VC Funding: The keys to success in 2022

2021 was a bumper year for VC funding across Europe, breaking nearly every record on the books. A variety of factors were at play, from low interest rates and high inflation to the disruptive impact of the pandemic on society. Collectively, these factors meant that in 2021, we saw more brands reaching Unicorn status than ever, record volumes of $100m+ funding rounds as well as more exits from founders than at any point in recent years.

From a media standpoint, VC funding continued to command interest from not only technology and finance publications but interestingly also within the national, business and broadcast spheres. There was widespread coverage for many high-profile funding rounds as well as growing opportunities for investors to share their insight on the volatile economic climate, growth sectors as well as their thoughts on the industries to keep an eye on.

The questions many are asking is what lessons can we take from the last twelve months and which trends are likely to characterise VC funding throughout 2022?

Funding fatigue and tapping up talent
Following such a stellar year, the consensus amongst VC funding circles is that 2022 will be somewhat of a return to ‘normality’. For many start-ups and scale-ups, this shift will be inconsequential due to not only how recently they’ve raised capital but also due to the volume of funds raised. For those who participated in multi-million dollar rounds, their runways will be clear for at least the next 12 months without the need for additional investment.

However, for the entrepreneurs and businesses looking for funding this may present some challenges, particularly for those at Seed and Series A stage, as investment firms prioritise investing in later-stage rounds which typically offer more mature and stable businesses. For these early-stage companies, it is critical to stand out from the crowd and proactively communicate with potential investors and shareholders across a variety of channels. The messages to communicate could range from the promotion of recent growth milestones to raising awareness of the value their business can provide to VCs and Private Equity houses.

Widely mooted to be one of 2022’s seminal challenges for not only the start-up community but the economy at large, recruitment will play a vital role for start-ups throughout the new year. Attracting the very best in tech talent is always a challenge when competing against the larger salaries offered by multinationals and that is set to increase further with a shortage of applicants affecting industries worldwide.

While as a start-up you may not be able to compete purely on salary, there are a variety of benefits that you are uniquely placed to offer such as autonomy and personal development. Founders and recruitment teams must think creatively about the tactics they are using to communicate these values and, and importantly, which channels will be most effective to engage the candidate market. Social media beyond LinkedIn is becoming increasingly important as part of the recruitment landscape, with platforms such as TikTok giving candidates insights in to what life is really like inside businesses.

Click here to read more about how TikTok and other channels that you may not have considered could support your recruitment objectives.

Trans-Atlantic competition
Stepping over to the other side of the fence, there is also likely to be several challenges for European VC firms following market entries from international investors such as Lightspeed joining a growing crop of US players such as Sequoia Capital in the UK. While there may be fewer funding rounds by total volume, the competition amongst VCs for equity stakes in this year’s prized start-ups will be fierce with UK and European firms likely to be up against American investors with notoriously deep pockets.

These firms therefore must emphasise an approach to investing that is beyond just capital and communicate this externally. Firms should consider a communications strategy in which this added value is the central pillar, communicated by leveraging content and case studies in order to show both extensive knowledge of the local ecosystem but also the real-life impact this approach has delivered for other start-up businesses. Pure capital is no longer enough so the communications battleground is becoming increasingly important.

An evolving landscape
As has been the trend for many years, London retained its top spot in 2021 as the leading location for VC funding in the UK. While London continues to command investor attention the broader landscape is certainly evolving with more investment than ever being directed outside of the capital. ‘The North’ is often described by commentators as one homogenised region but there are specific and individual tech ecosystems growing rapidly in cities such as Manchester and Leeds as well as a whole raft of climate focused start-ups emerging within Teesside the North-East.

Here are some of the start-ups leading the charge in the North-West.

For this next crop of start-up businesses, 2022 presents a significant opportunity. Many Manchester-based businesses have performed well capturing local attention through regional media coverage and local awards ceremonies. As these firms mature and scale, the challenge will be how to take that next step and command attention on a national level, reaching investors, talent and potential partners from across the country to support their growth as they enter scale-up mode.

For investors, the increased attention on ‘levelling up’ outside of London also presents a gold-plated opportunity. While there is growing governmental and public sector investment into job creation and growth, VC funding is enabling a whole generation of start-up businesses and delivering significant real-life impact. As well as promoting the investments being made into these businesses, VC and PE firms should be considering how they create and optimise on-site content and the strategies they can leverage to maximise this.

Content such as white papers presents an opportunity to leverage industry leadership and insight to position your business as experts and a leading voice on the growth of these ecosystems. Showcasing this knowledge through longer form reports will build trust and help not only attract your region’s leading entrepreneurs, but it can also be leveraged to attract capital from potential investors. Reports like these have the potential to be utilised across a range of channels such as the press as well as social media. Leveraging both your company channel and the personal channels of your C-Suite can amplify this impact further and increase your reach.

If you’d be interested in discussing how we could support your business throughout the new year why not get in touch today.

Get in touch with the team