The breakout moment came in Series E. In September of this year, data transfer company Matillion received a new investment of $150 million, a deal that pushed the company’s valuation to $1.5 billion. As such, it became the latest British company to gain unicorn status.
But does this really matter? You could argue that the $1 billion valuation threshold is nothing more than a random number. A good company is a good company, regardless of whether it is worth $900,000,000 or upwards of a billion dollars. There is no special magic in one character.
But this argument may be sloppy. Over the past few years, the growing number of unicorns emerging in the UK – around 100, according to Tech Nation – has come to be seen as a forerunner to the health of the local digital economy. More companies with a billion dollars is an indication that the ecosystem is maturing. There was a time when startups were struggling to raise the money they needed to scale. Today, there are more investors than ever and those who focus on the later stage rounds are ready to put in large sums to support a business with growth potential.
And when I talk to CEO and co-founder Matt Scullion, he’s clearly proud of growing what he describes as an “affiliate” business in North West England – a business that has tapped into the global enterprise software market, securing sales from companies like Amazon, Cisco, IKEA and Travis Perkins.
However, turning his attention to the tech economy more broadly, he believes the UK’s ecosystem has some way to go before it can match the US in terms of sponsoring fast-growing, high-value companies. A culture change is required.
Matillion was founded in 2011, originally to provide cloud-based business intelligence services to companies that didn’t have the IT firepower to hack data themselves. To deliver its presentation, the company needed a so-called ETL (Extract and Transform Load) layer to combine data from multiple sources. After trying and failing to purchase at a new ETL facility, the company developed its own area. By the middle of the decade, helping companies manage and analyze multiple source data became the main business. ETL is the name of the game.
This is a hot sector. As companies strive to become more data-driven, they face the challenge of integrating information from multiple touch points and systems — some on-premises, some in the cloud. This in itself is a technical challenge exacerbated by the fact that most large companies have relatively little experience. “If you work in an industry like banking or pharmaceuticals, you probably spend most of your time thinking about banking and pharmaceutical products. Very few people within an organization think about data,” says Sculion.
So Matillion’s proposition is that it provides non-experts with a way to leverage data to improve performance.
Most of its clients are at the corporate level and 90% of the revenue comes from abroad. So how did a company based in the northwest of England find a market?
“The industry has changed. In the past, sales were descending. Buyers were CIOs and CFOs. Today, the most important person in the buying process is the user.” Scolion says.
This helped provide Matillion a foot in the foundation door. The system can be trialled in a cost-effective manner by a department or an individual and, if it proves to be beneficial, the use can be spread across larger swaths of the organization in question. As such, working out of a provincial English city (Manchester) is not a disadvantage in the global market. “Actually, it’s an advantage,” Skelion adds. “It’s a practical entrepreneurial city and there is a good supply of talent.”
As Scullion sees it, fast-growing technology companies provide an important avenue for creating a high-wage economy, not only in northern England but throughout Britain as a whole. He cites wages. “We are paid an average of 3.5 times the national average wage,” he says, adding that the work is also stimulating and creative.
This is one example of the technological impact that policymakers would like to see. Likewise, policy makers are also keen to see the UK produce a digital economy company on a par with Google, Facebook or Salesforce. It has not yet happened and Scullion believes the way of thinking must change.
A change in the way of thinking
As a nation – from the white trucker to the stripped banker – I don’t think we (the nation) really get the concept of fast-growing business.” By this, he means companies that are growing fast on the back of future promise. They won’t necessarily make a profit from their growing revenues in the short or medium term They need a lot of capital to continue, but they have the potential to become major players.
“If the business is well run, if the unit economy is successful, and if there is a large market,” he says, “then it makes sense to boost it.” In his opinion, people who go the path of rapid growth are often criticized rather than encouraged.
Sculion would like to see more confidence in the UK. This relates in part to when entrepreneurs choose to sell – often, earlier rather than later – but also in terms of the capital available to support rapid expansion. “It would be great if we could get more capital into the system,” he says.
It must be said that investment in British technology has reached record levels, but in later stages, much of that comes from Asia, the United States and Europe rather than Britain itself. Mattillion’s own expertise is basically an outside investment.
This may be important for unicorns. They put a sign. Business is expanding in technology and it is attracting investment. This should boost the confidence of entrepreneurs and investors and create the change in mindset that Sculion wants to see.