In our Summer Special campaign in July 2020 we reached out to hundreds of startups through accelerators, incubators and startup support organizations, offering free assessments and investability ratings.
Key Outcomes
1. In 2019 79% of investment went to London-based businesses, but we attracted a much more diverse audience in our Summer Special campaign. Here is the breakdown of the location of the companies we assessed and rated:
2. Only 10% of funding goes to female-founded businesses, and about 10% to BAME-founded businesses. Again, we attracted a much more diverse audience.
3. Not only did we attract a much more representative audience of startups from all demographics and regions. Our rating outcomes show there is clear value in diversity, with BAME and female-founded businesses outperforming.
4. From a regional perspective, London-based businesses achieved only average ratings, with 6 other regions outperforming the capital. There is clear value in regional investment diversification.
5. The distribution of rating outcomes demonstrates there is a significant group of “ok” businesses which have issues to fix to maximize their investability. We know what those issues are, and can help accelerators to focus their support appropriately.
We draw a few conclusions from this distribution of ratings:
Our “gold” rating category of 800+ is surprisingly small – nearly every company looking to fundraise has improvements to make. We believe that between 25% and 50% of the 700-800 companies have the potential to improve their rating to 800+. At this high rating level the issues identified in assessments tend to be more presentational rather than fundamental, and hence fixable.
Equally, the group of sub-500 rated companies is small. These are companies which we would strongly recommend not to attempt to raise funding for their current business model.
Nearly 50% of companies are in the 600-700 rating range. Intuitively we believe this group is split 50/50 between “ok” businesses which may struggle to improve their rating because the issues are fundamental, and potentially great businesses with fixable issues.
Overall we see the potential to at least double the number of 700+ companies, assuming that 50% of the 600-700 companies are able to fix the issues identified in their assessments. This could dramatically increase the size of the overall funding marketplace, with major positive benefits for the UK innovation economy.
6. We found significant variation of rating outcomes by business sector.
7. Most importantly, there are some significant lessons learned from where companies scored well and less well. This analysis is just a teaser; we have loads more data which can be used to focus accelerator and incubator programmes.
Startup experience in the founder team was the most frequent negative assessment field, followed by the quality of the financial model and the presentation of traction. On the positive side, companies typically scored well on market sizing, problem/solution definition, and definition of market need.
Conclusion
Our Summer Special campaign has generated unique data about startup investability, by sector, region, and founder demographic. This is an important addition to existing statistics which focus purely on completed deals.
Our statistics demonstrate that there is a vast gap between the investability of companies looking for funding across the UK, and actual deals done, and this represents a massive opportunity to build a bigger and more diverse startup and scaleup ecosystem.
We are in a strong position to help accelerators, incubators and all organizations which support startups to improve fundraising outcomes for their cohorts. We diagnose and highlight issues, benchmark, and measure improvements.
🎯 To discuss how our assessment and rating service can be incorporated into your startup support programme, please contact our Chief Commercial Officer, Shahryar Barati: shahryar@capitalpilot.com
🎯 To arrange a further discussion on, or access to more detailed rating and assessment data, please contact our CEO Richard Blakesley: richard@capitalpilot.com.
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