When asked to narrate their journeys from startup to scaleup, entrepreneurs tend to fall into two camps. There are those for whom the travails of growth are a badge of honour: no 20-hour day, unconquerable challenge or unfulfilled investment pledge has been forgotten. Others display an insouciance, as though turning a light-bulb moment into a global enterprise required little more than a lucky encounter here, a touch of elbow grease there.
Duco founder Christian Nentwich bridges the divide. While he takes great pains to commend the “trustworthy sounding boards” who have made his success possible, he speaks matter-of-factly about the business that was last year listed among the 100 fastest-growing in the UK.
His fintech firm provides self-service data engineering in the cloud. Founded in 2013, it gives banks, brokers, asset managers and exchanges the ability to normalise, validate and reconcile any type of data on its cloud platform. It has grown to over 100 staff worldwide and has raised nearly £24m to date.
This is not to say that Austrian-born Nentwich’s experiences — or their retelling — are prosaic. He attributes success to “brutal honesty”, and our meeting ends with a parting thought touching on the profound: “data might seem abstract, but vast numbers of people and technology are now employed to enable us to keep the things we’ve all grown accustomed to using”.
In short: the world spins on data, and we cannot take it for granted. A mind-boggling 2.5 quintillion bytes of data are created each day, a figure that is accelerating upwards with each moment that passes. Fintech is becoming ever more important and, for those like Duco who came into the sector on the crest of the wave, the opportunity is vast.
There are now over 1,600 fintech companies in the UK; this figure will more than double by 2030. It has been forecast that over 100,000 people will be employed in fintech by 2030, but with 42 per cent of the sector’s workers coming from overseas, it faces challenges maintaining the rate of growth post-Brexit.
After all, international talent is the driving force behind the UK’s burgeoning startup scene: research from The Entrepreneurs Network has revealed that 49 per cent of the UK’s fastest-growing companies have at least one foreign-born co-founder. Among them: Nentwich himself.
The serial entrepreneur landed on UK soil aged 19 with nearly a decade of programming under his belt and a computer science degree in his sights. He hopped from undergrad to postgrad, where he studied software engineering. He was, it appeared, destined for life as a lecturer.
But his studies coincided with efforts by University College London at the time — mirrored across the UK’s higher education institutions — to commercialise the IP being developed in its labs.
“My professors were adventurous and my university encouraging,” Nentwich says. The result was software company Systemwire, which got off the ground with a Smart Feasibility Grant from the Department of Trade and Industry. A sale to Message Automation three years later ended Nentwich’s involvement.
The experience was invaluable. “Financial services produce huge amounts of data. It’s difficult to control and costly to get wrong. I learnt about the issues in the industry, sat out the crisis, identified a particular problem that could be solved, and Duco was born.”
Partnerships were crucial in the early days. Their first investor, Steve Gibson, subscribed to Nentwich’s goal — at the time a novel concept — that the future lay in the cloud. “It was so important. He invested in us, yes. But to take a business like Duco to market you have to be uncompromising in your views – and that can mean turning down revenue.” Gibson’s long-term approach enabled Nentwich to stick to his guns.
The firm recently completed a $28m Series B round with Insight Partners, and is now looking to entrench its footprint overseas. “We’re invested heavily into expanding in Asia, and have product launches this year which take us away from data integrity into solving more complex data problems for clients.”
Vital visa reforms
Though the future looks bright for Duco, Nentwich worries that many SMEs will struggle in the shadow of Brexit. Access to talent is a challenge — especially for fast-growth firms. “Anyone who manages to get a company off the ground to 30 people should be applauded. But many founders then sell up rather than build a real scaleup. So how do you hire a management team with experience taking a company from 30 to 100 employees, or from revenues of £5m to £100m, when so few have done it?”
That is why visa reform is desperately needed. The new government is making the right noises, and the Migration Advisory Committee’s recent report outlined proposals that would move us in the right direction, but there is an overwhelming economic case for keeping the UK open to overseas talent. “It’s not possible to grow a tech company in the UK by exclusively hiring in-country. The government needs to decide which industries it wants here, and make it straightforward to hire developers without long processes hanging over startups’ heads.”
Clarity around international students, Nentwich adds, is vital to stop talent returning home. As former minister for universities and science Jo Johnson recently wrote: “It is senseless to deny graduate entrepreneurs the chance to set up their business and invest their talents in the country where they have studied.”
Nor does Nentwich buy into the argument that the negative consequences of Brexit on business can be offset by a newfound freedom to trade with non-EU nations. “We sell software. We already sell to the world. The only thing now is that it’s becoming harder to do business in Europe.”
Duco is seeing increased issues dealing with new clients on the continent; the extra costs — of legal work, compliance, setting up an operations centre in Poland — is in the “millions of pounds”. Duco can absorb the cost; smaller businesses will find it tougher.
Nonetheless, Nentwich accepts that Brexit is done. What he wants now is a “swift implementation, because uncertainty is far worse than closing a deal”. Further, he emphatically believes that the UK — the fintech capital of Europe — is a great place to start and grow a business. The Enterprise Management Incentive, which allows startups to grant share options to key employees on a tax-advantaged basis and thus compete with larger rivals for top talent, might be just the “best scheme of its kind in the world”. R&D tax credits are “compelling”.
What the UK offers has been enough for Duco — and Nentwich — to put down roots here. Let’s hope others will feel the same.
Main image credit: Getty