There’s not much time before applications close for the second TechMarketViewGreat British Scaleup event (GBS2), to be held in London on 7-8 November.

The Great British Scaleup programme helps UK tech SMEs scale up by appraising their plans to achieve a step-change in growth in an intensive 90-minute closed-door session with TechMarketView analysts and advisors from ScaleUp Group, the team of successful tech entrepreneurs and experienced executives that have been responsible for accelerating growth and achieving successful exits at many well-known tech companies.

In this session, your company’s scale-up potential will be assessed using the ScaleUp Index, which will identify any areas of your business which might be an inhibitor to achieving your growth plans, and allow you to track your progress.

There is no charge to participate in the Great British Scaleup programme, nor any obligation to follow through on the outcomes. It is an independent insight of your company’s scale-up potential relative to your peer group, also making you feel better prepared to undertake the next stage of your scale-up journey.

There are 8 session slots available at GBS2 and it’s easy to apply. Just fill in the Pre-Qualification Form on the TechMarketView website here by Wednesday 4th October. It should not take long to complete it and we will let you know by 18th October whether your company has been selected.

In addition, every applicant will be entitled to an optional initial infrastructure assessment at no charge and with no obligation by managed cloud and infrastructure services firm Cogeco Peer 1, the Enterprise Cloud & Infrastructure Services Technology Partner for the Great British Scaleup programme.

If you have any queries about the Great British Scaleup programme, please give TechMarketView Managing Partner Anthony Miller a call (020 3002 8463) or drop him a line (amiller@techmarketview.com).

Don’t miss out on a unique opportunity to tap into the market knowledge of TechMarketView analysts and the success of ScaleUp Group advisors to understand what it could take to accelerate your company’s growth.

I will try to spare you the doggie puns to bring you the news that London-headquartered canine care startup DogBuddy has just raised a further €5m in a Series A funding round backed by existing investor Sweet Capital.

Born as myDogBuddy in 2013, they changed branding after merging with Spain’s Bibulu in 2014 (see myDogBuddy invites Spanish Bibulu into its kennel). DogBuddy also operates in Italy, France, Germany, Sweden and Norway. Its services include home dog boarding, doggy daycare and dog walking; owners will be comforted to know that they can ‘(r)eceive free photo, video and GPS tracked 'walkies' updates’ of your dog enjoying themselves in the safety of your sitter's care’.

DogBuddy takes a 15% slice of the booking value for each transaction.

Gets the bone, I’d say. (Sorry).

It is instructive to compare and contrast the business models of UK-headquartered international food delivery startups Just Eat and Deliveroo.

To put it simply, Just Eat is hugely profitable and generates a shedload of cash. Deliveroo isn’t and doesn’t.

By the numbers: Just Eat turned over £376m last year with a net profit of over £71m, and generated operating cash of £97m (see Just Eat dining well). Deliveroo turned over £129m last year with net losses to match, and consumed £111m of operating cash.

Why is this so?

The clue, if you needed it, is in the gross margin. Just Eat makes 91% gross margin; Deliveroo makes just under 1%. The difference is that Deliveroo engages (we shouldn’t say ‘employs’) delivery riders and Just Eat doesn’t. Indeed, according to its website, Deliveroo riders in the UK ‘(m)ake as much as £120 a day’, though one wonders how many of the (reportedly) 3,000+ riders make anywhere near that sum.

Here’s another KPI to digest.

Just Eat spent 71% of revenues on SG&A in 2016 but did not split out global marketing costs, other than to say that they spent £38m on marketing in the UK, their largest market at £237m, i.e. some 16% of UK revenues. Deliveroo spent 111% of revenues on SG&A, which is not broken out.

By the way, Just Eat compensates its ‘real’ employees better; it employed 1,621 staff last year at an average cost of £54.5k per employee. Deliveroo had 1,049 staff at an average cost of £47.9k per employee.

Happy eating.

NoSQL open source database provider MongoDB has officially filed for an IPO with the intention of listing on Nasdaq. The company, who posted a loss of $46m on revenue of $68m for the six months to July 31, has nominally set a target to raise $100m.

Designed to handle the demands of unstructured big data, New York-based MongoDB is one of the darlings of software startups being less expensive than alternatives from the traditional suppliers and reported to be easier to use. While facing stiff competition on all sides - fellow open source providers such as Cassandra and Cloudera, traditional providers like Oracle and IBM with their NoSQL offerings, plus Amazon Web Services, Google and Microsoft Azure on whose cloud platforms MongoDB also runs its database services – the company has built a reputation. As of the end of July it had secured 4300 customers, although it’s not clear how many of those are paying customers (it offers a freemium model). As a listed company one of its biggest challenges will be converting sufficient users into paying customers to satisfy thirsty investors. 

It was inevitable that Imagination Technologies would get bought. And probably inevitable that would be a ‘Johnny Foreigner’. Ever since the mighty Goliath Apple spat out the David that is Imagination Technologies in April - telling them they wouldn’t use their graphics chips anymore - their fate was sealed. Apple will now design and build their own graphics chips.  ‘So long and thanks for all the fish..’.

Now Canyon Bridge Capital Partners has agreed to buy Imagination for c£550m. The offer at 182p per share is a fraction of its 2012 peak. At the same time Imagination is selling its MIPS arm for $65m to Tallwood Venture Capital.

Now I’ve got into great trouble on HotViews before for even mentioning that certain global  tech companies are actually owned by the Chinese State which might cause certain security issues. Indeed that particular company is banned from telecom equipment sales in the US. So the fact that Canyon Bridge Capital Partners is itself backed by the Chinese State must give some concern. However, they have said that Imagination will continue to be based in Cambridge and staff will not be cut. All very similar of SoftBank’s purchase of ARM last year.

Does ownership matter? Can a company owned by the Chinese State REALLY be independent? Does the fact that the Chinese Government now own so much of the tech that powers the internet and smartphones matter?

I await the heavy gang calling (metaphorically) at my door. Like they did last time.

Footnote - I seem to have got abuse for using the term ‘Johnny Foreigner’ in a speech last week. It is NOT a term of abuse! The Collins English Dictionary defines it as “a personification of people from a country other than those which make up the United Kingdom”. What’s wrong with at that? Seems to be the exact description I was trying to convey.

Our HotViews readers cannot have failed to be aware of the furor around TfL banning UBER from operating in London. My ‘email bag’ is pretty much 50:50 against:for the ban. I would have expected that my ‘female’ friends would be 100% against UBER. Indeed some of them said that they felt really unsafe using UBER. Conversely many welcomed the convenience and cost savings of their UBER cabs.

Looks like half a million people have signed a petition against TfL’s ban. Citing that TfL were against ‘innovation’ and were ‘Luddite’.

I think that’s a bit unfair. TfL were NOT complaining about the technology or the ‘disruption’. They were complaining that UBER had rode roughshod over all the regulations which applied to Black Cabs and other taxi operators in London. If UBER could meet those obligations, I am sure their license would continue.

I am totally for the ‘New Economy’. But I am also for a ‘Level Playing Field’ and the upholding of the many regulations, employment laws, tax regulations, H&S rules etc that are the result of many painful experiences over many years.  If we let UBER ‘get away with it’, then the same applies to AIRBNB, Deliveroo etc. 

Last week I gave a speech at the Scaling Up: Selling Out Breakfast, organised by ScaleUp Group at Goldman Sachs, and posted a photo on my Facebook page. Unexpectedly, the majority of comments I received were along the lines ‘So the conference was on diversity?’ and ‘were there any women there?’. They had a point. Out of around 100 attendees I could only identify 6 as women - and two of those were Vin Murria (who was a panelist with me) and TechMarketView’s Tola Sargeant.

The Sunday Times reported today that (Baroness) Martha Lane-Fox had addressed a gala dinner in San Francisco last week for British tech entrepreneurs and said “What the hell’s happened to mean we have such an absence of female voices in the room?”. Even more surprising when you realise how young our tech industry is compared to most others - so we can’t really blame any historic bias.

I have oft reported that TechMarketView ‘practices what it preaches’ re gender equality. Indeed TMV has far more women than men, a female MD and an Exec Board of 4 women and 2 men. They are all at TechMarketVew because of merit.

If you are wondering why this gender discrepancy in tech has happened, I suggest you read the report from the Girls Attitude Survey from the Girl Guides published this week. Click here. The negative effects of gender stereotyping affects most young girls. Although these young girls feel pretty confident about their own digital skills, only 37% would consider a career in tech. One girl commented about how ‘very difficult’ it was to be the only girl in a male dominated environment. Another suggested female-only tech (coding) clubs.

Finally Jacqueline de Rojas, President of techUK sent me this photo  that had been taken in Mothercare. The girls T-shirt says “Make the world a prettier place’. The same T-shirt for boys is emblazoned with ‘Genius’ and various science symbols.

Wouldn’t it be great if a tech breakfast, lunch or dinner in 10 years time actually had an equal number of male:female attendees? We need to start when they are young. Ie stop gender stereotyping our own young girls -  particularly as far as tech is concerned.

Taken in isolation, half-time results from UK-headquartered IT recruitment firm InterQuest would not have warranted much comment, with the ‘usual suspect’ excuses of Brexit uncertainty and public sector demand decline resulting in ‘disappointing’ numbers.

But what was missing from the report was any news on the appointment of a new Nomad (nominated advisor), the lack of which led to InterQuest’s shares being suspended from AIM on 11th September (see InterQuest Nomad wanders). The company has just another couple of weeks to appoint a new Nomad before its shares are automatically delisted.

Neither was there any further news on the MBO bid led by executive chairman, Gary Ashworth, which has left the company technically a subsidiary of bid vehicle Chisbridge, having garnered just over 58% of InterQuest’s shares when the offer closed in early August (see Embattled InterQuest arrives in No-Man’s-Land).

Meanwhile, back to the numbers, which showed revenues for the 6 months to 30th June down 6% to £69.1m, but gross profit up 2% to £11.2m, lifting gross margins 140bps to 16.2%. Costs relating to the ‘defence’ of the MBO bid, along with restructuring costs and further investment in its New York office, dragged operating profit down to £0.53m, but this compares favourably with the £2m operating loss in H1 2016 after the £3.2m write-down associated with the ECOM acquisition (see InterQuest dragged down by ‘digital’ ECOM).

So, for now at least, it’s ‘business as unusual’ at InterQuest, as the clock ticks away the time towards what seems most likely to be its return to private ownership. But whether that would mark the end of InterQuest's problems is a moot point.

AIM-listed construction software specialist, Elecosoft has had a very positive start to the year with revenue up 14% to £10.0m (H1 FY16: £8.8m) and profit before tax up 81% to £1.0m (H1 FY16: 0.6m). At constant currency, revenue improved by 8% to £9.5m and profit before tax by 68% to £0.9m.

UK revenue improved by 18% to £3.3m (H1 FY16: 2.8m), representing 33% of revenue for the half. Growth was not as strong in Scandinavia, Elecosoft’s biggest market (36% of its revenue); revenue improved by 5% to £3.6m (H1 FY16: £3.5m). It achieved growth in all geographic regions during H1.

The rebranding exercise that Elecosoft started last year has continued into 2017. It has now unified all software brands under the Elecosoft brand worldwide.

The business has increased it expenditure on software development to £1.5m (H1 FY16: £1.4m). During H1 it launched a SaaS version of its construction scheduling software Powerproject in the UK, and introduced its stair design software Staircon to Canadian and Australian markets.

ICON, which was acquired in October 2016 (see Elecosoft buys ICON for retail SaaS know-how), contributed £0.4m in revenue in the period. Although relatively small, ICON has as impressive customer base in the retail sector and since acquisition IconSystem has been adopted by businesses in other property management sectors.

An impressive start to the year and it has also “enjoyed an excellent start to the second half”. The business will hope the unification of its product range under the Elecosoft brand will improve its ability to cross-sell amongst existing customers and help extend its reach outside of the construction markets in which it has concentrated to date.

It may have rebranded itself as Albert Technologies (from Adgorithms) in July this year to reflect the focus on its SaaS Albert machine intelligence enabled marketing platform, but the company hasn’t shaken off the problems that prompted the shift, primarily changes in the online advertising market. This was evident in its H1 results (to June 30 2017) which saw EBITDA losses deepen from $2.7m to $6.2m on revenue that plummeted from $8.7m to $4.4m.

Albert, which was launched in 2016 with version 2.0 released in H1 and effectively replaces human campaign managers, is most assuredly the future of the company. However, it has a long way to go because although Albert Technologies has made progress on the sales and partnership fronts and SaaS represents 45% of gross profit, SaaS revenue is only 10% of total revenue, which suggests there are more hard times ahead as the transition progresses.

There is more fundamental change coming to the company, as it prepares to seek shareholder approval to sell the All Aspects division which houses its ‘legacy’ Indirect and Performance assets and performed particularly, but not unexpectedly, poorly. We’ve commented previously that more efficient operations are needed, and that’s still the case even with the Albert advantage. 

We're delighted that so many of you have already booked your place at An Evening with TechMarketView next Thursday and can't wait to see you there! If you have yet to reserve your seat at An Evening with TechMarketView on Thursday 5 October there’s no time to lose. There are only a limited number of places left and these are going quickly - book your place via the website or contact our event coordinator Tina Compton (tina.compton@tx2events.com) directly.

Our fifth annual event is centred around our 2017 research theme, Unlocking the Intelligence. Hear from the TechMarketView analyst team about the trends, issues and suppliers shaping the UK software, IT services and business process services markets, now and into the future. Learn how the financial services and public sectors in particular are battling to ‘Unlock the Intelligence’ and hear from two erstwhile Little British Battlers with contrasting stories: one sold out successfully and one is scaling up and making its own acquisitions. Then take note as our Chairman Richard Holway MBE closes the show with his view of the future for the sector through to 2035 and beyond. 

Run in association with Sage, the evening event commences at 6:30 pm with a welcome drinks reception. This is followed by an hour of analyst presentations in the auditorium, a pre-dinner drinks reception and then a sumptuous three-course meal. During the course of the evening there will be plenty of opportunity for you to tap the brains of the TechMarketView analyst team, as well as meeting your peers in the industry – indeed we’re told the networking is second to none.

An Evening with TechMarketView will once again be held at the magnificent premises of the Royal Institute of British Architects (RIBA) at 66 Portland Place, W1B 1AD. Tickets cost £425 for TechMarketView research subscription clients and ‘Little British Battlers’ (£525 for everyone else). It has been a sell-out for the last four years, so book now and secure your place at what so many executives tell us is the one industry event they simply can’t afford to miss!

AIM-listed cyber security specialist Osirium grew its revenue by 59% yoy to £261k in the first six months of 2017, but a corresponding 135% hike in administrative expenses resulted in in a sizeable net loss of £1.2m, up from a deficit of £352k in H116.

Osirium has spent big on International sales and marketing since its IPO in April 2016 as it looks to make its mark on a competitive market for privileged access management (PAM) solutions populated by the likes of BeyondTrust, CA Technologies, Centrify and CyberArk. It has hired additional sales staff and forged distribution and reselling agreements with local players in Germany, Austria, Switzerland and Poland, the Middle East, Singapore and Australia to get product in front of punters.

The question is whether (or how quickly) the returns can pay back that investment. Revenue is growing but remains modest at this stage of the company’s development. Turnover from Osirium’s SaaS-based privileged access management service grew 29% to £207k, with professional services expanding from £4k to £54k during the period.

Osirium's pot of IPO cash continues to dwindle (now £2m, down from £4.5m in H116 and £3.6m in FY16) but things do look rosier in terms of future revenue. Management report invoiced sales up 393% with H117 bookings totalling £445k (H116 £90k). Those numbers should make for a better second half but on this evidence the path to profitability could be a long one.

Hosting provider, Nasstar, has reported progress in the first six months of FY17 as it executes against its "Nasstar 10-19" consolidation programme. The company saw its topline grow 47% to £11.9m, with organic sales in recurring revenue increasing 5%. Recurring revenue as a percentage of the total is moving in the right direction, up from 88% to 90%.

Nasstar has progressed from its acquisition strategy (which included the acquisition of VESK to take it into the public sector and Modrus, which added scale and further presence in recruitment and financial services) to focus on operational gains. To that end, Nasstar’s “10-19” programme has been addressing some important points – including retirement of brands, improved account management, consolidation of processes, and streamlining teams.

As a result, Adjusted EBITDA margin has increased to 22% (from 20%), with the company aiming to hit 25% by the end of 2019. 
That said, the operating loss increased to £884k from £593k last year due to an increase in customer contract amortisation and certain exceptional items relating to the "Nasstar 10-19" consolidation programme.

However, we see some good green shoots peeping through and certainly the mid-market is receptive to the types of cloud services Nasstar can provide.

Shares were up about 4% at time of writing.

When we first wrote about London-based image licensing startup Picfair back in August 2014 (see £4k startup Picfair snaps up £310k seed funding), we thought it’s best (only?) chance of success vs the likes of Getty Images would be to build function, content and market awareness fast.

Well, three years on and Picfair seems to have picked up pace – and some extra dosh too, with £1.5m in new funding, in a round led by the Claverley Group, owners of Express & Star regional UK newspaper.

Picfair’s USP is that image owners can set their own prices, while Picfair takes just 20% commission on any images licensed through the platform, vastly undercutting the traditional players.

Fair enough!

Nordic Payments Processor Nets is the subject of a US$5.3bn offer from Evergood 5, a company controlled by US PE firm Hellman and Friedman. It’s almost a done deal as shareholders holding 46% have agreed to the offer and the company looks as if it will be delisted from Nasdaq Copenhagen which it joined 2 years ago. Nets is the leading provider of payment services across the Nordic region.

In our August FinTechViews note, “Why all the M&A in Payments”, we highlighted the need for scale and access to customer data in this increasingly turbulent market. We can only presume that the management at Hellman and Friedman have the same views. Perhaps they even read our report.

If you don’t yet subscribe to FinancialServicesViews and therefore can’t access our Fintech reports and our increasing output on the Payments sector, please contact Deb Seth (desth@techmarketview.com) in our Client Services team.

GoCardless has built itself a strong position in a rapidly growing niche of the payments market. The company enables businesses to collect regular payments from their customers by managing the processing of direct debits. As businesses and individuals consume more and more on-line subscription services, or pay for utilities or memberships, GoCardless' "Direct debit-as-a-Service" leverages the direct bebit infrastructure acoss the UK and Europe and offers an easy way for companies to set-up, receive and manage the payment flow. By using the bank network, rather than the card rails so often used by newcomers to the Fintech sector, the underlying network cost is lower and the management of repeat payments easier.

Seven-year old GoCardless is run by co-founder and CEO Hiroki Takeuchi (interviewed recently by TechCrunch) who is looking to broaden the scope of the business geographically, so that businesses can more easily manage payments across multiple territories. The business currently handles over US$4bn of transactions with more than 30,000 organisations in the UK and Europe, with over 100 partners, including Xero, Sage and Zuora. US$22.5m has been raised from the company’s existing investor base.

As the payments market comes to terms with the introduction of PSD2 and Open Banking (see our report here), companies such as GoCardless, with a secure foothold, established customer relationships and a lengthening list of growth opportunities, should be well-placed.

SAP is to boost the profiling capabilities of its Hybris ecommerce solution with the acquisition of Gigya, a specialist in customer identify and access management, who has its HQ in the US and runs R&D out of Israel. Israel has a vibrant security startup community that suppliers such as Microsoft and Symantec (see previous HotViews posts here) frequently tap into to boost their own resources.

Media reports suggest SAP is paying $350m for the 350-employee strong company. Gigya received Series A funding in 2007, and since then has raised $100m+ in further capital.

Acting to boost identify management can only be a good thing, especially in the ecommerce area where the threat landscape is increasing and customer trust is vital for brands, of which Gigya has around 700 on its books. This tuck-in acquisition will increase SAP Hybris’ credentials and send the message that investment in protection is ongoing.

I am absolutely delighted that TechMarketView has been shortlisted for Diversity Employer of the Year at the Women in IT Awards organised by Computing . See Click Here.

I think this is the first time TechMarketView (TMV) has been entered for any award. But diversity is really a crucial part of the DNA of TMV. Over 70% of TMV people are female. Our MD is female. Our Exec Board is 2 male:4 female.

TMV is about being family friendly and trusting our people with flexibility in how they perform their tasks. Because there is such a strong team spirit, it is rare (actually it has never happened) where anybody ‘let’s down’ their colleagues. To be honest, as a result I don’t know a single person who wouldn’t - doesn’t - go the extra mile.  In return, picking up the kids from school, attending an assembly etc is all part of the ‘give & take’. BTW - This appeals just as much to our male employees as our females.

This diversity has been a major contributor towards our success. Bluntly, I think TechMarketView would be a worthy winner on 1^st Nov 17

An interesting article in TechCrunch serves as a salutary lesson for entrepreneurs to be careful what you wish for – though the lesson is actually about realistic business models.

San Francisco-based Doorman was launched in 2015 as a timed parcel delivery service. The idea was that you directed your online purchases to a Doorman shipping address and then scheduled Doorman to deliver the parcel to your premises in hourly slots between 6pm and midnight 7 days a week.

Doorman’s original business model provided for unlimited parcel deliveries for a fixed monthly fee of $29 (there were lower fee services too). In an interview a year on, Doorman founder and CEO Zander Adell rather bemoaned the fact that “We didn’t expect that Doorman would completely change peoples’ shopping behavior,” as it was losing money on some customers. His response was to massively raise subscription fees up to $89 per month, and limit inclusive delivery to 20 parcels. The top option also included cardboard box recycling.

There were other payment plans too, which included an ‘A La Carte’ option where you pay $5 to have a parcel delivered but with no option on timing – which rather begs the question, why would you not get delivery direct from the online retailer? – and a ‘Basic’ service for $19 per month for up to 5 parcels, again with no option on timing.

Needless to say, it all ended in tears, including for investors, who had pumped nearly $4m into the startup over its short life. Doorman is to close its doors next week.

Doorman was not a case of a ‘great idea’ running out of cash before it could succeed. It was a case of a poorly thought-through business model which was unlikely ever to succeed.

There’s just over a week before applications close for the second TechMarketViewGreat British Scaleup event (GBS2), to be held in London on 7-8 November.

The Great British Scaleup programme helps UK tech SMEs develop plans to achieve a step-change in growth in a closed-door, 90-minute workshop-style session with TechMarketView analysts and advisors from ScaleUp Group, the team of successful tech entrepreneurs and experienced executives that have been responsible for accelerating growth and achieving successful exits at many well-known tech companies.

The workshop will measure your company’s scale-up potential using the ScaleUp Index, a proprietary scorecard which identifies areas of your business that might be an inhibitor to achieving your growth objectives. It gives you an independent insight of your company’s scale-up potential relative to your peer group, and will help you feel better prepared to undertake the next stage of your scale-up journey. You can then use the Index to track your progress as you implement your plans.

The Great British Scaleup programme offers a unique opportunity to tap into the market knowledge of TechMarketView analysts and the success of ScaleUp Group advisors to understand what it could take to accelerate your company’s growth. There is no charge to participate, nor any obligation to follow through on the outcomes.

In addition, every applicant will be entitled to an optional initial infrastructure assessment at no charge and with no obligation by managed cloud and infrastructure services firm Cogeco Peer 1, the Enterprise Cloud & Infrastructure Services Technology Partner for the Great British Scaleup programme.

There are 4 workshop slots available on each of Wednesday 7th and Thursday 8th November. To apply, just fill in the Pre-Qualification Form on the TechMarketView website here by Wednesday 4th October. We will let you know by 18th October whether your company has been selected.

If you have any queries about the Great British Scaleup programme, please give TechMarketView Managing Partner Anthony Miller a call (020 3002 8463) or drop him a line (amiller@techmarketview.com).