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How to increase the value of your startup and maximise investment

When getting a startup off the ground, generating enough investment can be the difference between success and failure. As technology continues to dominate much of the UK’s business growth, investment in the industry has increased. It’s clear however, that the rules governing value are being re-written by this fast-paced sector.

If you’re up to date on tech news, you won’t have missed word of Slack’s $2.8 billion valuation. It was already ‘hot’ last October, valued at $1.1 billionn, but its most recent funding round took the collaboration platform up to a value of $2.8 billion last month. That is a $1.7 billion jump in value just from October to April.

Giving any business a billion dollar valuation is significant, but we’re seeing more and more of it in the tech sector. What has changed so dramatically since the last dot-com boom-and-bust to make us all put our necks on the line so confidently once again?

For many outside of the technology bubble it’s difficult to understand. Questions like “what have those companies got that mine doesn’t?” often come to mind. Investors may well defend their decisions with seemingly erudite economic reasoning based on unequivocal market analysis of the sector. I have a simpler theory, and it’s just one word: Accountability.

The direction technology has taken – cloudwards – is keeping those of us working in the sector honest. It leaves no room for complacency and nowhere to hide, and certainly renders us unable to pull the wool over anybody’s eyes. The software industry has learned the lessons of 15 years ago and subsequently built a world which keeps us accountable all of the time with truth, damned truth and statistics.

Successful technology companies with high valuations keep users close. They know intimate details about them; everything from location and age, to what devices they own and who they follow on Twitter. And it doesn’t need to be spelled out that the closer you keep people and the more you take time to get to know them, the more opportunities you will have together, and the more you can bend to their will. A wonderfully virtuous circle.

More importantly, you are then inextricably linked to your relevance. If you have a big screen in your office with a trend line showing daily active users, then it had better be pointing upwards or else the whole office is going to feel it. And let’s face it, nobody wants to feel that they are becoming irrelevant. So these startups breed a company culture that doesn’t rely on complacency or mutual self-congratulation, but bows only for the harsh light shone on the glorious reality of its daily accomplishments.

Getting the same level of openness that technology startups often achieve is much more difficult for businesses offering more conventional services. With technology companies, investors can delve deep into their platforms and gain a much better understanding of an organisation. There is a level of forced accountability. If you’re able to open up your business in the same way, not only will you build trust with an investor, but they’ll be able to see the honesty and effectiveness with which you run your company.

Ask yourself this: where would you put your money? In a company that tells you it’s good once a quarter, or a company that shows you it’s good every day? It is no longer simply about building a compelling product; it's about keeping people engaged, in full recognition that they have more choice than ever about where to spend their time and money.

Platforms like Slack tick both of these boxes demonstrably and, in my opinion, they deserve all the attention they get as a result. They certainly pass Google’s Larry Page’s famous toothbrush test – “will people use it twice a day and will it make their life better?”

Does your company make the grade? What could you start doing today to ensure that it does? I can guarantee it will pay dividends.

Adam Greenwood Byrne is Vice President of Strategic Alliances at RealVNC (opens in new tab).