Culture Creative’s Zoe Bottrell explains why success is a mix of planning and trust
// North East
Ad tech company, Covatic was already ahead of the curve back in 2017 when Creative England (as we were then known) first invested into it. With GDPR just a glint on the horizon, Covatic’s founders combined intelligent foresight with even more intelligent tech to come up with a solution that would change the landscape for big media firms.
Skip forward a few years to 2023 and they were getting their second Creative Growth Finance loan to kick off an impressive $5 million Series A fundraise. To understand what this investment journey felt like, we got together with CEO and Co-Founder, Nick Pinks who shared his company’s amazing growth story.
Nick Pinks
Creative UK
How did Covatic get started?
Nick Pinks
Covatic started back in 2017 when Creative UK helped us do our very first funding round. Our idea started when we were looking at the industry and trying to work out how the likes of BBC, ITV and Sky stay relevant in the Internet age. This was back in the 2010s when GDPR (General Data Protection Regulation) wasn’t around and Facebook was on its way to global dominance. Everybody was sharing everything online and there was very little or no regulation at all around the use of that data.
Covatic was born from the idea that internet search history was a really rubbish way to determine what somebody should watch and when they should watch it. We wanted to answer the media industry’s question of how do you get incredible personalisation without exposing personal data?
Creative UK
What were the biggest challenges that you faced when setting up the business?
NP
Well, it was hugely technical, hugely difficult. If you’re going to go up against the likes of Google, Facebook and Apple by saying you guys are doing it wrong, you’ve got to have a better answer.
We went to the University of Oxford and we worked with some of their professors and Computer Science department. We developed some really good IP and started the company based on this technical foundation.
The first thing you want to do is solve the tech, then you’ve got to try to help understand the industry to a point where broadcasters and the like are open to adopting this sort of change within their apps. And then you talk about privacy, legislation, and you go, well, there’s this thing coming called GDPR and everyone’s terrified about it. And then of course, you have to raise the funding to start the company up and convince investors that there’s an industry that wants this change and that you can raise the money to actually start a business.
Creative UK
How did you fund the company in the very early days?
NP
We spun out of Oxford and the early days were unfunded evenings, side projects, weekends. I think the university gave their professors a little bit of funding which meant getting some time to look at the project, but there was no actual cash value in that.
We took a very long fundraising thesis type approach, with an insanely large deck, hundreds of pages, investment memorandum, business plan – it was ridiculously detailed. We raised £800,000 in the first tranche and for a long time we had about £500,000 pledged but couldn’t bring it together because we couldn’t demonstrate the market wanted our solution. And actually, that’s where Creative UK put their first cheque in and that clinched it, allowing us to close the first round. That was the moment of ‘yeah, we can do it. We got an investor on board, we got somebody who has industry credibility.’
Creative UK
How did you first come across Creative UK?
NP
We were trying to find a chair and I was speaking through one of the Oxford communities to some angel investors and to some industry people. I was introduced to Travis Baxter (a business leader who has worked extensively with Creative UK) through them, who became our chair right in the beginning. Travis became one of our first angel investors, and he suggested having a word with Creative UK because you had your early innovation funds.
I then applied for funding and I met Tim [Evans, Creative UK’s Investment Director] for the first time.
Creative UK
What did that pre-seed investment round enable you to do?
NP
So, the first year was very exciting – we set off with a big proof of concept at the BBC, we hired a few people, we used a bit of consultancy and then we hired our first full-time roles. The first milestone with the BBC project was to reach a place where we’d built something that we could demonstrate that somebody in the industry of size and note wanted to play with.
We started to create this idea that we could identify, really accurately, people’s commuter and movement patterns and work out that… actually right now Lucy’s got 27 and a half minutes to listen to something and then 45 minutes to watch something because you know, she was traveling underground and now she’s driving a car. Now she’s hopped on a bus and can catch her favourite show on the bus… and we can predict this. So it worked really well – it was a very effective way of using mobile devices and on-device processing to understand the times when people would be consuming content.
Creative UK
What kind of challenges have you faced as a business since we first invested in you?
NP
Well, we faced the pandemic, the cost of living crisis, Brexit and so there were a few little things that weren’t in the business plan! I suppose that we are a deep tech business so the first few years were always going to be about building something and we planned for this. This early period went reasonably well for a young, inexperienced management group and team; there were challenges along the way as we were trying to explain our product to the market, but we were evolving and the first couple of years we just followed the plan.
Creative UK
And last year you took a loan from Creative Growth Finance. Did you have a specific reason for that?
NP
So, with how long it’s taken us to do Series A – because of the pandemic and everything else – we raised our $5 million series A with a £500,000 loan from CGF (Creative Growth Finance). Now the debt fund was brought in for a couple of reasons. One, we wanted to de-risk the investment. When you’re raising money it is a hugely risky period for everybody involved: what happens if the raise doesn’t complete in the time you expect it to?’ What happens if something changes? After the last few years, my tolerance for risk has gone down a little and here was an opportunity to put in a CGF loan that de-risked the completion of the round.
But of course, the real reason for the raise was our growth. We have an incredible product and an incredible list of clients. We want to scale up our sales, do a lot more marketing, invest in the stability of our product set and all of this was kicked off by the investment.
Creative UK
So, is it fair to say that CGF was something of an accelerator?
NP
It really was – it felt like the fuse, the touch paper.
Creative UK
And talking about your growth plan, can you tell us what kind of growth have you experienced since 2017?
NP
Yes. So, we started the company with three of us way back in the beginning and we are now at 24 and hiring people at a phenomenal rate. We’ve got a person in the US; we’ve got team members across the UK and in Europe which is fantastic; we’ve got an incredibly diverse team. We’ve got a facility in Birmingham and new office space in London; our clients are ginormous. If I was to talk about real growth – like actual numbers – then the most exciting one is that our software is in over 115 million devices when a year ago it was in 5 million devices. That really demonstrates the scale of our growth.
Creative UK
What kind of support have you received from the Creative Growth Finance team?
NP
Tim [Evans, Investment Director at Creative UK] is on the board and he is an absolute legend. It’s not been straightforward by any stretch and having Tim to either go for a beer with or speak to at any time, day or night has been incredibly helpful and important.
And then there have been some great events that we’ve been involved in as a result of being part of the Creative UK community. For example, when we moved to the Midlands, we wanted to get involved in the region and Caroline (Norbury, CEO of Creative UK) put me in touch with the people pitching to Channel 4 for a move to Birmingham. I got asked if I would mind going and being involved in the group pitches to Channel 4 and I went along for the day.
Though we lost it – we weren’t really prepared as a region – what came out of that was a thing called Create Central, which is the West Midlands industry body of which I’m on the Executive Board Governance Group. There are six of us and that came about because of my relationship with Creative UK.
So, there are a lot of benefits as well as an incredible commitment to the business, meaning that when things have gotten really difficult our investors have been able to look to Creative UK and say no, this is the industry right now, it’s struggling. We’ve got to lean in, it’s going to get better.
Creative UK
That’s great to hear. And what would you say are your proudest achievements as a business?
NP
So my proudest achievement, I think, happened two weeks ago and it wasn’t a single moment. I was in Philadelphia on a gloriously sunny day standing at the doors of Comcast, which is set between two absolutely ginormous skyscrapers. I was with Sarah Lawson Johnston, Covatic’s CRO and Dan Pike, our CPO and we were just chatting about how this small West Midlands based company was over in the US helping some of the world’s largest media organizations. And you know, when I look at our client roster and I look at the incredible output of our tiny team you can’t not be in awe. It’s really very moving and I don’t take it for granted. I do believe that a good idea, really well-executed by a small group of people – is a very powerful thing and to be part of that is very special.
Creative UK
We’re in challenging times – is there any advice that you would give to early-stage businesses working in the Creative Industries?
NP
You need to carefully find your founding team and partners; find the right people that you enjoy working with. Love it. It’s going to be all encompassing. It’s going to be such a big part of your life.
It’s going to be very difficult for all sorts of reasons and those reasons will be different to those that I found difficult. But if you can pull the right people around you, individuals who you really respect and who you really enjoy being with and who can push you, then I have no doubt that you can do it.
And I do mean that for your investors as well. For us it was Creative UK who were our right hand in the beginning, the support that they provided enabled us to open many doors.
Creative UK
So, what’s next for Covatic?
NP
Well, it’s about growth. Everything we’re doing is about growth. And we are building an incredible team of rock stars. The quality of talent coming in is exceptional.
We are aggressively going after global dominance. We’re looking at the US. We are pushing into Europe, scaling in the UK. It’s exciting. For us it’s about getting out there as much as we possibly can and letting everybody know that you can do incredibly accurate, incredibly effective advertising and marketing without having any personal data.