In the UK alone, you could count on one hand the number of seed funds investing any notable amounts of capital, with even fewer follow on funding options through to Series A. Companies that sit within this stage are in the middle of what is referred to colloquially as the “Valley of Death” or more formally as the Funding Gap. Within this stage, there are an abundance of excellent start-ups with commercial traction, who can be left with little or no option in terms of future funding. The current economic environment has only exacerbated this further, with capital options drying up. Hence the term “Valley of Death”, as this is where the majority of start-ups fail.
Now of course, funding may not be the only issue that these companies face. There are many other areas of the business that would understandably be scrutinised, often by investors, and not be considered investment worthy. These factors, such as an unproven team, often tie into funding not being forthcoming. However, our view remains that as an investor, there are significant opportunities available to bridge the funding gap and multiple opportunities that present themselves to both investors within our network and companies within our portfolio.
So How do Fuel Bridge the Funding Gap?Having the initial capital to deploy into companies who sit within this space means by definition that we are a key contributor to bridging the gap, however it would be short sighted and in some ways irresponsible to simply let this define us. Providing the initial capital can be seen as the easy part of the solution, however this alone doesn’t guarantee that companies will successfully navigate across the chasm.
In fact, what we have seen from across the industry and indeed within some of our own portfolio of companies is that receiving seed funding is almost never enough capital for companies to successfully reach the goals that they set out to achieve over the first 12-24 months. Thus, we’ve worked specifically on increasing our follow on capabilities and investor network to provide additional fuel to our companies such that they are able to extend their runway and then raise a larger Series A round, vitally on their terms. As mentioned in a previous post, we have invested over £10m via follow on funding into existing portfolio companies and more recently helped another of our portfolio companies, OnBuy, to raise over £3m entirely through angel investors introduced by Fuel.
The above is focussed specifically on how Fuel as an investor help our companies raise additional funds through various investment routes.
Should you wish to find out more about our funds or unique co-investment opportunities, we welcome you to connect with us (firstname.lastname@example.org) and be a part of our journey going forwards.