SaaS 2021 Report by Beauhurst

SaaS 2021 Report by Beauhurst, updated 10/28/21, 10:07 PM

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The SaaS Report 2021
The UK’s high-growth
Software-as-a-Service businesses
Contents and methodology
Foreword




1
Executive summary




2


SaaS business demography




3
Map of UK SaaS businesses




4
Map of SaaS sectors and sub-sectors



5
Top 10 SaaS businesses by investment raised


6
Top 10 SaaS businesses by turnover growth


7
Top 10 SaaS businesses by headcount growth

8
Investment into SaaS businesses



9
Top investors into SaaS businesses
10
Diversity of SaaS business founders
11
Outlook: the future of early-stage SaaS businesses
12


About the contributors
13
Beauhurst identifies ambitious businesses using eight triggers (outlined
at the bottom of this page) that we believe suggests a company has high-
growth potential. More detail on Beauhurst’s tracking triggers is available
via it’s website.
equity investment
To be included in our analysis, any investment must be:

Some form of equity investment

Secured by a non-listed UK company

Issued between 1 January 2011 and 31 December 2020
announced and unannounced fundraisings
An unannounced fundraising is an investment made into a private company
that is completed without press coverage or a statement from the recipient
company or funds that made the investment. These transactions are an
integral part of the UK’s high-growth economy, accounting for around 70%
of all equity transactions.
HigH-growtH triggers
Equity investment
Scaleups
Accelerator attendance
MBO/MBI
Venture debt
Academic spinouts
High-growth lists
Major grant recipients


1
When people think of the success of
the British tech ecosystem in recent
years—they usually point to the
big names: Monzo, Deliveroo, Bulb,
Wise. All great businesses and huge
British success stories. Software-
as-a-Service (SaaS) businesses are
rarely mentioned. And yet, the sector
encompasses 9.3% of the 34,815
high-growth businesses in the UK,
meaning that the average startup is
SaaS based.

Between 2011 and 2021, the number
of SaaS companies in the high-growth
ecosystem has increased by 282%,
signalling an increasing demand for
the products being created. Creativity
in the sector multiplies upon itself
as companies challenge traditional
methods of working and develop
software that creates efficiencies for
businesses, consumers and the public
sector.

SaaS has been at the forefront of
investors’ attention since last March,
when the need for urgent solutions
to the novel environment created by
Covid-19 highlighted the potential
in this industry. Of the 3,189 SaaS
companies tracked by Beauhurst,
almost 40% have benefitted from
a potentially positive pandemic
experience. This is most likely due
to the sector’s ability to adjust—and
thrive—in response to the changing
circumstances.

Despite the easing of lockdown
measures naturally inspiring a return
to the office, the concept of flexible
working has been written into our
lives. This has provided the SaaS
industry with the space to innovate
accordingly. Running parallel to this,
the movement of businesses and
the public sectors towards a cloud-
first strategy continues to stimulate
significant growth in this area.
Cloud-based approaches have
proven that they have the necessary
flexibility, scalability and data security
to smoothen the transition between
home and office working. The
potential of the industry has captured
the attention of investors.

This is evident from a recent survey
of ours which found that 52% of
VC investors are focusing on SaaS
startups. At Coadec, we work with
startups across verticals to engage
Government and improve policy
outcomes. And we work with a huge
range of startups in the SaaS space
doing incredible things —and yet
despite the major role played in
our economy by the SaaS industry,
they are rarely given the attention
they deserve by Government and
regulators.

There are a number of reasons for
this but one of the biggest comes in
categorisation of SaaS companies.
Since these businesses often operate
within existing sectors, SaaS itself has
struggled to define its own space. As
a result of this, aggregate stats fail to
provide comprehensive insights into
the intricacies and individualities of
SaaS.

Because of SaaS’s spread and
distribution across the economy —it’s
rare the spotlight is firmly on these
businesses. We’d like to change
that—and at Coadec we’re building
new streams of work to champion
the success of SaaS in the UK, and
to encourage the Government to
tackle challenges in procurement,
competition policy and beyond that
British SaaS startups face.

That’s why we’re excited to partner
on this report with Beauhurst and
kickstart a conversation about the
future of SaaS in the UK.
Foreword
Dom Hallas,
Executive Director
at COADEC
“We’re building new streams of work to champion the success of SaaS in the
UK, and to encourage the Government to tackle challenges in procurement,
competition policy and beyond that British SaaS startups face.”
2
Analysing Software-as-a-Service (SaaS)
businesses as a group is an interesting
exercise: it makes sense as a sector in
of itself, but is also understandable
as a technology and/or commercial
model used in a variety of other
sectors. Examining this sector is in
this way doubly rewarding, and so
we are even more grateful to Coadec
for commissioning this research to
better showcase and understand the
UK’s SaaS sector and its role in the
economy.

With over 4,000 SaaS businesses
getting going in the UK since 2011—
and many success stories among
them (see below and passim)—
it’s heartening to see so many
SaaS businesses at every stage of
development. Although over 500 have
died since 2011, nearly 500 have exited
and the rest are either starting up,
starting to scale, or scaling in earnest.
Most encouragingly nearly 40% are
at the seed-stage, promising a strong
pipeline of not only opportunities for
investors, but also innovative services
for private sector and public sector
customers.

It is never a surprise when London
dominates in our analyses—and
reasons for it are well documented.
It is a welcome tonic, however, to see
other, prominent clusters developing
outside the UK. In the North West,
for example, the cluster of 198 SaaS
businesses there—driven by the
activity in Manchester—have received
over £1b in equity investment. By
comparison, SaaS businesses in the
East of England, the next highest
region, have raised £475m.
When looking at the sectors SaaS
businesses themselves operate in,
some of the usual suspects crop up.
Fintech, digital security/cybersecurity,
and edtech feature prominently.
But labels mask some of the variety
that sits underneath those sectors.
Cybersecurity SaaS business is a
grouping that includes, for example,
both Onfido, which develops software
designed to verify a customer’s identity
by assessing the legitimacy of their
government ID and facial recognition
technology, and Ripjar which develops
software to analyse data that are
collected for clients about what is
being said in the news and social
media about the organisation’s brand
or reputation.

Some of the other sectors which
overlap with SaaS can be thought
of as technologies in of themselves,
in particular Artificial Intelligence
(AI). It is now almost expected that a
SaaS platform will be using at least
some machine learning (ML). SaaS AI
businesses raised just over a £1b in
2020 and have already raised £1.06b in
2021 (as of September). That number
includes some very big deals, such as
the $300m raised by Patsnap in March.
Like the rest of the UK’s startups and
scaleups, SaaS businesses are seeing
megadeals as a regular occurrence.

Given the war chests of capital that
some SaaS businesses end up with
after investment, it’s more important
than ever to see diversity in the
founders, managers and owners of
these businesses. Looking at just one
metric, it’s clear that the sector has a
long way to go; 83.3% of the founding
teams of the UK’s SaaS startups and
scaleups are all-male, compared with
the rate across all sectors of 75%.
The picture is improving (80.9% of
founding teams in the past 12 months
were all-male), but too slowly.

Diversity is important at SaaS startups
for the same reason that it’s important
that these companies have access to
the right (and enough) capital. The
products they sell (or will go on to
sell) to businesses, charities and the
government will improve services,
increase productivity, and ultimately
better lives.
Executive summary
Henry Whorwood,
Head of Research
and Consultancy
at Beauhurst
“With over 4,000 SaaS businesses getting going in the UK since 2011—and
many success stories among them—it’s heartening to see so many SaaS
businesses at every stage of development.”
3
The SaaS Report
Software-as-a-Service (SaaS) is a busy and rapidly
growing sector, with 3,237 active ambitious UK
companies currently operating in the space.
Continual interest and innovation in this industry
is demonstrated by the number of young high-
potential companies launching all the time; 61.4%
of the current population are at seed or venture
stage compared to 13.5% at growth or established
stage. Beyond this, 409 SaaS companies have
gone on to exit either by IPO or acquisition. The
sector has also had intense interest from investors.
A significant portion of presently active SaaS
companies that have neither exited or died have
secured equity—2,573 out of 3,237. Overall, SaaS
businesses have taken a staggering £11.8b of
equity investment in the decade between 2011 and
2020, and 2021 is on track to be the biggest year
by investment volume yet. Startups in the space
have also highlighted strong innovation and growth
potential by attending competitive accelerator
programmes and being large grant recipients.
SaaS business
demography
A company normally over 15 years
old or 5-15 years with a 3 year
consecutive profit over £5m or
turnover over £20m, and likely
to be a household name.
Established 6.2%
261 companies
A young company with a small
team, low valuation and a low
amount of funding for its sector.
Seed 37.8%
1,586 companies
A company that is a few years old
and has significant traction,
technology or regulatory approval
progression. Its funding rounds and
valuation are usually more than £1m.
Venture 23.6%
991 companies
The company has definitively
ceased all activity or its top parent
company has been dissolved.
Dead 13.1%
551 companies
A company normally over five years
old, with multiple o­ices, substantial
revenue and valuable technology.
Growth 7.3%
305 companies
The company is in
administration/liquidation,
or its website and social media
presence have been neglected.
Zombie 2.2%
94 companies
A company that undergone
an IPO or exit.
Exited 9.7%
409 companies
High-growth SaaS companies by stage of evolution (2021)
High-growth SaaS companies top figures
active high-growth
SaaS companies (2021)
3,237
2,573
active high-growth
SaaS companies with
equity investment (2021)
1,117
active high-growth
SaaS companies with
accelerator attendance
(2021)
51%
active high-growth SaaS
companies headquartered
in London (2021)
7,698
total equity deals
secured by SaaS
companies (2011-2020)
416
active high-growth
SaaS companies are large
innovation grant recipients
(2021)
4,197
lifetime total high-
growth SaaS companies
(2011-2021)
£11.8b
value of equity deals
secured by SaaS
companies (2011-2020)
91
active high-growth
SaaS companies are
academic spinouts
(2021)
4
The SaaS Report
Software-as-a-Service companies can
be found across the UK. The country’s
centre for the sector is London, home
to 51%. Similarly to other types of
technology business, Westminster,
the City of London, Camden, Hackney
and Islington dominate as the most
popular local authorities to base a SaaS
business. London-headquartered SaaS
companies may benefit from easier
access to capital, and are also more
likely to have attended an accelerator
programme.
Nevertheless, there is a huge amount of
SaaS activity outside the capital, with
Edinburgh, Manchester and Bristol also
hubs for the sector, each ranking within
the top ten for all UK local authorities
by number of companies. Regional
investors such as Scottish Enterprise
and the Development Bank of Wales
play an important role in facilitating
healthy SaaS ecosystems outside of
England.
Map of high-growth Software-as-a-Service businesses
High-growth SaaS companies by region and London local authorities (2021)
115
108
82
167
374
165
76
198
56
1,655
173
65
1
400+
277
194
178
209
260
92
87
47
51
47
Camden
Westminster
Islington
Hackney
Tower Hamlets
City of London
Lambeth
Southwark
Hammersmith
and Fulham
Kensington
and Chelsea
London
Scotland
Northern Ireland
North East
North West
Yorkshire and
the Humber
West Midlands
Wales
East Midlands
South West
South East
East of England
Number of SaaS Companies
5
The SaaS Report
Though all working via a Software-as-a-Service
model, the cohort of companies in this report span
a wide realm of product types and industries. SaaS
companies are serving the needs of businesses
in a range of ways, building tools for analytics,
developing business banking and financial services,
and offering products for marketing.
Innovative Software-as-a-Service businesses have
also situated themselves at the forefront of major
emerging technologies. FinTech giants Checkout.
com, Zepz (WorldRemit) and Quantexa operate
using SaaS, and have achieved the status of some
of the most valuable high-growth companies in the
UK. Digital security is another rapidly developing
industry, worked on by firms such as OneTrust,
Onfido and Snyk. Other top new technology areas
that are intersecting with SaaS include Artificial
Intelligence, Big Data, EdTech and eHealth.
Map of SaaS sectors
and sub-sectors
Security services
204
Recruitment
agencies
102
Payment
processing
111
Mobile apps
436
Marketing services
215
Legal services
96
IT consultancy
services
97
Information
services
117
FinTech
457
eHealth
121
Educational
services
151
EdTech
153
Digital security
189
Consumer
banking and
financial services
94
Collaboration
tools
208
Business banking and
financial services
323
Big data
152
Artificial Intelligence
510
Analytics, insight, tools
970
AdTech
114
Technology
Business and professional services
Personal services
Emerging technology sectors
Top sectors for active SaaS companies (2021)
6
The SaaS Report
Funding for FinTechs has absolutely
exploded in recent years, and this is
evident in the top SaaS recipients of
equity over the last decade. Six of the
ten companies with the highest volume
of equity secured operate in the FinTech
space, disrupting the financial services
industry through a range of innovative
offerings from payment processing
services, to business banking platforms,
to online branchless challenger banks.
Another major area for investment
has been cybersecurity. The need for
protection of digitally stored sensitive
information is only going to expand,
thus innovation in the field will continue
to become more sophisticated as well.
Onfido uses Artificial Intelligence as the
basis for its technology, which assesses
the legitimacy of government IDs against
facial biometrics.
As with many sub-sectors of the tech
industry, London is the centre of the
biggest firms, with seven of the top ten
equity recipients headquartered in the
city. Synk, Radius Payment Solutions,
and Dext, from Reading, Cheshire,
and Greater Manchester respectively,
represent SaaS firms raising major
investment volumes outside the capital.
Top 10 SaaS businesses by investment
Top active SaaS companies by volume of equity investment received (2011–2020)
£546m
£354m
£298m
£281m
£175m
£150m
£124m
£124m
£122m
OneTrust
Snyk
Checkout.com
Zepz
Onfido
Radius Payment Solutions
Sonovate
Currencycloud
Allica Bank
£113m
Dext
equity deals worth at least £1m
secured by SaaS companies
(2011-2020)
1,789
equity deals worth at least
£10m secured by SaaS
companies (2011-2020)
194
7
The SaaS Report
These 10 SaaS businesses are ranked
by their compound annual growth
rate (CAGR) in turnover over the last
three years. To be eligible, companies
need to file annual accounts disclosing
turnover in their base year (four years
ago) and in their most recent financial
year.
Top ranked company Modulr develops
web-based payment processing APIs,
designed to simplify how companies
send and receive payments. Based
in London’s White City, the company
grew sales from £41k in 2016 to £6.3m
in 2019. It has raised more than £50m
to date from investors including
Blenheim Chalcot, Paypal Ventures and
Fidelity Information Services.
Among the 10, Tyntec is notable for
its high turnover in its most recent
financial year, making its rapid growth
even more impressive. The City of
London headquartered firm offers
messaging applications and network
provision services for businesses. It
grew turnover from £7.4m in 2017 to
£60.8m in 2020.
Top 10 SaaS businesses by turnover growth
Top active SaaS companies by three-year compound annual growth rate in turnover (latest accounts 2019–2021)
435%
220%
218%
160%
132%
102%
91%
90%
87%
79%
turnover: £6.3m (Dec 2019)
turnover: £6.8m (Dec 2019)
turnover: £21.7m (Nov 2020)
turnover: £2.8m (Mar 2020)
turnover: £16.1m (Dec 2019)
turnover: £60.8m (Mar 2020)
turnover: £2.7m (Nov 2020)
turnover: £4.4m (Dec 2019)
turnover: £17.1m (Dec 2020)
turnover: £313k (Jun 2020)
Modulr
Perspectum
babble
Reactive Technologies
Matillion
Tyntec
Physitrack
WhereIsMyTransport
Takumi
Twig World
mean CAGR among the top 10
161%
£13.8m
mean latest turnover among
the top 10
8
The SaaS Report
These 10 SaaS businesses are ranked
by their compound annual growth
rate (CAGR) in employee headcount
over the last three years. To be
eligible, companies need to file annual
accounts disclosing headcount in their
base year (four years ago) and in their
most recent financial year, as well as
having at least five employees in their
base year.
Top ranked OneTrust develops
software designed to help users
manage their security, privacy and
third-party risk. Backed by nearly
£700m in equity investment, the
Islington company has grown
headcount from five in 2016 to 252 in
2019.
Second on the list is cybersecurity
firm Snyk. The Wokingham-based
firm develops tools that identify and
help fix security vulnerabilities in
open-source coding. It has grown
from six employees in 2016 to 143 in
2019. A $300m (£218m) fundraising
in September 2021 saw participation
from Accel, Baillie Gifford and
BlackRock, and valued the firm at a
reported $8.5b.
Top 10 SaaS businesses by headcount growth
Top active SaaS companies by three-year compound annual growth rate in headcount (latest accounts 2019–2021)*
OneTrust
Snyk
Tessian
Quantexa
Parkopedia
ScreenCloud
CUBE
Hackajob
Form3
F2X Group
230%
188%
184%
168%
156%
144%
141%
139%
132%
132%
headcount: 252 (Dec 2019)
headcount: 143 (Dec 2019)
headcount: 138 (Mar 2020)
headcount: 211 (Mar 2020)
headcount: 134 (Jul 2020)
headcount: 87 (Sep 2020)
headcount: 84 (Mar 2020)
headcount: 75 (Mar 2020)
headcount: 75 (Dec 2019)
headcount: 68 (Oct 2019)
mean CAGR among the top 10
161%
127
mean latest headcount among
the top 10
*Companies must have at least 5 employees in their base year to be included.
9
The SaaS Report
The volume of equity investment
secured by Software-as-a-Service
companies has climbed every year
since 2011, peaking at £3.16b in 2020—
27% of all investment in the decade.
The top recipient in 2020 was Artificial
Intelligence-based security service
OneTrust, raising £162m in September
and £224m in December. The number
of deals made over this period
consistently climbed until 2019, when
it reached 1,184 and then remained
relatively stable at 1,159 in 2020. While
investment in many sectors in 2020 was
affected by the COVID-19 pandemic,
SaaS appears to have maintained the
interest and faith of funders.
The future looks bright for investment
in the SaaS sector. The first half of
2021 has already matched 2020 by
hitting £3.15b, making it clear that
this year will be the biggest yet. An
enormous £358m was secured by
payment processing and point-of-sale
technology developer SaltPay from
backers Hedosophia and Tiger Global
Management. As the largest equity
deal secured by a UK SaaS company on
record, this is a huge feat, particularly
as SaltPay only incorporated in October
2019 and the deal was the company’s
second investment round.
Investment into SaaS businesses
Equity investment into SaaS businesses (2011–2020)
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
£3.16b£2.89b£1.70b£1.48b£150m£842m£443m£241m£227m£658m790
596
177
969
275
1,076
1,099
1,184
373
1,159
Number of deals
Amount raised (£)
£1.68b£1.47b269
347
Q1 2021 Q2 2021
total equity deals secured by
SaaS companies (2011-2020)
7,698
£11.8b
value of equity deals secured by
SaaS companies (2011-2020)
10
The SaaS Report
With 199 deals raised via Seedrs and
68 deals associated with Crowdcube,
placing first and third on a ranking
of top investors, crowdfunding
is a hugely popular method of
fundraising for SaaS companies.
Crowdfunding allows larger numbers
of investors to participate on a
smaller scale which minimises risk,
and thus is more often used by young
companies. SaaS companies are no
different; 96% of SaaS companies
securing equity via crowdfunding
were in seed or venture stage at the
time of raising.
Another major investor is the
Development Bank of Wales,
primarily through its fund
Technology Venture Investments. A
total of 74 equity deals have helped
to build a local SaaS ecosystem in
Wales. Top recipients include AdTech
venture Novatiq as well as analytics
technology provider Clinithink.
Top investors into SaaS businesses
Top investors into SaaS companies by number of equity deals (2011–2020)
119
74
68
44
43
42
38
36
35
31
Seedrs
Technology Venture Investments
Crowdcube
Entrepreneur First
Notion Capital
Seedcamp
London Co-Investment Fund (LCIF)
Scottish Enterprise
SyndicateRoom
Ascension
number of funds participating
in equity deals into SaaS
companies (2011-2020)
1,305
16.0%
average stake taken in equity
investment deals into SaaS
companies (2011-2020)
11
The SaaS Report
With only 16.7% of founding teams
including at least one woman, a lot more
is needed to be done to achieve equal
representation in the SaaS sector. Women
continue to be affected by pervasive
bias in the tech industry, making it a
greater challenge to access capital for
their startups and to build an essential
network of investment and partnership
contacts.
There are already initiatives underway to
improve gender representation amongst
business leaders in the tech industry,
such as accelerator programmes to
support business growth and help with
making vital connections. More women
are also taking on roles in venture capital,
which may be vital to female-founded
businesses being able to access more
funding. Change can be seen when
examining seed-stage businesses; a
slightly higher proportion are female-
founded. Women are also increasingly
taking on senior management positions
in SaaS companies, regardless of the
gender of the founders.
Looking at international founders of
active high-growth SaaS businesses,
the majority of the top nationalities are
either European or English-speaking.
Unsurprisingly, geographical proximity
or the common language make it more
likely to launch a company in the UK
ecosystem. Ireland, the top ranking
nationality, has both features.
Diversity of SaaS business founders
SaaS companies by founding team genders (2021)
All female
6.2%
177
Majority female
0.4%
11
Equal split
7.5%
212
All male
83.3%
2,360
Majority male
2.6%
74
Top nationalities of SaaS founders, excluding UK (2021)
SaaS companies by managment team genders (2021)
All female
2.5%
79
Majority female
2.0%
63
Equal split
6.0%
190
Majority male
36.6%
1,160
All male
53.0%
1,681
108
105
95
80
73
70
48
35
33
30
Ireland
United States
France
Italy
Germany
India
Australia
Poland
Greece
Netherlands
12
The SaaS Report
Outlook: the future of early-stage SaaS businesses
As this report demonstrates, the
scaleability, predictability of revenues,
and resilience offered by Software-as-
a-Service companies has driven record
investment into the sector. Successful
exits and IPOs by SaaS business such as
the recent Darktrace listing in April will
drive further activity. This is a business
model that is not going away any time
soon. But what does the future hold for
early-stage SaaS businesses?

The world is facing unprecedented
challenges to which software will
undoubtedly be part of the solution.
At its core, software offers productivity
gains that make it an inherently
valuable tool. Software entrepreneurs
that employ a service model find it
easier to achieve the stability needed
to provide value to customers over the
long term.

Beauhurst data shows that the SaaS
model is being applied to more niche
and specialised areas than ever before.
Surrey-based Lilli is helping to facilitate
independent living for the elderly and
vulnerable by monitoring patterns of
life within the home such as the use of
appliances to improve quality of life.
Caregivers can access insights via Lilli’s
software. The company has raised over
£10m via four rounds, including a £4.5m
round in March this year. Technology
like Lilli’s may help governments
around the world to alleviate the costs
of a growing population.

Leicestershire-based Previsico
provides real-time flood forecasting
via its visualisation platform. Insurers,
businesses and government clients use
the platform to mitigate flood damage,
build resilience and reduce disruption.
It raised £1.8m in September from
investors including the Midlands
Engine Investment Fund. As the
climate becomes more unpredictable,
technology like Previsico’s will help
public and private sector organisations
to manage the risk of natural disasters.

Another trend that is apparent in the
early-stage software companies raising
money is a push towards integration.
For decades, pundits have been
proclaiming that “data is the new
oil” but it is relatively recently that
organisations have been able to access
the value afforded by data at scale. As
more organisations generate, collect
and acquire data, software will play an
important role in extracting insights,
managing permissions and bringing
together disparate systems in a secure
manner.

In October 2020, Public Health England
lost around 16,000 coronavirus records
because it was using an old version of
Microsoft Excel. Incidents like this show
how robust solutions for managing data
could help to streamline and improve
the work of governments everywhere.
An example of an upcoming company
that may be able to tackle these sorts of
problems is the data-licensing platform
Shoji. Appropriately headquartered in
Westminster, it is working on privacy-
first technology to allow organisations
to share data securely. Founded this
year by researchers from Imperial
College London, the company has
already raised £1.6m.

As the data and examples in this
report show, the future of SaaS for
early-stage businesses looks bright.
Unprecedented interest and investment
in the sector will help to ensure that a
new generation of UK SaaS companies
receive funding. While some of the
low hanging fruit has already been
plucked by earlier waves of software
entrepreneurs, the world is not short of
challenges that software can help us to
overcome. The SaaS model can provide
entrepreneurs with some stability
while building more specialised and
integrated solutions to ever thornier
problems.
“For decades, pundits have
been proclaiming that
‘data is the new oil’ but it
is relatively recently that
organisations have been
able to access the value
afforded by data at scale.”
13
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Editor
Henry Whorwood
Production
Dan Robinson, Freya Hyde
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