2020 may have been a year of uncertainty, but companies including Cazoo have continued to attract capital
Credit: Tom Stockill
Start-ups, by nature, are used to uncertainty. Questions such as where cash will come from or how to ward off competition are, in a normal year, not far from entrepreneurs’ minds.
But as the Telegraph’s Tech Hot 100 list shows, this year has been a period of huge change in fortunes for some of Britain’s brightest brains.
More than half of those appearing on this year’s list are new entries, meaning that between last year and this, their companies have surged in value.
Telegraph Tech 100 2020: see the full list
A large chunk of this funding came from funding rounds completed, or agreed, before Covid-19 hit in earnest this spring. Fintech leaders, for example, feature heavily on the list, with newcomers this year including Freetrade boss Adam Dodds (No 42) and Yapily founder Stefano Vaccino (No 71). Revolut founder Vlad Yatsenko (No 10) has jumped a huge 19 places.
Yet fintech was an industry which notably struggled at the beginning of the pandemic, with high-profile names such as Monzo taking valuation cuts. Monese, meanwhile, reduced the amount it was looking to raise.
Venture Capital deal activity
“Even if you were a high-performing business, raising at the height of lockdown probably wasn’t the easiest process,” says Tim Levene, a partner at Monese backer Augmentum Fintech. Yet Levene says the gloom was short-lived, with “a lot of subsections in fintech having since performed exceptionally well”.
Another interesting feature of the Tech 100 list is the revelation that many industries, which are now among the hottest to invest in, had already been on the rise pre-pandemic – verification technologies being a good example. Even before Covid struck, the boss of Yoti, Robin Tombs (No 39), and the founder of iProov, Andrew Bud (No 86), had already seen their paper wealth surge due to significant funding rounds in their companies. And of course, since the virus hit, appetite for secure ID-verification systems which do not require face-to-face contact has really taken off.
Biotech is another sector among our list’s Covid winners, with Andrew Hopkins (No 20), founder of AI drug discovery firm Exscientia appearing for the first time, as well as the boss of rival firm Benevolent AI, Ken Mulvany (No 7).
Such roaring success for specific sectors has perhaps been the biggest driver of change on this year’s list, with many founders knocked down or out by the vaulting valuations of others.
Take Alex Chesterman (No 8), the serial entrepreneur behind Cazoo, the used car marketplace. He completed two funding rounds between March and June to turn his firm into “Europe’s best funded start-up”. But he didn’t stop there. The company secured yet another funding round last month, taking the total this year to £365m and, the company claimed, valuing it at more than £2bn. Twelve months ago, it was valued at £180m.
The British tech sectors most likely to spawn $1 trillion companies
Regardless of the pandemic, KPMG says “megadeals are now part and parcel of the ecosystem”. In the three months to the end of June, deals worth more than $100m accounted for over 40pc of the total deal value. “More money is going into later-stage deals,” says KPMG’s Bina Mehta.
That level of financing, in combination with the pandemic’s creation of clear winners and losers, means that – for good and bad – the current wild ride in the tech sector is likely to continue.