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We often get asked what kind of software businesses we’re looking to back here at BGF. Well, DriveWorks is an excellent example – based in Warrington, the business provides design automation and 3D configuration solutions for manufacturers around the world.
It can take an engineer hours or even days to redesign and customise a product, but DriveWorks fully automates the design and amendments within minutes, eliminating human errors and freeing up time for engineers to do more interesting things. The software also offers sales features, enabling 3D configuration of a product in a browser that a client on the other side of the world can view and customise in real time.
DriveWorks’ software platform has taken more than 15 years to build, and they have high levels of staff retention – people rarely leave because they’re passionate about the problems they’re solving.
Another good example of a high-potential software business is Unique X, which provides automation and film distribution solutions for the cinema industry. Unique X provides mission-critical services, continually optimises its platform, and never loses customers – all things we seek in a new investment opportunity.
Read on to learn more about what growth investors like us are looking for in this space.
1. Scalability
Here at BGF, we generally look for software businesses that operate in the cloud, with a software-as-a-service (SaaS) model – unless there’s a good reason not to do so. If a cloud-hosted platform has been well built, then it should be scalable and capable of growing fast. Ideally, customers can buy the product ‘off the shelf’ and be up and running, maybe with onboarding and training, within weeks – with minimal need for bespoke development.
2. Relentless improvement
Technology is never ‘done’, so the best software businesses are continually evolving and improving. This is reflected in the way that engineering teams work and interact with the rest of the business. Of course, we look out for best practices around development, deployment and product management too, but we also want to see the product improving with every release, as the business learns more about its customers and market.
3. Data-led approach
Every tech business has different divisions, but you don’t want them to become siloes. The divisions have to be integrated throughout the development process, with a data-led approach from the top. That said, we know that building great software is as much an art as a science. You need to use data to inform decisions, but you can’t let it override common sense, instincts and flair.
4. Culture fit
An honest, transparent culture is key. It’s important to be candid about what’s gone wrong, as well as what’s gone right, to be able to learn from failures and be collaborative. In management teams, we look for a balance between conviction in the mission and openness to other points of view. We’re looking for confidence, but not arrogance.
5. Agility
As well as having a great product and a great team, a business has to be willing to pivot if things aren’t going to plan. We look for software businesses that take risks in a calculated manner, and are quick to change course if things don’t work. Being agile also helps a business take advantage of unexpected opportunities – many of these have been thrown up by the COVID-19 pandemic, and the best tech companies were those that were quick to react.
6. Magic dust
In the software industry, competition for talent is ferocious. Software businesses have to be realistic and pay competitively, but they also have to offer something else that attracts staff to their mission – some of our investors like to call it magic dust… It’s important to have a purpose and clarity about the problem your product is solving, because techies are often purist in nature. Yes, some are mercenary about pay, but mostly they just want to build something really cool that solves a problem.
