Finding opportunity in a crisis
Updated: Oct 26, 2022
After a career of founding, co-founding and leading early stage technology businesses from start-up to scale up and exit, towards the end of 2019 a chance meeting with fellow tech leaders, James Walker and Giles Bourne identified a shared passion among us; a vision to help disruptive early stage founders fulfil their potential and build great businesses on the local and international stage, and on a scale we could not hope to match as individuals working alone. And so Scalare Partners was born to bridge the growing gap in the technology capital eco-system which currently sees early-stage founders being abandoned exactly when they need access to resources and funding the most.
Forming our launch plans in 2019, Scalare expected to make 15-25 early-stage investments each year where we could help the founders with their future funding needs and even more importantly provide hands-on access to the right type of help/ resource to scale and transform their businesses. We wanted to be there for the journey and not just for the exchange of funds for a share certificate. For our model to be successful we needed access to great businesses/founders who could see value in the help we could bring to them, both on funding but more importantly through a global network of Scalare advisors who could get hands-on and offer practical help. And of course, we also needed to build a network of investors who shared our vision - to support our investee companies as they grow.
So, if that was the plan in late 2019 surely we must have re-thought launching a business that invests in and supports early stage, often cash hungry technology business right in the middle of a lock-down due to COVID-19? Should we put the plans on ice until things returned back to normal and when we knew if the economic recovery would take on a V, U, L or even K shape?
For us the answer has remained a resounding ‘no’ and we feel incredibly grateful and excited to have the opportunity to be investing in and supporting early stage businesses right now as we enter such a period of change and opportunity. How could Scalare, founded on the principle of not abandoning promising early-stage businesses when they need help the most not see the enormous opportunity to provide real transformation at the pivotal moment that was before us? Timing is always so important and if we’d launched a year ago who’s to say we wouldn’t now be dealing with the fallout of a portfolio of companies that had great ideas to disrupt or service the travel, recruitment or commercial real estate sectors? Or launching in a year’s time when we would be trying to catch a few horses that have already bolted with great ideas for our new normal?
Now feels like a great time to us. Many of the changes accelerated by COVID 19 have permanence about them and the smart founders are already onto this. And speaking of founders, the recent coverage of Mike Tyson in training for a potential comeback to the ring at the age of 54 reminds me of the quote attributed to him that ‘everyone has a plan until they are punched in the face’. While COVID-19 has been a pretty big punch in the face for many entrepreneurs, rest assured it is not the only punch they will have to take as they build their businesses in future. At Scalare we are we lucky to be ringside right now to see how founders have reacted as this will likely be a good indicator of how they react when things get tough in the future. That’s a valuable insight that will help us make better investment decisions.
Funding is difficult right now for early stage businesses as all investors focus on reviewing existing investments and try and make sense of an environment where cash in the bank earns virtually nothing, or less than nothing, and stock markets globally disconnect from economic reality, fuelled by central bank printing presses and government stimulus checks.
This is creating significant opportunity for Scalare as good early stage businesses have limited options and our model of funding and immediate practical, hands-on, advice is all the more attractive right now.
We continue to believe the best returns will come from investing in growth where profitability follows on from a meaningful and sustainable gross margin - and this growth will come disproportionately from finding great founders with great ideas, preparing to disrupt the status quo or open up brand new markets. More so when those businesses can access the right resource at the right time to help them scale. Of course events like COVID-19 have shown how the best laid plans can fall apart when that punch comes and it is likely inevitable that some of the businesses we invest it will not be equally successful – but the benefits of diversification in our model protect against this; with the upside of those businesses that fully realise their potential making us confident of exceptional results over the longer term.
Despite the upheaval and ongoing health and economic crisis, our view on the Scalare model has galvanised since late 2019. We are delighted to have already made five investments in game-changing businesses we believe are well placed to thrive in the new environment, who have great founders and who are already benefiting from specialist and targeted help from Scalare advisors. We have many more businesses we are looking at, a number of whom we think have amazing prospects. Opportunity knocks!
At Scalare, we’re on a mission to create a greater impact by building a collaborative network that connects exceptional founders, advisors and investors in a unique and powerful partnership, because real transformation, and growth takes more than money.
Our unique collaboration and partnership model provides clear pathways to global investors, experts and markets. We plug existing skills gaps in our portfolio companies from our best-of-breed advisor network - to bring, expert resources exactly when needed to facilitate growth and deliver exceptional returns to investors and founders alike. Find out more here