Tech start-ups get geared for growth

Eighty-three per cent of tech start-ups in the UK anticipate growth throughout 2013, according to research from Silicon Valley Bank. This comes after 66% noted improving business conditions in 2012 and 73% met or exceeded revenue targets.

Joshua March, Co-Founder and CEO of start-up business Conversocial, explained this strong performance is thanks to the changing environment in Britain.

Says Joshua March: "One of the most exciting changes is how much easier it is to hire great developers than just a few years ago. Undertakings like Silicon Milkroundabout and the Tech City initiative, backed by so much government and press support, have turned 'start-ups' into a viable career path."

Having the right backing has proved essential to growth globally and in the UK alone more than half (56%) of tech start-ups want greater access to government grants and funds, while 52% would like to see tax reform.

Non-government run initiatives can also play an important role for facilitating growth, especially across borders.

Rovio - the makers of Angry Birds - and Spotify are just two examples of how the right environment and support can help tech start-ups expand.

Slush and start-up success

Slush is the event responsible for the growth of Rovio and Spotify. The non-profit technology and start-up gathering brings together the most promising companies from Northern Europe, Russia and beyond, and connects them with investors and media from all around the world.

TMF Group is one of the key partners of Slush 2013, which will take place on 13-14 November 2013. We are experts at helping start-ups grow fast and operate successfully in new markets by offering support with incorporation, set-up, corporate secretarial and compliance. With experts in over 75 countries, we can help link companies to the relevant local markets.

Rovio

"In 2010 we set out to build an entertainment company and after last year's performance we are on a strong path to achieve our goal,” Mikael Hed, Rovio CEO said.

The company is now the world's leading provider of mobile entertainment and grew by a massive 101% during the 2012 calendar year. The firm invests in brand protection globally and knows its future success lies in the tech it produces.

A 2011 article in Wired explained that users spend 200 million minutes playing Angry Birds each day. It is the best-selling paid app of all time and sold 150,000 copies in its first week.

However, at the beginning of 2009 Rovio had to be saved from bankruptcy and success wasn't overnight. Matt Wilson, head of marketing, realised that it was important to start small, conquering local areas first.

"It took only a few hundred purchases to get the game to number one in the Finnish App Store," he told Wired. "The same went for Sweden and Denmark, then Greece and the Czech Republic. Before having any traction in the UK and US, which are now 90% of our market, we had 30,000-40,000 downloads in smaller nations - not a huge amount, but probably four times what the average app sells."

Spotify

Spotify was founded in 2006 by Swedes Daniel Ek and Martin Lorentzon. It works by establishing royalty deals with record labels and paying approximately 70% of its revenue back to rights holders.

During 2012 it more than doubled revenues to €435m and has 20m active users and over 5m paying subscribers. The company is financially backed by firms such as Northzone, Kleiner Perkins and DST - connections to investors the firm doesn't take lightly.

"We cannot exclude the need or desire to raise more funds in the future to fund future growth initiatives," Spotify said.

No growth overnight

Tech start-ups can grow quickly with the right fundamentals in place but it won't happen overnight.

A study by government-backed GrowthAccelerator showed 60% of its 7,000 registered businesses are over five years old and a third have been trading for over a decade.

Putting the work in is vital and, according to the report, the "greatest indicator of growth [...] is the ambition and leadership of the management team running the business. It is this entrepreneurial spirit, drive, and commitment to growth that is a key, yet often overlooked, characteristic of these companies".

Get the right location

Europe is proving to be one of the top places for tech start-ups, with Berlin, London and Paris emerging as some of the best locations.

According to Sven Schmidt, venture partner at Accel, this isn't too much of a surprise, although in Berlin it may have taken longer than hoped. He told Wired: "People expected it just to happen, but it takes three to five years." However, Jamba, Brands4Friends, Citydeal and DailyDeal are all firms that successfully exited, demonstrating the city can deliver.

TMF Group's Toini Niekoop, Director of Regional Business Development, has done a recent case study into how the technology sector is faring.

 
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