Back in 2017, Douglas Lawson was a highly rated fund manager at Amati Global Investors, but he decided to change tack. Like any good chartered accountant, he’d done his research carefully. His idea was to set up a company providing advisers and investors with high-quality valuations and deals data on small-cap businesses in the UK. That business is MarktoMarket. 

Originally from Kirriemuir (a small town between Dundee and Aberdeen), Lawson studied geography at the University of Aberdeen. On graduating, he moved south to London, where he trained as a chartered accountant with EY. He decided that corporate finance was where his interest lay, and also that he wanted to work for smaller organisations.  

“The training at EY was great. But I knew I would feel much more comfortable in smaller, more embryonic businesses. I thought I would find advising small companies, and subsequently investing in them, more interesting.” 

In 2004, he returned to the east coast of Scotland, to Edinburgh, joining British Linen Advisers, an independent advisory firm that had, until 2000, been the corporate finance arm of the Bank of Scotland. Lawson joined as a corporate finance associate, but after just a year, he moved to Noble Fund Managers in its private equity business as a senior investment manager.  

Of his five years there he says: “At Noble, I was investing in public and private small-cap UK businesses, which I found really interesting. That experience taught me how to focus on the levers for growth in a business. That’s something that has proved invaluable in running my own business.” 

Then, in 2010, he was presented with the opportunity of leading his own corporate finance transaction – he co-led the management buy-out of Noble Fund Managers from Noble Group together with its head of equities Paul Jourdan.  

Double act 

The pair then set about growing the new business, Amati Global Investors. “Now, not only were we seeking small companies that could grow exponentially, but were also growing our own business at the same time,” he says. “It was very much a team approach we took to managing the funds, split on a sector basis. My key sector was technology, which is obviously a massive sector and especially so in small-cap investing.”  

His interest in software increased, together with his understanding of the business: “I loved the characteristics of software companies as an investor; just the standard stuff – long-term recurring revenues.” 

As a subsector, he got very interested in data companies and he could see the possibilities of building a real specialism in a particular niche: “You can create formidable barriers to entry if you can become an authority in that niche.” 

The holy grail 

In his role as a small-cap investor, he could see the strengths and limitations of available private company data platforms. He identified three issues. The first was taxonomy – how companies are labelled: “If you want to do a really niche search, to map a market, it’s very difficult if you’re just using standard industrial classification codes or generic industry codes.” 

The second was paucity of data at the smaller end of the market: “Through my own job, I knew where to find that kind of information, but pulling that together is very laborious and time- 
consuming. If you’re investing in or advising very small companies, the benchmarks that you’re looking for are really other small companies rather than big companies.” 

Third, and overriding everything, he knew there had to be trust in the data being provided. “The way we built our data, everything is backed up by an audit trail. Users can see the source of any number. 

“If I could crack those three things, we’d have a product that would be really interesting to a large customer base.” 

Amati was Citywire AAA-rated from January 2016 and in 2017 Citywire ranked Lawson himself fifth in its top fund managers under 40 worldwide. But Lawson wanted to set up his own data company and that year he left Amati to found MarktoMarket. 

It was co-founded by Lawson and Martin Carke, who’s now its chief technical officer. Clarke had worked as a senior IT and projects consultant at Lloyds Asset Finance until 2011, and was a consultant at the specialist software development firm Aniseed when Lawson met him.  

There are two big data companies Lawson points to as shining lights – GlobalData and Wood Mackenzie, the Edinburgh-based energy data, research and consultancy business. Two former CEOs of Woodgate Mackenzie came into MarktoMarket as shareholders in 2019. “They had built a business that became the go-to authority for data in the oil and gas market, and really understood how to create real value in other markets.” 

Lawson had sketched out the idea for MarktoMarket and he understood the market. Clarke had been building software solutions for large financial institutions and was keen to do his own thing. “We were introduced and he struck me as somebody who immediately understood what I was trying to achieve,” says Lawson. They spent a year working up the idea, knowing they would both be taking a risk, giving up well-remunerated jobs. “We had to give the tyres a proper kick,” says Lawson. 

Building blocks

Once they decided to get going, they hired a couple of staff on the data and the software engineering side. They built a small, relatively limited dataset, then trialled with customers. They sold a few licences and the feedback was positive enough to be the catalyst for raising more money (around £200,000) to expand the dataset, develop the platform’s functionality and take the product to a wider audience.  

Lawson had used his local network of contacts in Edinburgh to raise the investment, which got the business up and running. Then, in 2019, they received £1.75m from institutional investors – 24Haymarket, Par Equity and Techstart Ventures (Scotland). The investment gave MarktoMarket a post-money valuation of almost £6m. Par Equity and Scottish Enterprise put another £1.75m in at the end of last year. 

“The investors that came in in 2019 understood the problem we were addressing as investors themselves,” says Lawson. “The capital enabled us to build a platform that’s now a one-stop shop for advisers and investors in the small and mid market.” The MarktoMarket platform offers multiple use cases, including providing auditable valuation comps, a buyer list builder for sale mandates, a funder identification tool for start-up investing and advisory and an origination database. It has grown the client base through straight sales and identifying potential for recurring revenue, and has relationship managers working with accountancy firms, corporate finance advisers, private equity firms and law firms. 

Lawson says the company has also generated interest by creating on-valuation trends or transactional activity in certain sectors. “That creates inbound inquiries and the opportunity to develop a relationship. It’s a big advantage that we have the ability to attract attention by saying: ‘Here’s some detailed, high-quality analysis of a market you appear to be interested in.’” 

Virtuous circle

That, of course, can lead to subscriptions and the aforementioned recurring revenue. Part of their team offers bespoke analysis of the data: “You can go above and beyond to help your customers, who are always busy. If you can just say: ‘Look, you’re busy, I know you’ve got access to the platform, but let us help you’, it’s something they really value.”  

Lawson says the downside of being central to the business is that you can find yourself pulled in every direction. But he takes great satisfaction from having created a business and seeing people join it and be successful. “It’s great having created something that’s really empowering for staff, who are encouraged to think: ‘Let’s do this, let’s build it’ – and then we do it.”