With business continually evolving, so do company types. To move with the times, SFC Capital has taken a new view on business categorisation.
The world changes all the time, and so do businesses. Some time ago, when talking about companies to fund, we would typically refer to the sector in which they operated – e.g. Retail or Property –, their business model – B2B or B2C –, or the areas where their service or product was applicable – e.g. marketing or finance. Today, it is not so easy. Companies come up with solutions that have applications across various fields and thus, they cannot be locked in within just one sector.
SFC Capital has taken a new approach on this matter and created eight categories of businesses that come from similar fields – sharing needs, challenges, and potential exit routes.
1. Green
Innovations that have a positive environmental and societal impact across a broad range of industries – including Clean Tech, Renewable Energies or Sustainable Transportation. From alternative energies to air quality monitoring or new forms of mobility, these companies contribute to preserving and enhancing the quality of wildlife, vegetation, biological sciences, ecology, wilderness, sea life, wetlands, habitat.
Green companies will often require in-house engineers and/or scientists to develop their solutions.
Examples from SFC’s Portfolio: Swytch Bike, Vertical Future, Vortex IoT.
2. Health
Software, hardware, and other products improving human performance and wellbeing.
Their main challenges lie in proving that their solution works – clinical trials are often needed – and receiving an official approval indicating that the solution can be used in real life. This can cost a lot of money, so the risks at early stages for this category are much higher than in other types of businesses. Nonetheless, Health companies might never need to commercialise if their IPs and patents are strong and attractive to potential buyers.
These companies that innovate in Pharmaceutics, Healthcare, and Medicine absolutely require a doctor of medicine and/or scientist on board.
Examples from SFC’s portfolio: Kiteline Health, Novai, Surgery Hero.
3. Fintech
New tech that seeks to modify, enhance and/or automate the delivery and use of financial services such as mobile banking, peer-to-peer payment services, automated portfolio managers, or trading platforms. Fintechs aim to disrupt traditional finance, and are often driven by Artificial Intelligence, Machine Learning or Blockchain.
Their typical challenges at the start lie in code and algorithm writing, early adoption, and creation of the initial, critical user base.
Startups from this category absolutely need an in-house CTO and a team of software engineers – and sometimes data scientists.
Examples from SFC’s portfolio: Algbra, Penny, Ryft.
4. Consumer Products
Goods for businesses and consumers that present better quality vs. price ratios, better performance and/or functionality than existing alternatives, or use new technologies like Wi-Fi or 4G/5G connectivity. This wide group ranges from IoT to Fashion, and Food and Drink companies.
Product businesses tend to struggle with manufacturing and early adoption.
Entrepreneurs who want to raise funds should go to investors having already achieved some initial commercial traction (sales) and having put together a team that can handle both production and sales.
The necessary elements can vary much more than in other categories, but generally it is important to have a product/market expert on board as well as a marketing executive.
Examples from SFC’s Portfolio: Fussy, Nimble Babies, Olly’s Olives.
5. B2B Software
Companies that offer software to other companies as services in order to solve their pain points and help them operate more efficiently and effectively. B2B Software will be targeting, challenging, and changing one or more sectors – such as Education (EdTech), Property (PropTech), Insurance (InsurTech), or Agriculture (AgriTech) – by using data and/or automations.
Their typical challenges at the start lie in code and algorithm writing, early adoption, and creation of the initial critical user base.
Startups from this category absolutely need an in-house CTO and a team of software engineers – and sometimes data scientists.
Examples from SFC’s Portfolio: Cognism, Condense, Emperia.
6. B2C Tech
Direct-to-consumer technologies that innovate processes and/or provide better ways to acquire goods and services by facilitating transactions and interactions. They can use either new or well-known technologies to decrease time or costs to provide a service. Many businesses in this category have the potential to replace more traditional ways of doing business, particularly in sectors such as Retail or Property.
Their challenges will not only be onboarding users and creating a balanced ratio of demand and supply, but also branding themselves in a manner that will build enough trust with potential customers and keep ahead of copycats.
For this kind of business, it is extremely important to have a market expert and marketing person on board.
Examples from SFC’s Portfolio: GrandNanny, Renude, The Bunch.
7. Hardware & Robotics
Software, hardware, and other products that provide better results in existing sectors by applying new research and/or new materials and components. This category includes businesses in Space, and Automotive.
Typically, their main challenge is to build a working prototype and sort out manufacturing.
It is important that the core team has patents in place and in-house engineers.
Examples from SFC’s portfolio: AgsenZe, Blue Skies Space, Mayku.
8. Other
Offline and traditional services that can be provided with better efficiency due to automations, process improvements, or expert knowledge.
Companies in this group will require an increase of human and non-human resources in order to scale, which is usually the biggest obstacle they will need to overcome.
The key elements are: having an initial commercial traction (sales), a loyal basic consumer base, and a team member with extensive market experience and connections. These companies’ value often lies in personal relationships, consumer loyalty, and brand strength – which is what potential buyers will want to acquire.
Examples from SFC’s Portfolio: Further.Space, Oya, Pictures in Motion.
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