Following the announcement that Britishvolt has collapsed into administration, CEO of business advisory and M&A expert, Claire Trachet, provides an analysis looking at the abrupt downfall of the UK’s first Gigafactory and whether it could have been avoided. The firm’s plan to streamline national production of EV batteries was necessary to ensure Britain’s future role in the global car industry.

However, the company struggled to reach its ambitious commitments in order to secure the £100 million grant offered by the Automotive Transformation Fund. Funding under favourable terms has become increasingly inaccessible for tech scale-ups, as investors begin to prioritise profitability over growth.

This news comes twelve years after, U.S Solar panel start-up Solyndra, suffered a similar fate. The company filed for bankruptcy in 2011, just two years after receiving a massive government loan of $535 million and a $25 million tax break. The announced bankruptcy came after the company explained its plans to scale up its operations and drive down costs.

A key takeaway for the future of tech scale-ups in all of this is simple, yet, unpredictable – worst case scenario planning. Experience is crucial in planning for every possible situation that could arise – not having any contingency plans leaves highly innovative startups like this in a vulnerable position. Britishvolt – alongside thousands of other companies – probably never experienced an economic outlook subject to such high inflation. Dealing with such vast quantities of investment capital means a sudden rise in interest rates makes it nearly impossible to adjust on the go.

Claire Trachet (CEO/Founder) comments on the collapse of Britishvolt and the future of startups and their funding:

“For this scale of tech startups, it’s almost like a butterfly effect once you get moving, suddenly, years pass, and huge quantities of capital are invested. Only a few things need to go wrong for everything to be completely derailed.

“When this happens, things either go wrong and companies play catch up, or it just piles on. Usually, organisations try and hide the bad news, until there is nothing to be done. Another big project like Britishvolt, was the channel tunnel, in the end they shut it down because they couldn’t keep it going even though it was such a big project. Instead, it was revived through a different company, and got done in less than 10 years. Similarly, we are seeing a variety of potential investors such as Australian battery manufacturer, Recharge to step in.”

“Regarding Britishvolt, the downfall may have come down to a combination of factors outside of their control such as the pandemic, inflation and increasing interest rates – making them unable to keep up with such fast growth, at such a crucial stage of their development.

“It’s important for startups to understand the new funding environment, what their goals are and how they will achieve them. It’s very easy to get swept up in receiving funding and wanting to increase headcounts – this won’t cut it anymore. Focusing on profitability and product over growth should be at the forefront of every founder’s agenda in 2023 in order to secure their next round or a favorable exit.”