Last week, Brighton-based social analytics platform Brandwatch raised a $33m Series C round led by Silicon Valley’s Partech Ventures, and joined by existing backers Highland Capital Partners Europe, Nauta Capital and the PR’s best friend Gorkana.
The company was founded on the UK’s sunny south coast in Brighton back in 2005, way before ‘Tech City’ was even a blip on David Cameron’s radar.
Today, Brandwatch is not only raising megabucks from Silicon Valley, the US also accounts for more than half of the company’s revenues, and those using its service to understand the real-time, global conversations happening about their brands include Cisco, Whole Foods and Sony Music.
This looks like Brighton’s biggest ever round, and Brandwatch could well be on its way to unicorn status, so Tech City News caught up with CEO Giles Palmer to find out exactly what it’s like to (shock!) raise big money outside London, whether in many ways it might be better, and why those billion-dollar creatures are so incredibly rare…
London vs Brighton
“There are different stages in the growth of a tech business and they all blur together to some degree when you’re in the midst of it, but for simplicity, I’m going to break it down into three,” Palmer says.
Getting started
“First. Getting started. Frankly anywhere is good, but there are a few things that mark out some places as a little better than others,” he explains. “Things like whether there’s a ‘startup vibe’, and whether there have been many successes in the past, which helps to breed confidence that it could also happen to you.
“I think Brighton edges London on this because there is a greater concentration of small startups. Brighton 1, London 0.”
Surviving
“Second is surviving the first two years, also known as ‘achieving product-market fit’ in tech land. I can tell you that from the inside, there is no moment of – ‘oh, right, we just achieved escape velocity’ – but in hindsight, it’s definitely a thing.
“Important things here are: cashflow, which covers whether we can hire people at a reasonable rate and find an affordable office; skills, including someone who can sell, a proper marketer or someone with marketing talent and good or great developers; finally work ethic. This stage is hard and the team needs to be more than nine-to-five.
“This one is a draw,” he admits. “Brighton wins on affordability, skills exist in both, but Brighton can be a bit too laid back.”
Growing
“Growing to be really successful is a balance of costs and availability of the kind of people at decent scale that can help to create the next FTSE 100 company. London is the clear winner here, but I’m not ruling Brighton out just yet.”
And what about finally getting the cash?
“I have a really boring answer to this question which is that if you’re a great business with very strong metrics, a clear plan and a good team at the helm, it’s not easy, but it’s doable,” Palmer says.
“There is capital in the market but the investment thesis is one of risk and growth in venture capital, so we the investees need to be able to credibly show that we can deliver that growth to get the investors’ commitment.
“If you can show real differentiation or some sort of unfair edge which could create sustainable growth or high prices or low costs, then you can at least double the valuation, but there’s a reason that people use the word unicorn other than some bullshit billion-dollar thing – it’s because really differentiated companies are very hard to find.”