Andy Gregory on approaching an investor about funding
Andy Gregory gives his thoughts on what entrepreneurs should consider when speaking to investors about funding
1. Ask plenty of questions. Debt is debt, but equity partnerships come in all shapes and sizes. To find the right fit, be open about what you want for your business and ask your potential investor if that’s something they can support.
2. Be realistic and upfront. About revenue forecasts, market dynamics or improvements that could be made to your business. A good investor will be a supportive partner, not someone you need to sugar coat the facts for.
3. Make sure the chemistry’s right. We make a point of offering support as a junior partner, without getting involved in the day-to-day running of companies. But trust, chemistry and a shared enthusiasm for the success of the business makes the partnership all the more enjoyable.
4. Be open to ideas. What else can an equity partner offer you besides money? New contacts, business experience, specific expertise?
5. Make sure your investor is aligned to your goals. BGF is a long-term, minority investor. This means the decision over when, how and if to exit a company remains in the hands of the business owner. Know, from day one, where any potential partner stands on this point.
6. Don’t hide past failures. There’s more to be learnt from what’s gone wrong than what’s gone right.
7. Monitor third party costs. During the investment process, agree who will pay for what and when.
8. Show that you’re up the challenge. An investor will provide support, money and encouragement so that you can take the calculated risks that others won’t.
9. Speak to other business owners. Ask them about their experience of the investment process, how they’ve used their additional capital, and what they looked for in an equity partner.
10. Maintain momentum. Once you’ve decided on the right funding route, do all you need to keep the processes moving. The best time to make a change is usually when confidence is high, support is forthcoming and market opportunities are in sight.
This article first appeared in the Yorkshire Post in March 2015
MODA IN PELLE
BGF has invested £3.5m growth capital in Moda in Pelle, a designer and retailer of women’s footwear headquartered in Leeds, with nearly 60 stores and concessions across the UK.
Following a successful 12 months and with year-end revenues expected to be close to £20m, Moda in Pelle has extended its management team and will implement a strategy for further growth using BGF’s investment. The new capital will be used to accelerate the roll-out of stores across the UK and internationally, as well as enhance the in-store customer experience and support further development of the company’s website and other e-commerce channels. While continuing to focus on quality and affordable luxury, a brand refresh will be unveiled in autumn 2015.
Stephen and Claire Buck – who have been instrumental in growing the business into a national boutique brand of women’s footwear – will remain majority shareholders. Stephen has been at the helm of Moda in Pelle since he founded the company in the mid-1970s with a single store in Leeds.
To implement the growth plan, David Inglis, who has previously advised Moda in Pelle, will join as chief executive and invest alongside BGF. Judith Pilkington – introduced through BGF’s talent network – has also been appointed to the board as non-executive chairman.
David previously held senior roles at Asda and Shop Direct, while Judith is former chief executive of Space NK and has worked at Fenwicks, Selfridges, Harrods and Mappin & Webb.
BGF will take a minority stake and BGF investment director Richard Taylor will join the board as a non-executive director. As part of the investment, the company has also secured an increased working capital facility from Lloyds Bank. The Lloyds team was led by Matt Pollard and Alison Hoyle.
Stephen Buck, founder, Moda in Pelle said:
“Over the past 40 years, we’ve created a tremendous amount of brand capital among a loyal customer base by focusing on quality design and manufacturing. After a particularly strong period of growth, we want to pursue new opportunities to fully exploit the brand’s potential. David has an acute understanding of what we want to achieve, and brings with him energy, determination and strong background in the retail sector. I’m delighted that he will be joining the team.”
David Inglis, chief executive, Moda in Pelle commented:
“We have ambitious goals for Moda in Pelle. Developing our multi-channel offering will be a primary focus over the next 12 months, and we will continue to explore new opportunities with wholesale and internationally.
“The investment from BGF, alongside an increased facility from Lloyds Bank, provides us with the capital to implement our plan. We are excited about the future of the business and recognise that securing the right long-term funding partner is a key step.”
Richard Taylor, investment director, BGF commented:
“We’re backing Moda in Pelle because of the strength and capabilities of its management team and the growth potential of the business. We’ve been impressed by management’s clear strategy for the company, knowledge of the retail sector and understanding of the Moda in Pelle customer.
“Since opening the BGF office in Leeds, we’ve met many diverse businesses with ambitions to grow. Importantly, we only ever take a minority stake which means that the management teams we support – like Moda – are assured that they will keep control of their businesses.”
NATIONWIDE WINDOW CLEANING
BGF has invested £3m of growth capital in Nationwide Window Cleaning (NWC), a leading provider of window cleaning and associated services.
NWC directly employs and centrally manages 200 staff from around the UK, providing complex and simple cleaning services to universities, hospitals, large retailers and other commercial businesses. Set up in 2009 by Managing Director Thornton Tasker, the company has an annual turnover approaching £10m and manages several major window cleaning contracts including with Royal Bank of Scotland, ASDA and the British Museum. NWC is headquartered in Harrogate, Yorkshire.
The £3m investment will allow the company to expand its fleet and equipment, and hire new staff within its abseiling and specialist cleaning divisions where the company continues to experience growing demand. It plans to use part of the capital investment to increase its workforce in these business areas, with the aim of achieving a fivefold growth in revenue over the next seven years.
Stuart Lees, Managing Director at Altium Capital and former Chief Executive of Latium Group, a manufacturer and retailer of windows, has been appointed Non-Executive Chairman at NWC. Neil Inskip, Senior Investment Manager at BGF joins the board of the company.
Thornton Tasker, Managing Director, NWC commented:
“The NWC approach is to recruit skilled and committed employees, who we can offer ongoing training and development with excellent potential for career progression, actively promoting from within. We have committed to the government apprentice scheme nurturing new talent who can support the business going forward, resulting in higher productivity, quality of work, staff retention and employee satisfaction.
“NWC is a truly national service provider offering a managed quality service with high visibility through leading edge IT. This is the right time to expand. Demand for our range of national specialist services continues to gain momentum and we are in a strong position to grow this part of the business. We are delighted to be partnering with BGF. In addition to the investment, we value the insight and experience of its investment team as well as our newly appointed Chairman, Stuart Lees.”
Neil Inskip, Senior Investment Manager, BGF commented:
“We’ve tracked NWC over the past two years and are impressed by its progress and development under the leadership of Thornton Tasker. There is an extremely strong management team in place, with a clear business strategy and sound operating model.
“In a relatively short amount of time, NWC has become an industry leader in a market with significant opportunities, making the business well placed to build on the number of existing contracts it manages.”
Andy Gregory, Regional Director, North of England & Northern Ireland, BGF commented:
“This is the 63rd growth capital investment made by BGF in UK companies, and the 12th investment made in companies headquartered in the north of England. Our aim is to work with enterprises that span a diverse range of industry sectors, and as such, we are delighted to be working with NWC.”
Springfield Healthcare opens supported living home in Hartlepool
Care provider Springfield Healthcare has opened a new £800,000 supported living development in Hartlepool, a unique concept designed to enable young adults with learning difficulties to live independently in the community.
The ‘Pathways to Independence, Independent Supported Living Scheme’ facility comprises five, two-bedroom apartments and a further single bedroom apartment, along with a ground floor drop-in centre with a TV area and kitchen facilities, and staff available 24-hours a day. Located close to shops and amenities, it provides a halfway step for young people, preparing them for living independently in the community. The property, the historic Co-operative building on Park Road, is Grade II listed.
The project was backed by growth capital provider, BGF (Business Growth Fund). The funding follows BGF’s initial injection of £4.4 million into two businesses within the Springfield Healthcare Group in 2012: Springfield Homecare and Seacroft Care Village.
BGF is the UK’s leading independent investor of growth capital in UK smaller and medium sized businesses, and is backed by five of the UK’s main banking groups. The company provides long-term equity investment in return for a minority equity stake.
Springfield Healthcare Group, was founded in 1967 and today is one of the largest independent providers of domiciliary care in Yorkshire and Humberside. The business, which began as a specialist provider of dementia care, has expanded in recent years to provide general homecare and training for other care providers. Springfield has also pioneered the care village model. This saw the company open Seacroft, a £5 million development in Leeds last year. Across the Group, Springfield now employs 1,200 staff and provides care to 2,500 people each day.
Graeme Lee, CEO of Springfield Healthcare Group, said: “Our ethos is to keep people living at home independently for as long as possible. The facility offers disabled young adults the freedom to choose their path, while benefiting from comprehensive, market-leading care and support. These young people now have the opportunity to live independently within the community, with their families reassured by the 24/7 care and support that they will receive.
He continued: “Springfield Healthcare has seen exceptional growth during the past two years, and the support that we have received from BGF, both financially and strategically, has contributed significantly. We look forward to the further growth of the business during the coming months, continuing to provide the very best care to our clients.”
Andy Gregory, Regional Director at Business Growth Fund (BGF), said: “Springfield Healthcare continues to lead the market, providing the highest quality care in exceptional facilities. BGF is pleased to have been able to assist the business in delivering its latest facility, and look forward to working with Springfield Healthcare as it continues to expand both its properties and service provision.”
Richard Hunt and Jeremy Thompson of Squire Patton Boggs acted as legal advisers to BGF on its investment in Springfield Healthcare.
BGF in £5.6m follow on funding
In May 2014, BGF announced investments totalling £5.6m, of follow-on capital, into two investee businesses: award-winning Mexican street food chain, Barburrito (£3.6m) and budget gym chain, Xercise4Less (£2m).
BGF retained a minority stake in each of these businesses following the investments.
John Swarbrick, BGF’s Head of Portfolio, commented:
“We are an investor of just three years standing and the majority of our investments are still less than 18 months old. However, we are already seeing many encouraging signs of growth across the portfolio of companies that we have backed. This sort of sustained growth often requires the provision of further funding and the ability to provide this forms a critical element of BGF’s offer.”
Morgan Davies, MD and founder of Barburrito, said of the additional funding:
“We started this great burrito race in the UK and as I have always said, this is more than a business…it’s a passion. The further funding provided by BGF is a great step forward for our business. It offers us a vote of confidence and most importantly, the funds with which to continue to take the business forward.”
Since BGF backed Barburrito with an initial investment of £3.25m in March 2012, it has opened three new restaurants across London and additional sites in Leeds and Nottingham; and has established its position as the UK’s first burrito bar with a national presence. Its existing sites have also continued to experience strong like for like sales growth. The company’s turnover has doubled over the past year alone with a net sales run rate of over £8m, and it now employs 200 people nationwide.
Following this latest investment, Graham Turner the former CEO of the Tragus Group (the UK’s largest independent restaurant companies with more than 290 sites across the country) has joined the board of Barburrito as a Non-Executive Chairman. This introduction was made via BGF’s Talent Network.
Leeds based low cost gym chain, Xercise4Less, which received a £5m investment from BGF in August 2013, is also performing strongly and is on track to secure a further 11 sites this year, bringing its total to 29 gyms located across the country.
BGF BACKS BOLTON-BASED MEDICAL DEVICES COMPANY MEDICINA
BGF made its third healthcare sector investment in December 2013 when it invested £6m in medical devices company Medicina.
Medicina is the UK market leader in the enteral feeding device sector. Medicina designs and distributes syringes, tubes and pumps which administer nutrition to a patient, both in hospital and at home. The business, which is based in Bolton, was founded by CEO Ken Harrison in 1992. Clients include the NHS and a number of leading homecare companies.
This investment was led by BGF’s Manchester team.
The investment will allow Medicina to capitalise on growth opportunities in the UK and international markets, as well as support new product development and provide for future acquisitions. Galvin Mould joined Medicina as Non-Executive Chairman bringing with him wide-ranging senior level experience in the healthcare sector.
Medicina was the fifth investment made by BGF in the North during 2013 and took the total invested in the year to £35m. Other businesses backed included Better Bathrooms, one of the UK’s leading bathroom retailers; VTL Group, the manufacturer of precision engineered parts for the automotive industry; Xercise4Less, the low cost gym group and York Mailing, the UK market leader in the specialist production of retail flyers, media inserts and quality catalogues. Collectively they employ over 1,200 people and represent a variety of industry sectors.
This was also the third healthcare sector investment for BGF, having backed Shuropody, the specialist footcare provider and retailer and Springfield Healthcare, Yorkshire and Humberside’s largest independent provider of domiciliary care.
Medicina was introduced to BGF by BTG Corporate Finance and the company is banked by RBS.
Ken Harrison, CEO of Medicina commented:
“We see a number of exciting ways to grow the business both in the UK and overseas. As part of our growth strategy, it was important to find the right long term investor to partner with. BGF demonstrated a strong interest in the business and we believe that they are the right partner for us.”
Neil Inskip, Investment Manager at BGF, commented:
“We are delighted to be backing Ken, who has grown Medicina to be the UK market leader in its sector. BGF’s capital and support will help the Company take advantage of the significant opportunity to grow both domestically and overseas. BGF was established to provide long-term capital to ambitious companies and Medicina meets all of the criteria we look for when selecting investments.”
Andy Gregory, Regional Director for BGF’s Northern team, commented:
“Our Northern presence continues to go from strength to strength. We have now backed ten exciting companies across a huge range of sectors – from manufacturing and retail through to healthcare and hospitality. Having invested £35m this calendar year, we have continued to expand our team as we look to meet the strong demand from ambitious, growing companies who require development capital.”