Tim Mills of ACF Investors
Last year, tech investment in the UK was booming. In a year of record investment, London added 20 new unicorns to its ranks. Venture capitalists invested $25.5 billion in London-based startups, more than double the amount invested in 2020.
The current economic situation paints a somewhat bleaker picture for the funding landscape. But it’s not all doom and gloom. After all, some of today’s household-names in tech grew out of the economic upheaval of 2008. It’s a tale as old as time that adversity breeds innovation. As we enter a new age in the venture capital industry, how do we continue to drive the unique ecosystem in the UK to new heights?
Back in 2008 when Tim Mills, Managing Director at ACF Investors decided to pivot into the ventures space, it was hard to find any examples of successful VC-backed businesses in the UK. Today, of course, it is a completely different story.
ACF Investors was set up in 2011 as the Angel CoFund. “The hypothesis was that working alongside the best Angel investors in the market to invest in great companies would lead to great outcomes – with reach across the country, something hard to do with a small team,” says Tim.
It appears that ACF’s vision has come to fruition. London now ranks fourth globally for investment raised and leads the pack for VC investment in Europe. “All sorts of business models have become possible that weren’t achievable before,” says Tim.
The maturity of the investment ecosystem has driven founders to aim higher than ever before: “We now have momentum, which means, when an entrepreneur pitches and says, I want to grow a billion-dollar company, you no longer laugh at them because it’s a very real prospect and something you can achieve,” says Tim.
Despite this, deal flow still lacks regional diversity. “Certain regions are very good at certain things,” says Tim. “London is a massive pool of talent, capital and customers, as well as entrepreneurs, but that dynamic just isn’t replicated across every region. For us, the question is where is the right place for that business to grow? We have successes in Manchester and Liverpool with a series of digital media, gaming type investments and these regions are gaining momentum as sector experts in these fields”.
“We’ve invested in 3D printing and metals in Huddersfield. For a business like that, they couldn’t be in a better place – great connectivity into the local universities and you’ve got clients like Roll Royce, and others, who are interested in this.”
The most transformational factor for founders in these areas is seeing others like themselves achieving major success. “That’s how the snowball happens. That’s how the magic happens, in terms of regional economic growth,” says Tim.
So, what do ACF look for when partnering with Angels looking to invest in these types of businesses? “We look for a particular profile. Investors with domain expertise: people who either understand the business model in depth or understand the company’s market and customer base.”
VCs tend to invest with a medium to long-term view, so partnering with the right investors is essential. “If you’re building a business in a sector and you have support from a beacon of success in that sector, it’s incredibly valuable and builds your credibility,” says Tim.
ACF’s approach has proved successful, with investments in over 100 companies including unicorns such as Gousto and Ebury, as well as nine companies with valuations over 100 million plus. Building on its success, ACF recently launched the Delta Fund, a fast-track investment model working alongside more commercially-validated companies.
As for the next decade? “Perhaps even more exciting than the last,” says Tim. Undoubtedly, it’s a challenging moment to be an entrepreneur. The technology market has been hit hard by recent events, but the opportunities to innovate continue to persist. Venture and the wider startup ecosystem have had a stark reality check, but this is by no means necessarily a bad thing.
Problems need solutions and even in a down market, winning ideas will rise to the top and we may be on the cusp of a whole host of new household names emerging from the tech space.
