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PEOPLE – NOT PRODUCTS – ARE THE SECRET TO SCALING UP BUSINESSES, FINDS GOVERNMENT REPORT

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PEOPLE - NOT PRODUCTS - ARE THE SECRET TO SCALING UP BUSINESSES, FINDS GOVERNMENT REPORT

New Innovate UK study shows investors and businesses fail to see eye-to-eye on what drives innovative companies to attract private investment and successfully scale up.

British businesses are missing opportunities to secure investment, grow and scale up because of misunderstandings in what investors are looking for, according to a new report published by Innovate UK.

‘Scaling Up: The Investor Perspective’ compares the views of investors and scale-up business leaders on the key factors for success and includes the views of investors both in the UK and internationally.

The report finds that business leaders consistently underestimate the value investors place on ‘softer aspects’ like chemistry (78 per cent investors versus 53 per cent businesses), poor communications (84 per cent versus 46 per cent) and resilience – which were cited as deal-breakers. Out of the investors surveyed, 87 per cent said a lack of adaptability and resilience was a key deal breaker. Only 58 per cent of businesses thought this was a deal-breaker for investors.

Both investors and leaders of innovative scale-ups believe that a strong management team is the most important ingredient for scale-up success (96 and 82 per cent respectively), with drive and passion cited as the most important qualities.

When it comes to investment decisions, almost all (97 per cent) of investors surveyed agreed that a weak management team was the number one deal breaker. Interestingly, 74 per cent of investors have turned down an investment opportunity based on gut feeling.

Chris Wade, venture partner at Octopus Ventures comments: “I have been developing a 20-year thesis that nothing works out from a company pitch; their products or services always end up taking a different direction. A strong team can build a company, but a weak team – even with a brilliantly compelling idea – wouldn’t be one for us to invest in.”

The aim of the Scaling Up: The Investor Perspective report was to identify how investors, government organisations and advisors can better support innovative UK businesses to scale and export. It comes at a time when innovation and exports have become a central part of the UK’s industrial strategy.

Dr Ruth McKernan CBE, CEO of Innovate UK comments: “Attracting investment is often a key challenge for innovative businesses and the brilliant people at their heart. At Innovate UK we are increasing our focus on connecting innovators with both government grant funding and venture capital investment, to turbo-charge their journeys to success and the UK’s economic growth.”

Dr Jeremy Silver, CEO Digital Catapult, added: “Digital Catapult helpa UK companies of all sizes grow and scale their businesses through digital innovation. We want to help more companies grow faster for longer, rather than rushing to trade sales. We recognise that this requires entrepreneurial and investor confidence. We run projects to help companies achieve those goals; recent successes include Nymbly, Cambridge Bio-Augmentation Systems and Smartify. We recently launched Dimension Studio last week which sees Digital Catapult partnering with Microsoft and Hammerhead bringing world leading volumetric capture technology to the UK. This new report on scale ups will inform and engage the key players in this sector.”

The report highlighted further disconnects when it came to understanding what both UK and international investors look for in innovative businesses:

  • Two thirds of businesses (65 per cent) thought timescale to exit was a deal-breaker for investors while less than a third (28 per cent) of investors said that they had actually turned down an investment opportunity for this reason.
  • 70 per cent of investors felt cultural fit was a deal breaker, versus only 50 per cent of businesses.
  • Businesses (74 per cent) overestimated the importance of fit with the investor’s portfolio, with only 55 per cent of investors saying it was a deal-breaker.

International expansion was considered as important, and encouragingly, 92 per cent of UK innovative scale-ups currently or are planning to export in the next 12 months – but that does come with challenges. Lack of local market knowledge and having the right contacts are seen as two of the biggest barriers for scale-ups looking to grow internationally. Fortunately, the UK is seen as an attractive target for international investors, with 47 per cent saying that UK scale-ups are more attractive than those in other countries.

Innovate UK will use the results of this research to inform and improve its work on follow-on investment and the formulation of innovation loans, which it intends to launch during November 2017.

Business

ByteDance names head of China news unit as global TikTok R&D chief – sources

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ByteDance names head of China news unit as global TikTok R&D chief - sources 1

By Yingzhi Yang and Brenda Goh

BEIJING (Reuters) – Beijing-based ByteDance plans to move the chief of its Chinese news aggregator Jinri Toutiao, Zhu Wenjia, to Singapore to head global research and development for its hit short video app TikTok, two people familiar with the matter said. The role is newly created and would be the first senior R&D position for TikTok. Zhu will be in charge of the app’s product and technologies including its recommendation algorithms, the people said. His position will be parallel to TikTok’s interim head, Vanessa Pappas, and will report directly to ByteDance founder and Chief Executive Zhang Yiming, they said.

ByteDance declined to comment. The sources declined to be named as the information is not public.

TikTok had come under pressure from the Trump administration in the United States to divest the app’s U.S. operations over concerns that user data could be passed on to China, which TikTok has repeatedly denied.

Reuters reported last year that TikTok had moved its key research capabilities outside China and had approached employees from tech giants like Google for a senior engineering role.

U.S. investors, including Oracle Corp and Walmart Inc, have discussed with ByteDance taking a majority stake in TikTok’s American operations.

The White House under Biden has said it is keeping risks TikTok may present to U.S. data under review, but stressed it has taken no new “proactive step” relating to the pending TikTok deal, Reuters reported earlier this month.

“With Trump now out of office, and the new Biden administration focused on urgent matters like the pandemic and the economy, I think TikTok has more leeway to make strategic, rather than reactive, decisions,” said Mark Natkin, managing director of technology consulting firm Marbridge Consulting.

Kevin Chen, a former Didi Chuxing executive who recently joined ByteDance, will replace Zhu as Toutiao’s new CEO, the sources said, adding that the personnel changes have not been internally announced and are still subject to change.

Zhu, now based in Beijing, joined ByteDance in 2015 and became Toutiao’s CEO in 2019. Prior to ByteDance, he worked as an architect at China’s search engine giant Baidu.

In September, Reuters reported that ByteDance planned to invest billions of dollars and recruit hundreds of employees for its new Southeast Asia regional headquarters in Singapore.

(Reporting by Yingzhi Yang in Beijing and Brenda Goh in Shanghai; Editing by Jan Harvey and Stephen Coates)

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SE Asia’s biggest travel app plans regional fintech expansion before 2021 listing

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SE Asia's biggest travel app plans regional fintech expansion before 2021 listing 2

By Fanny Potkin and Anshuman Daga

SINGAPORE (Reuters) – Traveloka, Southeast Asia’s largest online travel startup, plans to launch financial services in Thailand and Vietnam as it eyes a U.S. listing through a blank-cheque company, its president said.

The 9-year-old Indonesian company, which counts Expedia and China’s JD.com among its backers, is seeing a strong rebound in its business after the COVID-19 pandemic pummelled demand. The company’s president, Caesar Indra, told Reuters in an interview that Traveloka’s Vietnam business had surpassed pre-COVID-19 levels, is nearly back to normal levels in Thailand, and is at half of pre-COVID level in Indonesia. “The worst has happened and now we’re well prepared for 2021. Domestic travel is driving recovery,” he said.

“The plan is to invest in fintech in a big way to allow more consumers to travel in the region,” Indra said, adding that the travel business had returned to profitability in late 2020. Traveloka, which says it has 40 million active monthly users, is developing “buy now, pay later” services for Thailand and Vietnam markets.

“We recently formed a joint venture with one of the largest banks in Thailand to collaborate in the fintech space,” Indra said. Traveloka, which has smaller local rivals, is also talking to potential partners in Vietnam, but Indra declined to name the parties. Traveloka’s two-year old equivalent service in Indonesia, launched after the firm realised that customers would wait until their paydays to book travel, has already facilitated more than 6 million loans, Indra said. Last year, Traveloka launched “Paylater” credit cards with some Indonesian lenders. It also offers insurance and wealth management services.

Indra said the business potential was huge in Indonesia, Southeast Asia’s largest economy, where only 6% of the population of 270 million has credit cards. When asked whether Traveloka might buy a bank in Indonesia, like other start-ups, to expand its financial services, Indra said, “all options were on the table.” Traveloka, also backed by Singapore sovereign wealth fund GIC and Indonesian venture firm East Ventures, has grown its local lifestyle services in Indonesia, where it offers restaurant vouchers and a food delivery service, as well as a popular rapid COVID-19 testing.

Indra said the company is Indonesia’s largest restaurant review app. Traveloka, which has been preparing for a listing, is holding discussions with special-purpose acquisition companies, or SPACs, for a U.S. listing.

“U.S. markets have become more appealing because there’s more and more appreciation of Southeast Asia as a flourishing region, and by listing in the U.S, we can also provide an opportunity for U.S investors to become part of Southeast Asia’s growth story,” Indra said. Many SPACs, exchange-listed shell companies that raise money through IPOs and merge with firms by enticing them with shorter listing timelines, have approached Southeast Asian startups.

Bridgetown Holdings, backed by Asian tycoon Richard Li, Provident Acquisition and Cova Acquisition are contenders for Traveloka, with a potential valuation of up to $5 billion for the startup, a source said. The firms did not immediately respond to requests for comment made outside normal U.S. business hours.Indra declined to comment but said an Indonesian listing remained an option.

(Reporting by Fanny Potkin and Anshuman Daga in Singapore. Editing by Gerry Doyle)

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United 777 plane flew fewer than half the flights allowed between checks – sources

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United 777 plane flew fewer than half the flights allowed between checks - sources 3

By David Shepardson

WASHINGTON (Reuters) – A United Airlines plane with a Pratt & Whitney engine that failed on Saturday had flown fewer than half the flights allowed by U.S. regulators between fan blade inspections, two sources with knowledge of the matter said.

The Boeing Co 777 plane had flown nearly 3,000 cycles, equivalent to one take-off and landing, which compares to the checks every 6,500 cycles mandated after a separate United engine incident in 2018, said the sources.

They sought anonymity as they were not authorized to speak publicly. United declined to comment.

Pratt, the maker of the PW4000 engines, advised airlines on Monday to step up checks to every 1,000 cycles, in a bulletin seen by Reuters. It did not immediately respond to a request for comment.

On Tuesday, the U.S. Federal Aviation Administration said it was ordering immediate inspections of 777 planes with PW4000 engines before they could return to flight, going further than Pratt.

Japan and South Korea have also grounded the planes for fan blade checks.

On Monday, the FAA acknowledged that after a Japan Airlines PW4000 engine incident in December it had been considering stepping up blade inspections.

A risk-assessment meeting was held last week to discuss the issue before the United engine failed on Saturday, one of the sources said, confirming an earlier report by CNN. No decision had been imminent ahead of the United incident, the source added.

(Reporting by David Shepardson in Washington; writing by Jamie Freed. Editing by Gerry Doyle)

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