Its name may not be the easiest to pronounce, but Beringea certainly boasts some promising tech companies in its investment portfolio.
There’s Network Locum, an online community for GP locums; fashion tech startup Thread, which closed a £4m round in June; Blis, an Adtech firm whose £25m round made headlines earlier this year; and more recently, Honeycomb’s £3m raise led by the firm’s UK division.
The investment firm, which is also active in the US tech scene, focuses on development capital (aka Series A) – dishing out anything in between £1m and £5m to companies that show growth potential.
That’s not to say the investment team isn’t willing to meet early-stage companies, though.
“We are definitely open to meeting companies early on as they may become ventures we want to invest in the future and getting involved with them early allows us to follow them as they develop,” Robert Dagger, investment associate at Beringea, who worked on Thread’s and Poq’s recent deals told Tech City News.
Ideas, products, people
Newport-based FinTech startup lands £1.25m
But investors don’t only invest in ideas or products, they primarily invest in people.
“We are interested in the experienced entrepreneur, someone who has worked in a particular industry or worked in a functional role and knows the sector inside out,” he added.
Before joining Beringea about a year ago, Dagger worked at Deloitte’s strategy practise advising tech and media companies. In fact, it was this exposure to emerging companies that got him interested in startups in the first place.
His leap from the large multinational professional services firm to the UK’s venture capital scene did not come without its challenges.
Lifebit gets $3m for its AI-powered genomic analysis system
“At first I had this perception that everyone was going to be Mark Zuckerberg: straight out of university, wearing a hoodie and wanting to completely change and disrupt the world.
“You certainly come across people like that but we’re far more interested in those entrepreneurs that have experience and know the industry they’re going into inside out,” he said.
Beringea UK, he said, seeks to invest in businesses that already have a £1m run-rate, meaning that they’ve already proven they can sell their product.
The right team
Investing in an entrepreneur and their idea is obviously an important part of the game, but Dagger, like many venture capital investors before him, believes a company’s true potential lies in the strength of its core management team.
Tradeteq lands $6.3m to develop trade finance marketplace
“We always consider the credentials of the management team and there are certain things that we look for during our assessment,” said Dagger.
The firm, he explained, is looking for people who have previously held senior roles within their industry. Another element investors on the team look out for is the variety of skill sets.
“Having a salesperson who understands sales or a head of finance who can help the business plan and take it to profitability really makes a difference,” he noted.
Whether a startup is founded by one, two or more individuals is less of a concern.
“We’ve invested in businesses that are co-founded by two or three people, which is a nice model because then you’ve at least got two people who bring complementary skills to the business.
“Equally, we’ve invested in businesses where you’ve got a solo founder with a strong management team,” said Dagger.
Similarly to other investment firms, Beringea UK is keen to sit on the board of its portfolio companies. This, Dagger believes, is of mutual benefit to startups and VCs.
“We almost always take a seat on each board, which itself comes with a lot of responsibilities and ways in which you can add value to board meetings or at strategic level; helping businesses plan for the future, advising them where to invest or when to expand overseas,” said Dagger.
According to him, the other way Beringea UK can add value to its portfolio companies is by widening the network of people that entrepreneurs have access to – something which can prove useful when it comes to hiring.
Dagger, who sees five to 10 business plans a week, opened up about the kind things that pique his interest in a company.
“Every VC will have their own take on this,” he said, adding: “One of the things that we look out for are what we call ‘capital efficient businesses’.”
By this Dagger refers to businesses that have a route to profitability and do not necessarily need to keep raising funds in order to survive and thrive. This, of course, is dependent on the market they are operating in.
Firms such as Deliveroo, which has raised a whopping $474.59m in five rounds from 11 different investors, are unique in that they operate in ‘winner takes it all markets’, he explained.
Startups operating within the food delivery or social network space face an increasing amount of competition from other firms that are raising equally as much cash. In these kind of deals, Dagger noted, investors need to make large commitments in order to win big. But this, he added, is a dangerous race.
Although particularly interested in the media sector, as that’s where most of his experience lies, Dagger is enthusiastic about the progress being made with virtual and augmented reality.
“Demos have moved on leaps and bounds in the last two years to the point where you are now much more comfortable in the virtual environment,” said the investor, who seemed particularly impressed with a demo that had allowed him to feel like he was standing on the beach looking award winning artist Adele straight in the eye.
“Not that I am a big Adele fan, but it’s still pretty cool,” he joked.
A-listers aside, it’s the nation’s talented tech entrepreneurs Dagger is interested in meeting and potentially interested in investing in.