Startups Weekly Round Up – 30 January

Welcome to Startups’ Weekly Round Up, where we bring you the latest headlines to keep you in the loop with everything that’s affecting the startups industry in the UK.

The highlights this week:

• The front seat of our Startups 100 Index, Caura, secured £4 million in funding from Lloyds Banking Group
• Amazon workers in Coventry marked as ‘no show’ after historic strike
• New research reveals that only 9% of UK entrepreneurs plan to set up a business despite government pledges for growth
• A survey conducted by Conversica showed that 33% of respondents think their chatbot experience impacts their purchasing decisions significantly

Some Numbers To Start Up Your Week

📈 Searches for ‘dropshipping’ are up by 500% – the highest it’s been in over five years. This reflects Brits potentially looking to bolster their incomes through what is becoming a trending and highly accessible side-hustle business model. Curious about how to start? We give you the map to get to your next dropshipping venture here

😬47% of UK businesses are embarrassed by their website despite spending an average of £336,500 on martech → nearly every business (92%) thinks their website’s poor user experience is costing them sales

🏡 Searches for ‘work from home jobs’ hits the highest point in five years amid cost of living crisis → this is a sign to employers that there is a high demand for flexibility and that it’s time to hop aboard the hybrid bandwagon

💰 79% of employers gave pay rises in January but only senior pay rose above inflation → half of employers admitted to giving pay rises for cost of living purposes, and a quarter of large firms admit to fear of bad press if they do not increase pay

11 Downing Street and the UK Economy – what should startups know?

👨‍💻 Can the UK host the next Silicon Valley? Research by Ayming UK doesn’t think so

Three quarters of businesses are moving R&D activity abroad, hinting that the UK is failing to compete in this area with other markets. According to the research, 69% of businesses moved R&D activity abroad in 2022 and 70% are planning to move activity abroad in 2023. Further, 63% of businesses have moved activity to EU countries.

This is bleak news for Chancellor of the Exchequer, Jeremy Hunt, who has said: “Every big business was a startup once, and we won’t build the world’s next Silicon Valley unless we nurture battalions of dynamic new challenger businesses”.

🌧️ Dreams of entrepreneurship continue to soar high, but the economic landscape is still too cloudy for optimism

Research from FreeAgent has revealed that only 9% of UK entrepreneurs plan to set up a business this year, despite government pledges for growth. However, over half (54%) of respondents stated that they still dream of setting up their own business one day. 3 out of 4 would-be entrepreneurs have decided to delay their business dreams due to the cost of living crisis.

🌐 Mind the gap (in international trade)

According to research from the CBI and Finastra, there’s a gap between the ambition of SMEs to trade internationally and the reality of doing so. 33% of those surveyed believed there’s potential value, but choose not to trade internationally due to perceived barriers and a lack of support.

Common barriers cited by respondents include the impact of Brexit (23%), being too small to trade internationally (16%), and limited knowledge about international markets (15%).

We know you’ve heard of ChatGPT, so let’s talk chatbots and the consumer journey

To some, ChatGPT is an exciting sign of how technology is developing and to others, it’s a dizzying preoccupation of robots replacing humans. However, in the midst of all the noise and discourse, have you considered how crucial AI chatbots can be to the customer journey?

According to research conducted by Conversica, one-third of B2B buyers are likely to place significant weight on the chatbot experience when evaluating vendors. While website chatbots are intended to help enterprises connect with leads and customers in an engaging and scalable way, if the chatbot is script-based, they are likely hurting your business bottom line.

We also learnt that:

• One-third of respondents rated the chatbot experience as impacting their purchasing decision — they rated it 70 or higher on a scale of 0 to 100 (100 being “high impact on purchase decisions”).
• The top three reasons people abandon chatbots are irrelevant responses (51%); recommendations that aren’t specific enough (18%); and the chatbot only offers a list of standard questions (15%).
• Accurate responses were rated the most influential aspect of the chatbot experience on vendor evaluation (4.25 on a scale of 1 to 6, with 6 being ‘high impact on decision’)

Startups spoke with Jim Kaskade, CEO of Conversica, to understand how chatbots bring value to businesses. For Kaskade, the beauty of chatbots is their scalability, “Whoever your target market is, they want faster, more personal experiences from brands at every point in their buying cycle. You can’t keep hiring more and more employees or invest in larger call-centre personnel just to provide those experiences.”

Chatbots are not our enemy. Kaskade points out that if AI-powered chatbots eventually get trained to be optimal enough to provide good customer service, human employees can focus on what they do best: build relationships, be strategic, and close deals. He said, “It’s not human replacement, it’s a force multiplier.”

David and Goliath – Amazon workers marked ‘no show’ after strike

Around 350 Amazon workers in Coventry went on strike on 25 January, defying the e-commerce giant and making history in the process as the first Amazon workers in the UK to do so. The strike was staged in an attempt to receive more dignified pay. However, the workers that partook in industrial action were marked as ‘no show’ – an unauthorised absence.

Workers are now worried they will be fined, or even face a gross misconduct penalty. The GMB Union has demanded clarity for the company.

One Amazon Coventry worker, who requested to remain anonymous, said, “It makes me fear for my job as it is considered great misconduct, I feel targeted for taking legal industrial action.”

Stuart Richards, GMB Senior Organiser, said, “We hope and believe this is just an error on Amazon’s part, rather than an attempt to intimidate workers taking legal industrial action.” He added that: “Amazon need to sort it out and quick, Coventry workers did an incredibly brave thing taking on one of the world’s biggest companies.”

Ethical concerns about the sustainability of Amazon’s business model have already inspired some to disrupt the market and look at delivery services that are characterised by a more compassionate ethos that is not so fixated on profit-at-all-costs. We recently spoke with Packfleet, a member of the Startups 100 2023 Index about how they’re enabling small merchants to compete with Amazon’s delivery model, while keeping the focus on worker rights.

Startups 100 score big funding wins – Caura and onHand

🚗 Caura

Lloyds Banking Group announced on 26 January that they have invested £4 million in all-in-one management app Caura, which takes the No. 1 position in our Startups 100 Index this year. The significant investment will be used to develop new features for iOS and Android apps.

Dr Sai Lakshmi, CEO and Founder of Caura, said: “Lloyds Banking Group’s investment will help accelerate our plans to improve Caura for our consumer customers and our industry partners.” In Lakshmi’s vision, Caura’s next step is to apply the app’s technology to overhaul the car insurance and maintenance processes, which have remained antiquated and resistant to change.

There also are plans to include embedded financial services such as motor loans and insurance, white-labelled payment solutions for automotive partners, and self-service SaaS solutions to SME customers. In short, way less headaches if you’re a UK motorist.

✋ onHand

onHand announced a pre-series A funding round of £3.23M to help companies everywhere do more good. Led by 24Haymarket, the round is backed by Northstar Ventures, UK Research and Innovation (UKRI), and Shazam co-founder Dhiraj Mukherjee. The funding round seeks to accelerate international growth and fuel further product expansion

Sitting in the 14th spot in this year’s Startups 100 Index, you can think of onHand as the Uber of volunteering. onHand helps engage employees with on-demand social impact and sustainability initiatives, with tracked CO2 reductions.

Funding Opportunities

Global climate tech accelerator Subak is offering £130k grant funding to 14 not-for-profit climate startups across the UK, Europe, and Asia Pacific. Subak has already funded and scaled 15 startups who have raised £13M in follow-on funding and achieved significant consumer and policy impact. You can apply here. Applications close on 17 March.