How VC funding is supporting business growth in Yorkshire

The Leeds tech sector generates £6.5bn for the UK economy each year, but how can entrepreneurs access the capital needed to break into the market? YFM Equity Partners take a look.

For a business with potential to grow rapidly, seeking venture capital funding can be the most effective route to elevate it from being good to becoming great.

There are challenges however, often due to misconceptions about venture capital and a lack of understanding about how it works. Entrepreneurs may not know how to connect with the right investors or prepare a compelling pitch.

It is important for entrepreneurs to explore all available options and choose the one that aligns with their goals and values. Not enough owners consider venture capital when thinking about how to fund growth and realise their ambitions. In addition, too many businesses that have heard about venture capital and seek funding, fail to get it – industry data says just 1% of companies who seek VC funding end up being successful.

How can firms improve their chances of being in that magic one in a hundred?

In basic terms, venture capital firms like working with ambitious teams and leaders that understand their markets, have a clear growth plan and an ability to deliver it. These businesses will be operating with a scalable opportunity: a large and growing market (e.g., one worth over £100m+), which provides scope to build something of scale and value through a strategic business plan and a pathway to profitability.

In many cases, they will have unique or market-leading products that underpin their firm’s growth momentum and single them out in their sector. 

Business founders can dramatically improve their prospects of catching the eye of a prospective VC investor by following this advice:

  • Founders must be able to demonstrate early traction among a growing number of customers – they need to prove market momentum that showcases their marketing, product and sales expertise
  • Demonstrate an intimate understanding of their key financials and KPIs and articulate their growth plan over the coming year and beyond 
  • Clearly describe the product and the technology used to build it, why it’s different from competitors, and the market opportunity – both now and in a year or two
  • Show how external investment capital would be used and at what speed so it’s clear when the next round of fundraising will be reached  
  • Highlight potential risks to the business (e.g., legal, tech, product liability, new competition) and show investors they understand what these risks are and how best to mitigate them
  • Have a realistic valuation that stands up to scrutiny

Finally, it really helps when talking to investors to have a pitch deck that is professionally designed, coherent and interesting. It’s highly beneficial and reflects on the firm, its leadership team and the culture of the business.

Yorkshire: a thriving community of entrepreneurial creativity

Yorkshire has a thriving community of forward thinking, creative and ambitious entrepreneurs. Their businesses are creating new jobs and bolstering the economy across the region. The Leeds tech sector alone generates £6.5bn for the UK economy and providing jobs for 102,000 people the city region.

Continued momentum in the area relies on investment, development and support for these businesses, and the entrepreneurs that create them. This is critical to protect the future of Yorkshire’s economy – as well as the wider UK economy. 

How can YFM help scale up businesses in Yorkshire?

YFM Equity Partners has a 40-year track-record of supporting the next generation of successful UK business through venture capital funding – it sits at the centre of their business model. They work with businesses and their leaders to capture growth opportunities, get products to market quicker, expand their teams or move faster in terms of strategic developments, including acquisitions.

The firm has provided growth equity and support to over 300 fast-growth businesses and their owners, including many based in Yorkshire. This includes, helping Leeds based Force24 rapidly scale the sales team from 2 to 25 heads

YFM Leeds is one of YFM’s five office locations around the UK. It is highly established in Yorkshire, and is a core territory for the firm – one with a great track record of success. If you’re a business owner looking to grow, YFM would be delighted to help support that ambition. Contact us here:

Ian Waterfield, Head of New Investments, YFM Equity Partners
07771 578 416 / [email protected]

Mike Clarke, Partner– Yorkshire, YFM Equity Partners
07971 319 182/ [email protected]

Join YFM Equity Partners for ‘The Reverse Pitch‘ at Leeds Digital Festival this April, where they’ll combat the long-term imbalance between VCs and tech founders by turning the tables on the pitch process, inviting four investors pitch to a room of fundraising founders.

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