From zero to 60 countries in six years: What early-stage businesses can learn from the BISON Group
5 August 2021
As brothers, Greg and Mark Fahey from Dunedin technology company the BISON Group will tell you, there’s no end of challenges in scaling an early-stage business, especially a hard-tech manufacturing business a very long way from its markets.
Since launching in 2015, the co-founders, who developed both a smart scale system and portable container lifting technology for shipping, have grown their business rapidly, and now have customers in 60 countries globally.
But while the BISON Group’s growth has been exceptional, having evolved from start-up to growth business in six short years, they didn’t always develop ‘in a straight line’. As an investor, director and business adviser to the group, here’s some areas I believe the BISON Group have done well that your early-stage business might be able to learn from.
When a business is first established, most founders need to cover all the necessary roles, irrespective of their central skillset. But as the business evolves and grows, additional people will need to be brought into the business, which will require a different leadership approach and structure.
As a founder, it’s important to understand both your strengths and limitations and how you can best add value to your business to help it achieve growth. Many founders believe they can cover all the C-suite roles forever. But leading a business that is evolving and becoming more complex requires different skill sets and abilities and, without them, you can end up being more of a handbrake, than an accelerator, to your business.
Embrace change as a positive force to help your business grow. Listen to advice from your networks but own the decisions. This is a strength of Greg and Mark who have certainly evolved as leaders within the BISON business in their areas of expertise and supplemented their own skills through smart recruitment.
Inevitably, investors in early-stage businesses expect a larger return for the additional risks taken as compared to a more established company, but this does not mean you need to give away all your equity. Getting the right balance between risk and return for investors is important to set appropriate expectations.
Likewise, if you know your business will need more funding to get to a critical value point, set this out from the start so investors are aware of the total commitment. This both helps prevent their investment from becoming unnecessarily diluted by going back to the market repeatedly and allows for follow-on investment.
You’ll also need to decide what form the funding should take – debt or equity funding. Each comes with different consequences but what’s important is to understand the terms the funds come with, especially the longer-term fishhooks or restrictions on flexibility. Smart investors will understand the need to protect founders and may use Employee Share Option Plans or sweat equity to manage value/contribution gaps.
If you decide equity funding is best for your business, focus on the ‘smart money’ first. These are investors who understand your business and can add value through knowledge or connections, as opposed to those who only contribute cash. For example, BISON was fortunate to attract a cornerstone shareholder, who adds value well beyond equity.
Crowdfunding can be an effective strategy for early stage businesses that are established with investors and looking to raise additional funding within a targeted investor segment (e.g. future consumers). However, crowdfunding has the downside of complicating the Cap Table, so the benefits for your business need to be clear.
While crowdfunding can be a simple way to reach investors, they are usually small investors. This means you can end up with a large number of small investors, which can create difficulties when you need all your investors to agree to a major transaction.
Early stage businesses may find that while less investors at a higher value results in losing a larger proportion of the business, it may be a better answer long-term. So, make sure you’re very clear on the need and your plans for the future when determining if this type of funding is suitable for your business.
In BISON’s case, we used an equity crowd-funding platform (wholesale investors only) to close out a wider funding round.
As a ‘growth’ business, BISON have created a product category where one didn’t exist previously and, as a result, they’ve had to create and educate the market from scratch. But with the right funding, network and business advice, BISON have been able to achieve in six years what most early stage businesses can only dream of.
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