Upper Street

Year founded 2010
HQ Location London
Sector Fashion Technology
Total funding raised £2m
Upper Street CEO and co-founder Julia Elliott Brown explains her tough decision to fold her fashion tech company came after an unforeseen funding crunch put a halt to its six-year scale-up journey.
www.enterthearena.co.uk
We didn't really have a quick enough plan b or plan c when Venrex decided not to follow on their money.

Julia Elliott Brown

Co-founder & CEO

Facing up to an unexpected funding technicality

The future was looking bright for Upper Street as the company continued to scale its upmarket online bespoke shoe design business.

The company’s principal investor Venrex Investment Management had invested about £750,000 alongside £250,000 from the British Business Bank. Upper Street had raised another £230k from a crowdfunding round. And Venrex was about to invest even more in the company.

“But at the 11th hour Venrex didn’t follow on with its funding,” explains CEO and co-founder Julia Elliott Brown. Any further investment would have taken Venrex over its Enterprise Investment Scheme threshold.

But Venrex hadn’t realised until the last minute that investing in Upper Street didn’t make any financial sense.

“We were doing a second crowdfunding round at the same time. But then we decided to pull the campaign and close the business because we weren’t confident that we were going to make it happen,” says Elliot Brown. Meanwhile, the company was going into the red, and as a director of a business “you can’t continue when the books don’t balance”, she adds.


Plan, know your investors, then plan more

Venrex had been “a very understanding and supportive VC”. But it hadn’t dawned on Elliott Brown and her sister and co-founder Katy Chandler that they would need an investment back-up plan. “We didn’t really have a quick enough plan B or plan C when Venrex decided not to follow on their money,” she explains.

In hindsight, Elliott Brown says they would have managed their capital very differently. Knowing your investors’ motivations and investment horizons are vital. So, financial planning over the short term and long term is critical as is “never taking your eye off the ball”, she says.

At Upper Street, we wrote a really comprehensive business plan but focused less on the financial forecasts.

Julia Elliott Brown, Upper Street

The human factor of raising capital

Without further substantial backing from the VC, “it felt like we were just pouring money into a hole, because we didn’t have enough to really scale the business”, says Elliot Brown. “My sister and I lost a lot of money. The VC lost money but for them it wasn’t a surprise because they take a portfolio approach to investing,” she says.

But for crowdfunding investors, it was a harder pill to swallow because Upper Street had already done a successful crowdfunding round, she adds.

“When you’ve got investors, customers, friends and family, and suppliers who are the ones investing in you and putting their faith in you, and then it doesn’t work,” says Elliot Brown. “This can be very tough for entrepreneurs.”

 

Focus on financial planning

In her new role as founder and CEO of Enter the Arena, Elliott Brown incorporates her lessons learned at Upper Street. She advises women entrepreneurs who want to raise equity finance for their high-growth businesses.

Doing a lot more financial planning at the start of the business and thinking about the funding journey are very important pieces of advice, she says. “At Upper Street, we wrote a really comprehensive business plan but focused less on the financial forecasts.”


Sources of capital
Government Support
  • Enterprise Investment Scheme

Related Stories

Uniplaces
Ben Grech and his two co-founders Miguel Amaro and Mariano Kostelec met at university and were inspired to emulate the successes of marketplace champions Airbnb and Homeaway. Focused on offering choice, trusted service and convenience, they set up Uniplaces to make international student rentals much easier and more secure to access. Read more...
Cocoon
Hardware and software specialist Cocoon is helping people feel safe in their homes with its surveillance solutions, and its same-name device is generating admissible evidence to combat crime. Read more...
Taylor & Hart
Challenging the “very traditional” jewellery industry culture, Taylor & Hart has cultivated a disruptive brand, using technology capital to create a global-reaching business model. Read more...
Diamond Logistics
Founder Kate Lester had a “Kodak moment” five years ago to scale up her business after collapses in the same-day courier market made her realise her business would “become extinct”. Read more...
Profile Pensions
CEO Jordan Mayo says efficient back-end technology and front-end human capital position Profile Pensions well to serve the UK mass market, delivering pensions clarity to tens of thousands of savers who like the service so much the company’s net promoter score is 77. Read more...
Sphere Fluidics
Sphere Fluidics makes cell-analysis systems to help pharmaceutical companies discover new potential blockbusters, and has raised more than £16m of financial capital and grants in eight years. Read more...