Will the growth opportunities presented by AI encourage more British founders to build businesses over the long term rather than cashing in through early exits when the opportunities arise? Certainly, that’s the hope. In its recently published AI Action Plan, the U.K. government outlined its ambition to build an AI technology base that could be exported to the rest of the world, with startups playing a vital role.
That’s the high-level statement of ambition but what do things look like from the startup coalface? In many respects, the U.K. innovation economy continues to thrive, attracting more VC investment and creating more unicorns than its European competitors. On the other hand, growth finance from Series B onwards can be hard to secure and the temptation to sell to a rival or a corporation can be strong. So what will keep U.K, companies in the game?
It’s a question I put to Chaz Englander. Having just secured a $12.5 million Seed investment in a deal led by Y Combinator and Phoenix Court, he and his brother Arnie have launched Model ML, an AI-driven software product aimed at the financial services industry. Their goal, says Chaz Englander, is to build the business over the long term.
“Arnie and I simply want to build one of the biggest companies in the world,” he says. “We are not doing this because we want to be acquired.”
This represents something of a change of approach. Back in 2021, when the brothers were poised to raise further funding for their last-mile delivery service, Fancy, an alternative option swung into view. Seeking a means to enter the U.K. market, Philadelphia-based delivery company Gopuff made an acquisition offer and in doing so presented the Englander brothers with a dilemma. Should they accept the offer or continue with the original plan to source additional capital?
After consulting with their mother – who was dead against the uncertainties associated with taking more investment – the brothers sold, completing the deal in November 2021. It wasn’t their only exit. The following year, sharing economy rental company Fat Llama – founded by Chaz Englander, Rosie Dallas and Owen Turner-Major – was sold to Swedish competitor Hygglo for $41 million.
So here’s the thing, Both companies were relatively young. Fat Llama was founded in 2016, while Fancy was launched at the beginning of the COVID-19 pandemic. Arguably both exits exemplify a strategy that is dear to the heart of entrepreneurs. You build a company and when the time is right you sell, securing a life-changing sum of money in the process. This time round, however, Englander says they are in it for the long haul.
Long-Term Thinking
So why should the future be any different from the past? This time around, what is motivating the Englander brothers to look to value creation over the longer term.
One reason is that the pressures are different now. With money already in the bank from previous exits, Chaz Englander says cashing in through a sale is not a necessity.
“We don’t have to work. But we’re working seven days a week. Many people think that’s very strange. Arnie and I simply want to build one of the biggest companies in the world. It’s not a financial thing. We just want to be impactful,” he says.
There is also, he believes, a very large market to be won. Model ML connects to the information sources used by financial services companies, including email, messaging, and real-time data to enable institutions not only to prepare documents and reports rapidly but also to use the platform as an aid to fast decision-making. In addition to a voice interface, the company provides bespoke word processor, spreadsheet and presentation software designed to work with the AI. It’s also an agentic system, meaning that the software can operate autonomously. Englander says agentic AI will revolutionise decision-making in the financial services market. Given the size and importance of the financial services industry, there is scope to build a global company, with London as an ideal base.
“If you are selling into financial services, London is fantastic,” he argues.” You are in between Hong Kong and New York,” he says. What’s more, with 60% of meetings taking place over video calls, talking iu person to clients is the issue it used to be,
However, Englander stresses that his ambition to create a sector-leading company also ties in with learned ambition. Model ML is the third Englander business to be supported by Y Combinator and has HQs in both London and the U.S. As such he has seen at first hand how U.S. businesses are scaled.
““There are just more entrepreneurs in the Bay Area. That in turn means there is a whole life cycle. If you are in the Dogpatch district of San Francisco in a coffee bar you are constantly shoulder to shoulder with people who have themselves changed the world,” he says.
There will undoubtedly be many challenges. It’s quite a long way from the kind of trillion-dollar company that the Englanders want to create.
That raises the question of what being in it for the long haul actually involves. It could be simply a case of sticking around as founders through Series A, B, C and beyond, perhaps with a mix of domestic and overseas capital, with an IPO as an endgame. It could also mean a sale that preserves the identity of the business, creating a springboard for growth, even if the ownership changes. Founders have to make their own choices.
Strategic Choices
Coincidentally, a few days after speaking to Chaz Englander I caught up with Ami Daniel, co-founder and CEO of AI-driven maritime decision-support business, Windward.
Founded in Israel and, until this week, listed on the London Stock Market, the company has just been acquired by U.S. growth equity company FTV Capital. As Ami Daniel explains, the deal is intended to drive growth that he thinks would not have been possible had Windward remained a public company listed in Britain.
“In the age of generative AI there are more opportunities and we need to double down on investment. Doing that as a public company is a bit more cumbersome.
That’s partly because of the regulatory requirements and costs associated with public status but it’s also about investor expectations. In particular, investors want to see profits. “In our specific case we wanted to invest a bit more and that would not have been popular with investors,” says Daniel.
In that regard, the delisting and acquisition by FTV create a space in which the company can invest in technology – perhaps triggering a short-term dip in profitability – without having to worry about the impact on the share price. As he sees it, a London Stock Exchange Listing is great for companies that are growing by perhaps 25% a year but relatively small businesses – Windward came to the market with $15 million in revenues – may struggle to retain the support of shareholders if its investment affects the bottom line.
Daniel stresses that despite U.S. ownership, Windward is still hiring and generating IP in both the U.K. and Israel. The deal, he says, is win/win for the company, its investors and the buyer.
Policymakers here in the U.K. are determined not to get left behind as technologies such as AI and quantum computing change the world. Equally, entrepreneurs see opportunities to build substantial, world-class companies as AI reshapes economies and business models. In an age of global investment and dealmaking, the ongoing questions around ownership and location are likely to be more complicated.
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