The Million Pound Startup competition – a global competition to bring tech companies to London’s Tech City – has launched today.
The competition aims to attract high-growth technology companies to the capital. The winner will receive £1m equity investment to build its company in London.
In addition to the investment, the winning company will also receive support and assistance from a series of partners including KPMG, the Mayor of London, the Tech City Investment Organisation (TCIO), Taylor Wessing, Seedrs, City University London, London & Partners, London First, Schools for Start-ups and Ketchum.
The competition is facilitated by Digital Shoreditch and while it is open to any company around the world, the winning company must relocate to London in order to receive the £1m.
The £1m prize is sourced from angel funding, venture capitalists and equity crowd-funding. Applicants will have to show that they will use the £1m equity investment to build a £100m company based in London.
The investment process will conclude towards the end of the year and as it proceeds, candidates will be gradually reduced and there will be a pitching process, which at the end one organisation will receive £1m.
“We believe that by 2020, the technology sector will look substantially different to today. There will be a new group of world-beating companies, many more of which will have started and grown in the UK. The UK will have cemented its place as one of the key centres of technology, innovation, attracting funding talent and interest from around the world,” said Tim Kay, head of KPMG’s High Growth Technology Group based in Tech City.
While KPMG is not providing any of the monetary prize, the organisation is partnering with the competition to provide mentoring and support throughout the process.
“What we’ve effectively said is that we might do a dry run before pitch days with the final 50. We will give feedback, run sessions and seminars as part of this process, not just for the winner,” said Kay.
To qualify for the competition startups much have been trading for fewer than 10 years and be turning over less than £1m per year.
One of the increasingly evident issues within the startup sector is that there are plenty of opportunities for early stage companies to acquire funding, but minimal opportunities for companies to grow and expand due to the limited second stage growth funding.
A report written by senior executives at Tech City states that there is a lack of funding causing companies to miss out on business opportunities and preventing growth. Additionally, one-fifth of Tech City businesses said that they had to make people redundant because they were unable to secure funding.
Alastair Paterson, chief executive of tech startup Digital Shadows, said: “I think where we’ve got to work and develop is the next stage, so once you’ve had your seed investment, there isn’t a huge amount of funding still in the UK compared with the US. That's why you see companies heading over to the US to get their funding. We’re coming to that crossroads right now and we're just assessing where the best place to take the money from is."
However, the Million Pound Startup competition has broad application requirements in order to include later stage companies to compete for the equity.
“One of the things we’re keen to promote are investment opportunities for second stage companies,” said Kay. “This is why the boundaries are wide.
"If you’re a very early stage startup, this capital will be useful for letting you bring on experienced developers to build a robust product. But also for companies slightly down the development path who need capital for overseas expansion and hiring robust sales staff. That level of investment can help a lot of companies in different ways.
“A lot of schemes and investments are aimed purely at the early stage investment, but this is trying to cast the net slightly wider,” Kay said.