital. It may be a nerve-wracking experience, particularly in the early days when the business owner or owners are extremely exposed. But when it works – when the money comes in – entrepreneurs like Matt are clear that what they gain is much more than money.
According to Matt, “When you promote your business on an investment platform, it’s a great way to get the word about what you are doing out in the market. There’s promotion of the product, and press coverage – and you may find potential investors that can also offer knowledge and expertise. In our case, we were introduced to an angel investor who has subsequently gone on to invest £1 million in the business himself”.
A culture of communication at Veeqo
For Veeqo, a key part of the success has come from involving the entire team at every step of the way. Employees have a fortnightly meeting with the CEO where they discuss the company financials and how well they’re doing (or not doing) on a week to week basis. According to Marc Girdlestone, Head of Support at Veeqo, “Transparency is really useful for us (employees) to know where we need to focus our attention, and know which teams need to work harder”.
All of the employees are shareholders in Veeqo so they have a vested interest in Veeqo improving and growing, as they all share in the success of the company.
Scale up when the numbers are predictable – not before
Scaling a business is often just as nerve-wracking, if not more so, than starting out, because the amounts of money are so much greater, and more jobs and people’s livelihoods are at stake.
Matt Warren explains, “That moment where you are switching between a start up to an established company lots of things change. Things you would do when you are a start up you wouldn’t do when you are established. Having that change and changing that mental attitude has sometimes proven quite difficult”.
It can be hard for the business owner to know when to try to scale, and Matt advises business owners to wait until they truly understand the metrics that are driving their success, before attempting a step change.
Matt readily admits that he made errors along the way, “I was too quick to invest in sales and marketing, when the product simply wasn’t ready”. But he goes on, “In hindsight, it’s easy to see that it was time to scale only when we truly understood the unit economics of the business. Two years in, we knew exactly how many leads we were receiving daily. We knew our conversion rates. And we knew what ROI we could expect to achieve if we were to invest in one more marketing person, or another person in sales. At that point, the numbers were predictable”.
Finding the right type of finance for your business
Veeqo has found a balance between angel finance and crowdfunding, which has allowed them to spread their risk, and to involve and engage both external investors and their own team.
Veeqo’s Head of Design, Jade Lundie, joined as a trainee, and has seen the company grow. She says, “When we have had investors come down we have had brainstorm sessions with them, which is really cool. Every time we have a Seedrs campaign go live we all sit down and we share the video, which gives everyone the opportunity to invest themselves if they want to”.
Securing external investment can also boost the internal team’s confidence in the brand. According to Jade, “When I first started I didn’t know anything about tech start ups or what to expect from coming to work in house for a company. It has been really great to see how we have grown, and how investors believe in us. That pushes us to believe in ourselves and make the most out of the money they invest in us”.
Crowdfunding and angel investment have worked for Veeqo. But it’s important to find the right type of funding for your own business. For example, if you are investing in manufacturing capabilities, then you will inevitably need to purchase some fixed assets – and this in itself may lend itself to a different form of finance such as leasing and hire-purchase, for example.
It is vital to understand what type of company you are, the rate at which you want to grow, and to have a robust business plan. The Business Finance Guide can help business owners understand different opportunities to fund growth, and is a great first step in deciding where to look next.
Matt Warren, Founder and CEO, Veeqo
For more information on crowdfunding, read our article ‘Crowdfunding: from 1783 to today – and why it’s not just for start ups’.