According to Toby Austin, chief executive and co-founder of data company Beauhurst: “It’s important to remain differentiated.” The Corporate Finance Faculty member firm provides detailed information about the UK’s fastest-growing businesses, the investors in them and the people behind them. “You have to provide data that other people don’t possess, have filtering tools that are unique, or a process or knowledge you can demonstrate. Differentiation is key – and that’s sometimes misunderstood in the data space.”
Discovering the market demand for the data that Beauhurst now provides was something of a circuitous journey for Austin and his company’s co-founder and chairman, Stephen Bence.
After leaving the University of Cambridge in 2005 with a first in computer science, Austin joined venture fund Angle for what was meant to be an eight-week internship: “I joined for two months and stayed for two years.”
Bence, who had spent six years in management consultancy at McKinsey, led on new ventures for the fund. Pretty quickly, he had Austin working with universities to identify interesting intellectual property (IP) that could be licensed and around which they could then build companies. “Maybe today you’d brand it more as a service, but it was a classic venture fund,” recalls Austin.
The pair ended up running some businesses in their early days – doing market assessments, defining strategy and recruiting teams. The ultimate aim was to get each company externally funded. It was a tremendous learning curve for Austin. He was effectively paid to research how to start businesses, address challenges they typically face and build a strategy for them: “It was a real eye- opener. I got a free ride, and learned the pitfalls.”
New direction
Austin and Bence left Angle “for a variety of reasons”, says Austin. The pair then teamed up to launch GradFutures, an online network helping graduates into professional roles, and Transentia, a consulting firm that specialised in helping universities with all aspects of IP commercialisation.
GradFutures never really found its feet. “It was 2007 – not the best time to launch a graduate recruitment business,” Austin surmises.
It was out of the Transentia experience that Beauhurst was born, when a market need became apparent. “We kept running into the problem of universities identifying a spin-out opportunity, finding an investment need and a sensible commercial rate for the investment. But the next question was always: ‘Who’s going to fund it?’”
Austin and Bence had their own contacts, but realised they were just the tip of the iceberg. “It was difficult to get on top of all of the funds that existed around the UK, to compare all the eligibility criteria and understand the evolving investors, in certain specialist tech areas. Effectively, our analysts were trawling Google to see what each investor required.”
They had the idea of building a database of investors into UK high-growth companies. This was originally thought to be a three-month project, until they hit two problems – but these turned out to be positives that resulted in the development of Beauhurst. First, there were far more funds than they had imagined. They initially estimated 300, but by the time their searchable database was first launched in 2010, they’d found 1,200. Second, pulling the data together in an easily comparable manner was hard work. An algorithm simply couldn’t do it. “We realised that we were making a really useful tool and we could create our own IP with real value.”
Encouraged by conversations with universities and firms in the broader advisory space, they considered selling datasets direct to clients looking for investment. But they soon realised the idea of a ‘self-service’ platform wouldn’t work. Most clients wouldn’t know what to do with the data. Clients needed guidance crucially on how to approach funders. “That taught us the value of advice to make transactions happen.” Key was making the database as comprehensive as possible. “The value is in high-quality, relatively deep data on these businesses and funds.”
This realisation, combined with feedback from early corporate finance clients, prompted a shift in focus. Instead of providing data on potential investors to companies looking for funding, they moved to a company data-centred platform targeted at advisory firms, with deep data on the companies themselves.
Growth path
Beauhurst tracks more than 50,000 growth companies across the UK, from emerging life sciences start-ups and government-backed fintechs to unicorns, spin-outs and scale-ups.
Among Beauhurst’s clients are advisory firms including Grant Thornton and finnCap. JP Morgan and Coutts are also clients. The company has written research reports into growth investment with the ScaleUp Institute, the UK government’s Department for Business, Energy and Industrial Strategy, Newable Capital, the British Business Bank and the Royal Academy of Engineering. Law firm Marlborough House Partners has built its corporate finance function around the Beauhurst research tool. Other clients include local government and universities.
The main funder for Beauhurst has been Charlie Songhurst, a prolific angel investor in a variety of tech companies, both in the US and the UK. He has been “absolutely instrumental” in getting Beauhurst to where it is today, explains Austin.
An equity drawdown facility at a pre-agreed valuation multiple was set with Songhurst, and capital taken only when they thought it could be deployed efficiently. Through 2012 to 2019, a “seven-figure sum” was drawn down, but since then the business has been self-funding. Revenue is not disclosed, but it’s been growing at 50% per annum for the past five years and is well into seven figures. Beauhurst has been marginally profitable for the past couple of years, with cash generated being reinvested to support its growth plans.
Other investors include Tom Tugendhat MP, chair of the Foreign Affairs Select Committee, and Ayesha Vardag, a specialist divorce lawyer and business angel.
Beauhurst employs 150 staff and has offices in London and Nottingham. It has a flat organisation structure: below Austin, COO Joseph Saxby joined the company six years ago from The Hut Group; Henry Whorwood, head of research and consultancy, which completes bespoke projects for clients using Beauhurst data, is a biannual columnist for Corporate Financier.
In total, there are 15 at management level below Austin – many, but not all, of whom have grown with the business since the beginning. Austin says: “We prefer to nurture our own talent and bring people through rather than hiring externally.” Every permanent employee has share options. “It can be good for attracting talent, but it’s particularly good for retaining it.”
The data still sits at the heart of the company. “The value is in high-quality, proprietary data on these businesses and funds”, so humans remain a vital part of the process of refining the algorithm and “adding the all-important human layer of intelligence around what might have actually happened in a transaction”.
What next?
Thinking of future plans, Austin says there’s no particular desire to exit the business, but if someone came along he’d certainly consider the idea. “We’re building this because we think there’s an opportunity to build a massive data business around private companies, their ecosystem, and their funding and M&A. We think that can be global.”
Austin, Bence and their backers prefer to grow organically rather than acquire. Austin says that their bespoke approach makes acquisitions harder to integrate, although they’ve done some small deals.
At the moment, Beauhurst is investigating more than 50 data-set ideas and 200 platform development ideas. International expansion is on the horizon and so they may need a funding event themselves at some point. “If we can carry on at anything like the growth rate we currently have, what’s the point in selling up? We have very, very supportive long-term investors on board. The management team is generally young and incentivised to grow the business.”