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What are the Beauhurst Tracking Triggers?
What are the Beauhurst Tracking Triggers?
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Written by Elliot Britton
Updated over a week ago

Contents

Definition

We create tracked profiles of companies that meet one of our Beauhurst tracking triggers – our tracking triggers signal high-growth or ambition. We then track these companies as a continuous process, meaning the data are reviewed and updated frequently.

There is a panel on the summary tab of each tracked profile called Beauhurst Tracking Triggers, which contains a badge corresponding to each tracking trigger a company has met. These badges do not appear on the profiles of companies which are not currently being tracked.

The tracking triggers

We use the Beauhurst tracking triggers to identify companies that are high-growth or ambitious. We will create a tracked company profile for any company that has met at least one of the following Beauhurst tracking triggers since 2011:

The equity investment trigger

We deem a company to have met this trigger when:

  • it is disclosed publicly or to us directly that it has secured equity investment

  • or when we can see evidence of equity investment in the company's Companies House filings (c. 70% of UK equity fundraisings are undisclosed and are unearthed by our proprietary technology - more details here).

When we talk about equity investment, we are referring to the issuance and sale of new shares by a company to fund its growth. To us, the mere sale of existing shares does not constitute equity investment. When existing shares are bought, that money goes to whichever shareholders have sold shares – not to the company.

We have created profiles for all companies that have secured equity investment on or after 1st January 2011.

The venture debt trigger

Venture debt comprises mezzanine debt, convertible debt and debt provided by angel networks or venture capital firms. What makes certain debt 'venture debt' is essentially the presence of one or more of these elements:

  • There are mechanisms for the lender to share more of the upside than simply charging interest

  • There are mechanisms for the lender to share more of the downside than simply accepting the risk the borrower may default on the loan

  • The borrower company would typically not be eligible for a loan on the basis of being too young or not being profitable

So-called 'vanilla' loans from high-street lenders and most P2P lenders would not count as venture debt.

We have created profiles for all companies that have secured venture debt on or after 1st January 2011.

The management buyout or buy-in trigger

We define an MBO/MBI as a transaction in which a stake in the company is sold and either:

  • New management take a 1%+ stake

  • Existing management increase their stake by 1% in absolute terms, not relative to the size of their previous stake.

The transaction may or may not include other parties, such as private equity firms.

To give an example: we would still class a transaction where management took 5% and a private equity firm 95% as an MBO/MBI. The key element for us is the size of the management’s stake, rather than the size of the stake of any other eventual participants.

Sometimes acquisitions are not publicly described as MBOs/MBIs but we may decide that they are, as they meet our conditions; conversely, sometimes acquisitions are publicly described as MBOs/MBIs but they fail our test (a common reason for the latter is that management have been found not to have taken a stake, something that sometimes can only be verified months later, when updated shareholder registers are filed).

We cover secondary MBOs/MBIs provided the criteria are still fulfilled.

We have created profiles for all companies that have undergone an MBO/MBI on or after 1st January 2011.

The accelerator trigger

By 'selected accelerator programmes', we mean programmes that validate the ambition and growth prospects of participating companies. An eligible accelerator programme must have all of the following characteristics:

  • Start and finish date

  • Involves structured learning (has at least one of: a syllabus, milestones, events with required attendance, or a mentoring scheme)

  • Competitive application process

  • No or low attendance fees (low in relation to its length and perks)

  • They have at least one UK-based participant

Programmes that call themselves 'accelerators' or 'incubators' yet fail to meet all of the above criteria are beyond the scope of this trigger.

We create company profiles for the UK participants of the accelerator programmes we track.

The 10% and 20% scaleup triggers

A company meets our 10% scaleup trigger when it meets one (or both) of these conditions:

  • It had an annualised average growth rate of at least 10% in turnover over 3 accounting years AND it had at least £200k in revenue in its base year;

  • OR It had an annualised average growth rate of at least 10% in headcount over 3 accounting years AND it had at least 20 employees in its base year;

A company meets our 20% scaleup trigger when it meets one (or both) of these conditions:

  • It had an annualised average growth rate of at least 20% in turnover over 3 accounting years AND it had at least £200k in revenue in its base year;

  • OR It had an annualised average growth rate of at least 20% in headcount over 3 accounting years AND it had at least 20 employees in its base year;

The 10% and 20% scaleup definitions are identical in everything but the percentage growth required. Companies that meet the 20% scaleup criteria will also meet the 10% scaleup criteria.

The 'base year' is the first year of the accounts we're looking at for any given company. As a partially worked-out example, let's say a company filed accounts in 2013, 2014, 2015, 2016 and 2017. We would first take 2013 as the base year and ask: was this company a 10% or 20% scaleup in 2016? Then we would take 2014 as the base year and ask: was this company a 10% or 20% scaleup in 2017? If a company has achieved 10% (or 20%) scaleup status at least once, we classify it as a 10% (or 20%) scaleup.

We create profiles for companies that meet the 20% or 10% criteria in filed accounts that pertain to accounting periods finishing on or after 1st January 2011. Please note this date is different from the filing date. A company may have filed accounts on 1st January 2011 pertaining to an accounting period finishing on 1st September 2010. This would fall outside of the scope of the 10% and 20% criteria.

Furthermore, the 'revenue scaleups' Beauhurst tracks are 'visible revenue scaleups'. Companies don't have to file (thus publicly disclose) their turnover if they meet two (or more) of the following criteria:

  • annual turnover of £10.2 million or less

  • balance sheet total of £5.1 million or less

  • no more than 50 employees on average

While it is legally required for all companies to disclose the average number of employees in an accounting period (see section 411 of the Companies House Act 2006), it sometimes happens that companies fail to disclose this in their accounts.

Similar comments therefore apply to 'headcount scaleups' as for 'revenue scaleups': Beauhurst only tracks 'visible headcount scaleups'.

Using both revenue and headcount as independent strategies to discover scaleups is Beauhurst's strategy for mitigating for the occasional lack of public data – if we don't discover scaleups via one method, we will hopefully discover them via the other, in many cases.

The academic spinout trigger

We define an academic spinout as a company that meets condition 1 and at least one condition out of 2-4:

  1. The company was set up to exploit intellectual property developed by a recognised UK university (This is broadly in line with the Higher Education Statistics Agency's (HESA) definition of a spin-off)

  2. The university owns IP that it has licensed to the company

  3. The university owns shares in the company

  4. It has the right (via an options or warrants contract) to purchase shares in the company at a later date

If 1-4 are all false, the company may still be a staff or student startup. These are companies set up by students, recent graduates or staff. Neither HESA nor Beauhurst considers staff and student startups to be spinouts.

We have created profiles for all companies that were deemed to have spun out on or after 1st January 2011. Please note that sometimes companies are formally incorporated before the spinning out is deemed to have taken place, so some tracked spinouts may have been incorporated prior to 2011.

The high-growth list trigger

By 'selected high-growth lists', we mean lists that validate the ambition and growth prospects of featured companies.

An eligible high-growth list must have the following characteristics:

  • The list's main focus is high growth, high innovation and/or ambition

  • There is a competitive and selective application process

  • No fee is required to be featured

We have created profiles for all companies that were featured in high-growth lists published on or after 1st January 2011, as long as they've met our other pre-requisites for being a tracked company.

The large innovation grant trigger

A company that has met our innovation grant trigger is one that has formally accepted a large grant offer for a specific innovation project. Here are some important things to note about this trigger:

  • 'Large' is here defined as £100k+ where the awarding body is UK-based, and €100k+ where the awarding body is the European Union

  • The project's primary focus must be fostering 'New-to-the-market' innovation, as opposed to other aims such as job creation, capital equipment or 'New-to-the-firm' innovation

  • There can be a lag between the formal acceptance of the grant by the company and the updating of internal records by the grant-awarding body. If the grant awarding body's records state the offer has been made but not formally accepted, the company will not meet this trigger

  • For the avoidance of doubt, participating in a project that has disbursed £100k+ or €100k+ to all participants collectively, or receiving £100k+ or €100k+ in aggregate across multiple projects, is not sufficient. The company must have individually received £100k+ or €100k+ as part of a single project.

Beauhurst covers grants awarded by Innovate UK, H2020/FP7, Scottish Enterprise, the Development Bank of Wales and Invest Northern Ireland, amongst others.

We have created profiles for all companies that formally accepted large innovation grants on or after 1st January 2011.

We also separately have data on all grants awarded by Innovate UK, even those below £100k and accepted before 1st January 2011. But please note that having accepted such grants is not currently a reason for us to create a tracked profile for a company.

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