The author Peter Adediran is a UK qualified and fully licensed current practising solicitor specialising in assisting start-ups from making the shift to corporate clients and institutional investment candidates. His breadth of experience over 18 years includes more than a 100 digital technology start-ups worth over $100 million.
“Without continual growth and progress, such words as improvement, achievement, and success have no meaning.” Benjamin Franklin
What do we do at PAIL?
What we do at PAIL is assist start-ups that already have a product and are revenue generating but are still looking to make that transition to corporate clients or to take investor funding. This transition is not an easy one. If your business has largely been done by employing people-per-hour consultants on a pay as you go basis or writing your contracts yourself, it is difficult to navigate the complexity of licensing technology to a corporation as all of them have rigorous procurement processes. One of the major validation concerns of corporations and investors is the longevity of your business model i.e. are you a here today and gone tomorrow. Apart from ensuring legal compliance we offer insight into how a business can be better prepared from generating revenue to being a high growth business. We are fortunate enough to represent a few such businesses. Are you feeling the itch to make the shift from selling to consumers and SME’s to acquiring corporate clients and institutional investors?
How do you become a high growth business attracting corporate clients?
So, what is a high growth digital tech business? What do buzz words like scalable and industry agnostic mean? Although you might think so, a high growth digital tech business does not just mean having a great product or service, and generating revenue. You could have a great ecommerce business that does great revenue numbers but if the business model is tied to one industry, is only consumer facing, solely understands and targets a small geographic segment of UK customers, then it is not a high growth tech business.
A high or fast growth start-up must be more than product or service or profits. This article discusses what it takes to be a high growth digital tech business, attracting large corporate clients, and institutional investors.
What is a high growth digital tech business?
A high growth start-up must be bringing such an innovative and dynamic product or service to the existing market-place that it is able to continually grow in productivity and size, and have an impact on a wide variety of industries. Wondering what to invest in to either start or transform your existing business as a fast growth digital tech business? Here are some tips for you?
Multiple revenue models
Forget about the traditional 20th century business model of concentrating on perfecting a single product or service, and then marketing to customers to come and buy it. A high growth business means multiple revenue models for generating revenue.
Your business model should integrate multiple revenue models including: subscription model – securing the customer on a long-term contract for recurring revenue; add on models – loading the customer with more goods or services aligned with their initial purchase. Amazon does the add-on model very well; freemium model – give away the product or service for free in return for something equally valuable such as data. LinkedIn is a good example of this model.
There are many other revenue models I have not mentioned and they are constantly evolving. Essentially, if you build a business with multiple features and bespoke functionality, or processes, then you are more likely to be able to increase your revenue models and build a scalable business.
Build a scalable business
A scalable business is one that can keep costs down whilst continually increasing productivity, and expanding into new geographical regions and markets. Amazon is a great example of a scalable business. Amazon started selling only books in 1994. It now sells almost everything under the sun. In 2005, the company launched cloud computing and Amazon Web Services. Amazon is the market leader in providing cloud computing services. Amazon launched Kindle and by 2010 more people bought eBooks from Amazon than physical books. Amazon is a lot more than a book seller or even an ecommerce business. Now Amazon is a shopping, reading, media, computing and social networking major corporation.
You are far more likely to get interest from corporate partners and/or investors if you tell them that your business model can show double digit percentage growth and that it is scalable. Investor and/or corporate interest is crucial to build a scalable business and to have exit strategies. Organic growth can only take you so far. If you ever want to exit on a public sale or need that institutional sharp growth curve, then getting an institutional investor to take stock in you company will lend to the validation of your business, and ultimately its scalability. Look at all possibilities for collaborative partners. Collaborative partnerships are an essential part of any scalable business model. You can do this through affiliates, franchises, licensing, joint ventures – the list is endless. Innovation- innovation – innovation is key to scalability. Your business cannot offer a single feature, product or service. To scale you need several different features, multiple products and services and a passion for new ideas.
But let’s be clear you can have a very successful family run business with healthy profits that is not a high growth business. Not everyone wants scalability, to go public or to impact the corporate world. It is a matter of personal preference. If you are going for a fast growth business to conquer the world, like Amazon or Google or Facebook, then it must be scalable.
Build a platform model
A platform model is a business that has essentially built an eco-system in which other businesses can be integrated and thrive. When Facebook first launched, it was not a platform business. However, since its launch, it has acquired more than 50 businesses which it has integrated into its business model making Facebook one of the best examples of a platform business model that exists today. Some of Facebook’s best known acquisitions are Friend feed, Instagram and WhatsApp.
Google is another example of a business model that was an application which developed into a platform. When Google first launched, it was just a rather good search engine. But gradually through innovative features and bespoke applications developed inhouse and by a vast number of very clever acquisitions, it became a platform. Some examples of the integrated applications that transformed Google include: You Tube, Gmail, GDocs, GDrive and GMaps.
Platform models are great for building a fast growth business. By opening your model to an infinite number of collaborative partners you are guaranteed continual innovation. So, whilst your core business model will have limits, you can keep extending those limits by the enhancements brought by collaborative partners, associates and even customers. Platforms and ecosystems mean that even your customers are out there extending your brand.
Industry agnostic models
An industry agnostic model is a tech business that can have significant impact on several different industries, or put another way, is not specific to any single industry. An agnostic business model is a business model that could bring efficiency to the HR, Legal, Marketing, Operations, etc. department of any company. It is a business model that can be applied to the Financial, Medical, Marketing, Health, Entertainment etc industries simultaneously.
The information age, digital economy and constantly shifting consumer trends have seen a shift away from industry specific technology to technology that can be applied to almost any industry. There has been a shift away from proprietary technology where source code is stringently guarded to open source technology where collaboration is encouraged through APIs – a shift to interoperability and collaboration. Tech agnostic literally means that it does not know. The technology does not know an industry or can be applied to any industry.
The type of technology that are most attractive to corporate companies and investors is technology that is compatible with multiple platforms, multiple protocols and multiple devices. In other words, it can be used to either solve problems in multiple industries, or it can create better processes than currently exist within a corporation. At first the latter function seems pointless, why solve a problem that does not exist yet? If the existing process is fine why invest in a better process? It’s primarily because of fierce competition but there are lots of other equally important existential reasons as well. Any corporation that is not investing heavily in learning about market shifts, new technologies or shifting customer trends will lose market share and will eventually go out of business.
We have added value to the steep growth curve of 100’s of digital technology start-ups. If you wish to contact us for legal and intellectual property advice you may do so by email to [email protected]