BGF has invested £2.8m of growth capital in RVL Group, a specialist aviation services provider that operates a fleet of 15 aircraft based at East Midlands Airport (EMA).
RVL Group manages long term contracts for government and private sector clients in the survey and surveillance market, and undertakes scheduled and ad-hoc cargo work. It also provides bespoke services for defence equipment manufacturers. While most of its work is carried out in UK airspace, it has completed surveys as far afield as Greenland, Iceland, Saudi Arabia and western Africa as well as throughout Europe.
Founded in 2007 the company operates from a purpose built hangar and office building at EMA, with direct access to the main runway. EMA’s central location and comprehensive infrastructure are strategically important for RVL Group, allowing rapid transit times to any destination in the UK.
RVL Group is part way through a major project to design and create a new spray system for a freight converted Boeing 737 aircraft, which can be used for dispersing oil spills. The solution will be a worldwide first and is being developed with the Maritime and Coastguard Agency and Waypoint Aeronautical. It is expected to revolutionise the industry’s oil spill clean-up capability which currently consists of legacy systems and technology.
The company plans to use part of BGF’s investment for the final stages of the project, which is due to complete in the first half of 2015, pending regulatory approval. The remainder will be used to develop into new business areas and expand RVL Group’s aircraft fleet, meaning it can take on more work.
As part of the deal, Graham Cole CBE joins the company as Non-Executive Chairman after being introduced to the co-founders through BGF’s talent network programme. Cole is a former Chairman of the West of England Aerospace Forum, a member of the Ministerial Aerospace Committee and Chairman of Agusta Westland. BGF’s Tim Whittard joins the board as Non-Executive Director and James Syrotiuk as Board Observer.
Steve Guynan, Managing Director, RVL Group commented:
“In the past seven years, we’ve won several major contracts through demonstrating innovation, reliability and efficiency. We now want to increase capacity so we can grow existing contracts and take advantage of new opportunities. BGF’s investment allows us to do this.
“We are also delighted to be welcoming Graham Cole to the board. Graham’s experience in the industry will be invaluable as we continue to expand the business.”
Tim Whittard, Investment Director, BGF commented:
“We have worked closely with co-founders, Colin and Steve, to understand the needs of the business. Throughout this process, we’ve been impressed by their sector expertise and commitment to the company, their staff and customers.”
“RVL Group has quickly established a strong foothold in a market with high barriers to entry. There are further opportunities that – as a company with plenty of ambition, energy and ability, and an enlarged aircraft fleet – it can capitalise on.”
RVL Group is banked by Natwest.
Midlands based family cycling business partners with BGF
– £2.8m invested to expand Rutland Cycling’s estate of destination stores and e-commerce capability –
In March 2014, BGF continued to support the leisure sector when it invested in one of the UK’s leading independent cycle retailers, Rutland Cycling.
BGF invested £2.8m of growth capital in Rutland, a family owned business that is based in the East Midlands.
The investment will fund the refurbishment and extension of Rutland Cycling’s existing estate of stores; as well as its national expansion, with four new outlets set to open in prominent UK leisure and tourist destinations over the next 4 years. The investment will also enable the business to develop its e-commerce capabilities, including its website www.rutlandcycling.com.
In addition to providing growth capital, BGF introduced the business to Keith Pacey and Keith Fleming who joined the board as non-executive Chairman and non-executive Director respectively. Pacey is the founder, and former CEO and Chairman of Maplin Electronics and has also held a number of NXC seats including at Mountain Warehouse, and LBM Direct Marketing Fleming is the former Finance and Strategy Director at B&Q plc, former CEO at Woolworths Group plc and former CFO of Blacks Leisure Group plc. Tim Whittard, Investment Director at BGF also joined the company’s board.
Rutland Cycling is led by Paul Archer and David Middlemiss who took control of the business in 2013, but have a long history in a business that was originally founded in 1981 by Paul’s parents, Dave and Ann Archer.
Rutland Cycling sells and hires premium cycling products from its four stores in the Midlands and via its website; and is a preferred retailer for the UK’s three best selling cycle brands, Giant, Trek and Specialized. It has been named Independent Cycle Retailer of the Year for three of the last four years and its website consistently ranks among the UK’s top 10 online cycling retailers. The business currently turns over approximately £10m each year.
Rutland Cycling’s retail outlets, which include one of Britain’s biggest bike shops, are located in leisure destinations in Lincolnshire (Rutland), Cambridgeshire (Grafham Water) and Northamptonshire (Fineshade Wood), all of which benefit from extensive cycle trails and high footfall. In addition to retailing and hiring premium products, Rutland Cycling also offers workshop and test ride facilities so that customers can have their bikes set up, adjusted and serviced in store or can try out the product range on relevant terrain.
David Middlemiss, Managing Director at Rutland, reflected that:
“We are extremely pleased to be opening a new chapter, one that will bring exciting developments for our customers and our people. Our vision is to be Britain’s best cycling destination, and our staff have worked incredibly hard over the last year to be recognised as both the UK’s best Independent Bike Retailer and Women’s Independent Bike retailer of the year in recent months.
“Working with BGF now allows Rutland Cycling to realise the ambition we have to take a unique model, rooted in a passion for cycling and customer service, and inspire more people to own and ride a bike. This is excellent news for everyone associated with our business.”
Tim Whittard, Investment Director at BGF who joined the board of Rutland Cycling, commented:
“Rutland Cycling is a business with a thirty year heritage that has developed a strong brand and fantastic relationships with the UK’s best selling bike companies. With the rising popularity in cycling, has come high levels of competition from online retailers in this space and Rutland’s combined bricks and mortar and e-commerce strategy and its differentiated customer offering has enabled it to hold its own in this competitive market.
“Our investment marks the start of a partnership with the company and we look forward to working with the management team, Keith Pacey and Keith Fleming to take a successful well established model and expand it across wider geographies and to reinforce the business’ place in the cycling retail market.”
PTS CONSULTING GROUP
BGF invested £8.7m of capital in London headquartered PTS Consulting Group (PTS), a global IT Consulting and Project Management company in October 2013. Established in 1983, PTS operates from 17 strategically located offices, enabling a ‘follow the sun’ service from Australia, through Asia, the Middle East, Europe and America.
PTS’s clients, which include 17 of the top 20 global investment banks as well as more than 30 Fortune and FTSE 100 companies, have mission critical, multi-territory IT project requirements and PTS has the local knowledge and world class skills to supplement their in-house teams. This project activity has resulted in PTS helping its clients move into some of the world’s most iconic buildings such as: the Willis Tower in Chicago, the Abu Dhabi Stock Exchange, the International Commerce Centre in Hong Kong and the Mori Tower in Tokyo. In London, PTS is working with companies moving into 122 Leadenhall Street (the ‘Cheesegrater’), 20 Fenchurch Street (‘the Walkie Talkie’) and 30, St Mary Axe (the ‘Gherkin’). PTS also provided Audio Visual and Multimedia expertise for The Shard Viewing Gallery and the London 2012 Olympics Aquatic Centre and Velodrome. In total, PTS has worked in 80 countries and 320 cities.
PTS has recently invested in its Data Centre service, developing a consulting and market-leading accreditation platform, STARS, which has driven significant growth in the business. Data Centre projects have included supporting a global online retail and distribution company with an assessment of its Data Centre capability and working with a leading US financial institution to define its global Data Centre strategy.
CEO Kevin Perrett originally led an MBO of PTS in 1990 when it operated out of one London-based office with just eight employees. Since then, it has developed a presence in 10 countries employing 400 people, and has delivered 11,000 projects for 4,500 clients. The business is on track to generate revenue of almost £40m in 2013.
BGF’s investment will fund geographical expansion, in particular in North America, accelerate the development of STARS, and allow PTS to recruit additional high calibre staff. Funding will also be available for strategically relevant acquisitions.
Rob Pinchbeck has joined the Board as Chairman. Rob has extensive international business experience developed during a 40-year career in the oil and gas industry, latterly with Petrofac where he founded and led the Operations Services division and subsequently served as Group Director of Strategy. Rob previously acted as Chairman of Sparrows Group, and currently is a non-executive Director of IGas plc, Enteq Upstream plc and Severn Energy International.
Tim joined BGF in September 2011 and is based in Birmingham. His main role is to identify and successfully execute investments for the fund. He sits on the board of a number of portfolio companies.
Tim has 15 years’ experience in private company investing and has been involved in or led investments into over 16 businesses. His investment experience was gained initially at Natwest Equity Partners, Gresham Private Equity and then at Sovereign Capital, where he was involved in a number of growth capital and management buyout transactions, across multiple sectors and throughout the UK. Tim began his career at Coopers & Lybrand starting with the Business Services team before moving into Corporate Finance both in the UK and in Continental Europe.
Tim has a BSC (Hons) in Biochemistry and Biotechnology from Birmingham University and is a qualified Chartered Accountant. He is married with two children and lives in Hertfordshire. When he is not working Tim enjoys leisurely cycling, competitive motorsport and clay pigeon shooting.
“At BGF I have the privilege to meet, work with and support many exciting, growing companies and high-quality entrepreneurial management teams and to help them to deliver their vision for the future of their businesses.”
Latest investments/Board positions:
- RVL Group (Board Director)
- Rutland Cycling (Board Director)
- PTS Consulting Group (Board Director)
- Celaton (Board Director)
- Springfield Healthcare Group
- GCI Telecom (Board Director)
- Paintbox Group (Board Director)
FUNDING SALES & MARKETING
“We call it the ‘ugly duckling syndrome’,” says Sarah Wood, Chief Operating Officer and co-founder of Unruly, a London-based company that is one of the world’s leaders in social video campaigns. “Businesses like ours reach a stage where they’re no longer a fluffy chick start-up, but nor have they become a Google-like beautiful swan – yet they still have to compete against both of them.”
It’s a common theme amongst successful business founders and entrepreneurs. If getting the business off the ground was difficult, making the leap to scale and global reach can be even more challenging and nerve-wracking. One of the biggest problems is that building a sales and marketing infrastructure capable of acting as a springboard for that leap requires financing and specialist expertise. Growing businesses are often short on both.
At Unruly, founded in 2006, the business had reached a critical moment by 2011. “We’d run almost 2,000 campaigns but when you hit a certain size it feels uncomfortable to start taking even bigger risks without a cash cushion on the balance sheet because there are inevitably going to be problems to overcome at some stage,” says Wood. Unruly had made a big splash in New York but was desperate to open an office in Chicago, while also needing to get a Berlin presence up and running and move into Asia. “Geographical footprint is so important when you’re dealing with Fortune 100 companies,” says Wood. “The trouble is it takes the same investment of time and money for a business like us to open new offices and subsidiaries as it does for a huge multi-national, but they have much greater resources to play with.”
To make matters worse, time was pressing. “We knew organic growth wouldn’t be quick enough,” Wood adds. “There were no market leaders in the US or Germany, so this was a real window of opportunity.”
It was at this stage Unruly began negotiations with BGF. “We considered other types of financing, including debt, but we wanted backers whose interests were aligned with our own,” Wood explains. Tim Whittard, a BGF investment director based in Birmingham, says the sort of growth capital Unruly sourced is perfect for growing companies that want to develop sales and marketing with the aim of taking the business to the next level. Such companies need new people, as well as infrastructure that may range from scalable IT platforms to physical property, but none of this spending generates an immediate guaranteed payback.
“Investment in sales and marketing is all about preparing the ground for growth but it is cash-burning and speculative – you’re just not going to be able to raise debt to support that,” Whittard argues. “In any case, even if you could fund these investments with debt, there are good reasons not to: with an equity partner, and particularly with BGF, you’ll also get commercial support, including a presence on the board, and hugely valuable access to networks of useful contacts.”
This was exactly what Richard North, chief executive of toy development company Wow! Stuff, was looking for when his business reached critical mass. “We were making good money but we were also aware there was a ceiling,” North recalls. “As an entrepreneur, you always wonder if you could do something really big, but you also have a fear of failure, and we felt we’d reached a crossroads – that if we were really going to go for it, which we had the ambition to do, we’d need help.”
Wow’s discussions with BGF were completed over the course of a few weeks early in 2012, securing a £4.8m investment in the company. North wanted the cash to fund an Asian office that would oversee local production and quality control, to fund expansion into the US and to beef up product development, but the arrangement was not simply a financial one.
“Running a business is lonely – very often you don’t even know what it is you don’t know,” North says. “With BGF, we’re in it together and I’ve come to see that as just as important as the money they’ve provided – more so really.” Not least, they have introduced an exceptional non-executive director to the company with toy industry experience at the highest level, whose networks have already helped Wow to move closer to mass market volumes.
Software business Celaton has also been in recruitment mode since securing a £2.5m equity investment from BGF in January 2013. “The difference this money has made to us is that we can invest in the right people to go for growth,” says Celaton’s chief executive, Andrew Anderson. “Good sales directors and marketing directors don’t come cheap and we’ve already made some fantastic hires.”
However, Anderson points out that development of sales and marketing requires more than just additional people. “It is also about the effort that goes into marketing and sales; BGF encouraged us to spend three months conducting some good old-fashioned market analysis that we’d simply never had the resources for in the past,” he says. “You can waste an awful lot of time and money doing the wrong things and that analysis is already providing us with some priceless intelligence.”
Anderson did at least consider other sources of finance when he realised Celaton’s growth potential was being curtailed by its lack of capital. “Our bank was very supportive, but it brought out its standard lending models and we just couldn’t get the boxes ticked,” he says.
Celaton also held talks with several other equity investors before settling on BGF. “They were only interested in a minority stake, but, also, they were prepared to work with us,” he says of the decision. “With the venture capital firms we met, we always felt we were working for them – they gave short notice of meetings, for example, and were hugely demanding about the information they wanted and then their key people wouldn’t turn up.”
In the end, it’s the relationship that matters most, says BGF’s Tim Whittard. Sales and marketing investments require patience – and while they’re waiting to see those dividends start flowing, both investor and investee have to be able to work together constructively.
“My personal checklist when I’m thinking about whether a company has investment potential starts and stops with my assessment of its management – and its CEO in particular,” Whittard says. “He or she needs to be genuinely looking for a partner rather than being solely focused on the money – the chemistry is hugely important given that we’re going to have such a long-term relationship.”
Milton Keynes based software business secures £2.5m from Business Growth Fund
Founded in 2004 by Andrew Anderson and Gary Grant, Celaton was created through the MBO of Redrock Technologies from Netstore plc and the subsequent acquisition of DG Tech Ltd. The Company’s inSTREAM™ software applies artificial intelligence to streamline labour intensive clerical tasks and decision making in a way that hasn’t been possible before.
Delivered as a service, inSTREAM software transforms the way that enterprises handle the unstructured content that flows in every day from customers and suppliers including correspondence, claims and complaints received by email, fax, post & paper. It enables scale and efficiencies that were previously out of reach, minimising the need for human intervention and ensuring that only accurate and relevant data enters line of business systems.
Unique to inSTREAM™ is its ability to learn through the natural consequence of processing information. inSTREAM is relied on by enterprise customers in retail travel insurance and financial service sectors including Asos, Carphone Warehouse, TalkTalk & Virgin.
In December 2012, BGF invested £2.5 million in Celaton. The growth capital from BGF is supporting the accelerated development of a sales and marketing infrastructure and enabling Celaton to drive sales into both the public and private sectors.
Tim Bittleston, Chairman, was introduced to the company through BGF’s Talent Network. Tim has considerable experience at CEO and non-executive levels at a number of IT and software businesses and has raised over £150m in venture capital for various successful enterprises over the past 12 years. Tim Whittard, Investment Director also joined the board as BGF’s representative.