Array
(
    [last_viewed_post_id] => 128824
)

Tech Report: Wales - UKTN Skip to content

March 2024

Looking ahead

Growing with your system

David Williams, office senior partner for South West and Wales region at KPMG in the UK, shares practical guidance for scaling startups.

In today’s rapidly changing business landscape, having the right technology strategy is crucial for growth and success. Startups and growing businesses often face challenges as their scale of operations changes rapidly, outgrowing their existing systems and processes. Here are three considerations to help businesses navigate these challenges and leverage technology opportunities for sustainable growth.

1. Technology is a business issue

Successful technology transformations require the support and involvement of the entire organisation. Technology should not be viewed as a separate entity handled by IT professionals alone. It should be a priority for businesses to ensure that the voice of IT is represented at the executive and board levels when making strategic decisions for long-term growth. This partnership between IT and the rest of the business is essential to educate stakeholders on the importance of technology investments and their alignment with the company’s long-term goals.

2. Planning ahead

Startups and fast-growing businesses often have many priorities. Cash can be tight, and they need to remain nimble and entrepreneurial. Against this context it’s not unusual to make tactical choices for their technology investments which suit their business at the time. However, those who take a more holistic look at their technology in the context of the business and its growth path tend to be more successful.

Having a clear plan and strategy for where you’re trying to go, keeping your technology options flexible and regularly reviewing your systems as the business grows will help future-proof your investments and ensure your technology continues to support your business.

3. People

These are systems that employees will use every day, so having the right systems in place will benefit them and make their jobs easier. If a system isn’t fit for purpose, then ultimately it will have an impact on how people can do their jobs which is why having the right technology in place is so important.

To maximise the benefits of technology solutions, it is crucial to invest in both people and capabilities. This involves investing in the development of your employees’ skills and knowledge to ensure they can effectively utilise the technology. Additionally, investing in IT capabilities is essential to deliver technology solutions to the business effectively. Making better use of what you have should always be the first consideration before investing in new technology.

Many businesses fall into the trap of having to continuously add solutions to address emerging process issues, resulting in a disparate landscape of siloed systems. To avoid this, it’s important to take a holistic view of business capabilities, technology, and data – and how all this works together. Understanding current needs and future growth potential is key to selecting and deploying technology solutions that can support growth without throwaway investments.

Setting your technology strategy is like buying your first house. Whilst you might not need three bedrooms and a good catchment area today, it’s worthwhile having the headroom you can grow into one day, without constraining yourself and having to move again in a few years.

While immediate needs may not require certain features, it’s wise to consider future growth and choose solutions that offer the flexibility to scale up without the need for major overhauls in the near future. By adopting this mindset, businesses can leverage technology to drive growth and stay competitive in the ever- evolving digital landscape.

David Williams is KPMG’s office senior partner for the South West and Wales region. He leads more than 700 colleagues at the professional services business across the Bristol, Plymouth and Cardiff offices. David is an experienced leader and has worked across both the private enterprise sector and the infrastructure, government and healthcare markets.

David Williams,
office senior partner for South West and Wales region, KPMG in the UK.

What’s next for Welsh tech

Funding growth

A commonly reported challenge among key tech stakeholders and founders in Wales is that the tech funding landscape hasn’t prioritised growth-stage companies. In research interviews, multiple people told UKTN that while the key Welsh investors, accelerators and angels provide significant support for early-stage startups, many startups struggle to raise funding when they are at a critical growth point.

They believe that this is due to several factors, including the relatively few Wales-based VC firms and funds, and a perceived local investment culture in which investors tend to undervalue early-stage startups or by high proportions of company equity, both of which make it hard for startups to raise the investment they need at a later stage.

But tech leaders in Wales are also optimistic that this is changing with new scaleup-focused funds from Cardiff Capital Region and the British Business Bank, alongside a £20m SMART Flexible Innovation Support programme designed to provide flexible funding opportunities for R&D-focused businesses.

Tom Fox,
emerging giants lead for South
West and Wales region, KPMG in the UK.

"

Many tech startups in Wales face challenges in securing Series A and B funding to scale up their operations. Increased investment in these funding rounds would go a long way in enabling promising startups to grow and become successful scaleups.

Welsh universities are known for being hotbeds of innovative research and technology, and increased support for university spinouts, such as providing access to funding, mentorship from professional advisers, and business development resources would also further support sustainable growth.

"

Access to market

Another distinct challenge particularly for homegrown Welsh tech companies with a B2B business model is that the market opportunities locally can be very limited since the private sector is less developed than elsewhere, and selling to public sector organisations is often time-consuming and bureaucratic.

Several interventions are already in place to address this. Initiatives to attract non-Welsh tech companies and corporates to set up bases in Wales could create a more mature private sector and more business opportunities locally, and there’s increasing support for Welsh companies to ‘go global’ and export their products and services. The Overseas Business Development Initiative Support from the Welsh government offers to fund 50% of the cost of an international trip for businesses looking to expand into new markets.

Daniel Sawko, cofounder and CEO of Welsh fintech Shipshap.vc, applauds this scheme. “Startups need to tap into international markets to generate returns, so the ability to export and hit large markets early can be a real game changer,” he says.

Already there are examples of successful and established Welsh companies committing to using local suppliers, including global semiconductor company KLA, based in Newport. But some tech leaders believe more can be done to incentivise Welsh companies to proactively seek out and use Wales-based tech services, and that practical issues like transport connections between Wales and the rest of the UK need to be addressed to improve access to new markets.

Gino Brancazio,
programmes and engagement manager at Tramshed Tech.

"

Working with some international organisations that have recently moved to South Wales, I’ve been really pleased to hear how supported they feel having landed here. The overwhelming support they’ve received from all aspects of the Welsh tech ecosystem has very much validated their decision to move to Wales and grow here.

"

Emerging technology expertise

Wales is developing world-leading specialist tech clusters, including compound semiconductors, cybersecurity and life sciences.

Advanced cybersecurity and semiconductor developments in particular are becoming important enablers for growth in other sectors. Digitisation across all industries – particularly in creative and media production using generative AI and other tools – is creating much more demand for specialist cybersecurity expertise, explains Francis Cowe, who sits on the Cardiff Capital Region’s Skills Board and works as a director for FE Partnerships and apprenticeships at the University of South Wales. The region’s strength in cybersecurity and significant talent pool is in such demand that Welsh cyber students are increasingly poached by employers before they graduate.

The UK government has identified semiconductors as one of five critical technologies which will create opportunities for growth and capitalise on existing UK strengths. With one of the UK’s main semiconductor clusters, Wales will undoubtedly play a key role in developing the sector further, and South Wales is already seeing trickle-down effects including more interest from international investors and companies.

In fact, the other four critical technologies – AI, engineering biology, future telecomms and quantum technologies – will depend on semiconductor innovation, says Andy Sellars, strategic development director at CSA Catapult in Newport.

With increasing global and national demand for advanced cybersecurity expertise and semiconductor innovation, Wales is in an excellent position to leverage these strengths and develop into a globally recognised centre for innovation.

Sara Doust,
innovation project coordinator at Tramshed Tech.

"

Over the past five years, Wales has experienced a 20% growth in tech enterprises, reflecting the dynamic landscape of innovation and growth Wales has to offer. With robust investment into innovation and supportive government initiatives, the Welsh tech ecosystem is poised for continued acceleration, particularly in key verticals such as cybersecurity, compound semiconductors and AI.

"

Thank you to our sponsors and partners

We’re a development bank that puts Wales’ potential at the heart of our decision-making. Ranked as a top 10 tech investor in the UK by Beauhurst and Experian, we’re purpose-driven to provide sustainable, effective finance that fuels ambition. We work collaboratively with high- growth technology businesses to make sure they have access to the right support, often co-investing alongside private investors, business angels and angel syndicates. As an experienced impact investor, we understand the challenges of running a tech startup or spinout. Since 2017, we’ve invested over £70m in more than 200 innovative Welsh tech businesses.

We have a range of funds that can provide loans and equity investment as well as follow-on funding for starting or scaling, and have helped many customers progress from seed investment right through to exit. We couldn’t do this if we didn’t really understand the economic and social landscape. With our headquartes in Wrexham and offices all across Wales our teams are embedded in local communities, and we pride ourselves on being a national investor with global ambition.

KPMG LLP, a UK limited liability partnership, is a leading professional services firm operating from 20 offices across the UK with approximately 17,000 partners and staff. We employ more than 700 colleagues across our Bristol, Plymouth and Cardiff offices, working across areas like digital technology, M&A, tax and consulting.

Whether it’s steering a business through early-stage funding and investment, sharing guidance on governance responsibilities, making introductions to industry specialists from across our global firm, or helping to tackle the inevitable challenges that come with growth – we help our clients overcome challenges big and small.

We can walk businesses through tried and tested means of getting to the end destination, while exploring alternative routes for businesses that are anything but ordinary.

Insights

Tech Hubs