TWO’S COMPANY: TIM CRITCHLEY AND DAVID SEAR OF SEMAFONE
It was common for the equity investors of yore to demand a complete overhaul of a management team as part of the terms of a fundraising deal. The received wisdom was that the people who had built up a company in the early days of its operation were rarely the right people to lead a much larger organisation. Luckily, some investors now take a more informed view.
In Semafone’s case, not only was chief executive Tim Critchley identified by us as precisely the right man to grow the secure payments business, but his choice of non-exec, David Sear, was also given the seal of approval.
It’s this kind of hands-off, respectful investor-investee relationship that gives other entrepreneurs the confidence to seek outside funding. The business is now in the best possible position to embark on its new contract with BT, one of the world’s largest telecoms companies, and to take Semafone to the next stage of growth.
Tim Critchley – CEO, Semafone
I first got involved with Semafone in 2009. The two founders, David Jackson and Charles Cooper-Driver, came to me with the idea and said they were thinking of setting up a business. I have known David and Charles for more than 20 years. We’d always talked about doing something together but they were busy running a big call centre business – one of the reasons they had the idea for the Semafone technology in the first place – and so they didn’t have time to run with it themselves. It seemed like a great idea and a great opportunity.
We got to a point where the business was making a small profit: we had over £5m turnover for the year and we were growing 35pc-40pc year on year. We had some great customers in the UK but almost by accident had started to win customers overseas: we were being reactive to enquiries through the website and had ended up with around six clients in North America and one in Australia. It was pretty clear to us that we were sitting on a potential global opportunity.
We were keen to try to capitalise on that with external investment. We wanted to get some bodies on the ground overseas, and set up a North America sales team and one in Asia Pacific to go out and be proactive in those regions. We also had just signed a major deal here in the UK with BT, and we realised that it was going to need quite an investment from us to really deliver.
During the process of seeking funding, BGF was head and shoulders above everyone else, really. Its interest in us was exciting; it could help not only with money but also with support and a strong business network.
Bringing BGF into the company has changed the dynamic, but that is as much of a reflection of our development than anything else – we realised we had to grow up a bit and the governance changes that BGF has brought in would have happened anyway, so it worked out really well.
We got David involved about three years ago, before BGF’s investment, as non-executive chairman. I’m delighted to say that BGF felt that he was the right chairman for us and that the relationship he and I had was a strength – so they didn’t feel a need to replace him. I was really pleased that they were happy for David to stay on.
David’s got a fantastic track record and is incredibly knowledgeable in the payments sector, and he’s also a very smart bloke. David and I have forged a great relationship over the years – we’ve done some big contract negotiations and fundraising, and we’ve also had to grapple with litigation over patent infringement. David’s experience has been a huge help in all of that. It is a formal relationship, but that works for us – and the business.
David Sear – non-executive chairman, Semafone
I’ve got 20 years’ experience in payments, and I’m a serial investor in payments companies, so I know the space very well. Three years ago I was approached by a third party in relation to Semafone when it was at a relatively early stage of its development.
It piqued my interest because this is a business with a vital role in protecting consumers and their data. These are really important things to consumers – people want to feel secure when giving out card details over the phone.
This was a business with strong technical capability, and scope for further development in secure payments. It was exciting from an intellectual and investment point of view. Early on, I put my money where my mouth was and invested in the business, and it paid off as the business has since made significant progress.
You wouldn’t invest in a business unless you strongly believed in the people, and that always comes down to the CEO. If you don’t think they can grow with the business, you really shouldn’t invest.
My assessment of Tim when I came in as chairman and investor was that he has a lot of energy, and that he was definitely capable of running the business as it became bigger. I also thought that with my experience – I run Skrill Group, which is a €250m (£179m) business – I could help him as a chairman and create the kind of board that the business needs.
Tim had so much potential, and he has become a mature player as he’s dealt with the challenges that you face in business – making sure you make the payroll, and all those other wonderful things you have to deal with as CEO. Tim is one of those guys who soaks up pressure too, with grace.
I’ve tried to help Tim with strategy and coaching himself in terms of what he can do, but all the time without trying to run the business for him. I understand, having been a CEO myself, the real difference between executive and non-executive: he’s firmly in the seat, he just needs the right kind of advice and support from his board, when he asks for it.
The fantastic opportunity with BT is going to be the next massive step change in the business. You can’t underestimate how important that kind of deal is. But there is an investment required in managing big partners such as BT, and so we knew we needed to go to market and raise money last year.
We were looking for a complementary shareholder and BGF came through the process fantastically. When you get to this kind of stage you benefit from a fresh look at the business and its governance. It has been very firm in its views, but very nice to work with. It is good to have such a direct and clear relationship with a supportive investor.
Cass Art opens in Scotland
Cass Art, the UK’s leading independent art supplies retailer, has opened its first store in Scotland following BGF’s £3.2m investment to support its nationwide growth. The store is located in the heart of Glasgow, which is internationally recognised as a creative city that has produced many world-acclaimed artists.
Founded in 1984 by CEO Mark Cass, an avid art promoter and entrepreneur, Cass Art strives to encourage as many people as possible to create art, believing that art is a fundamental human need and that art over the centuries has profoundly changed the way we view the world.
Mark Cass is a trustee of the Cass Sculpture Foundation, a British charity devoted to the promotion of 21st British sculpture through public commissions and exhibitions. His family have been involved in art over many generations – his great uncle, Paul Cassirer, was an important art dealer in the 1920s, and was a promoter of the Impressionist movement in Europe.
The new site on Queen Street boasts more than 6,000 square feet, and includes the Art Space that will endeavour to support and celebrate the local artist community through workshops and exhibitions. In preparation for its launch, Cass Art was proud to sponsor this year’s Graduate Degree Show at the Glasgow School of Art – one of Europe’s leading university-level institutions for the visual creative disciplines.
CEO and Founder Mark Cass opened his first shop next to the National Gallery, and Cass Art currently has five shops in London and one in Kingston. Cass Art offers the world’s best art materials at the UK’s best prices. All Cass Art shop staff are artists, giving expert insight and advice on all of its customers’ creative endeavours.
“We are thrilled to be opening in Glasgow”, says Mark Cass, CEO and Founder of Cass Art. “It is a city with a long cultural history, and a thriving art community. We look forward to supporting artists of all ages in Glasgow, whether they are beginners, students, tutors or professionals – to fulfil our mission, ‘Let’s Fill This Nation With Artists’. It is our first step in opening affordable art shops across the country.”
BGF backed the Cass Art team to roll out new stores in major cities across the UK over the next five years and to develop its e-commerce platform (www.cassart.co.uk), which presents a significant opportunity to grow on a national scale.
As well as BGF Investment Director Rory Pope sitting on the board, BGF appointed Stuart Rose, the former Chairman of toy group Hamleys, ex-Managing Director and deputy Chairman of The Body Shop and former Chairman of Agent Provocateur as Non-Executive Chairman through its Talent Network.
Rory Pope, Investment Director for BGF commented:
“Mark Cass and his team have created a truly inspiring business based on an ‘art for all’ passion and they remain committed to encouraging everyone to realise their creative talents. By extending Cass Art’s regional footprint and continuing to offer the world’s leading material at the best prices, they are set to achieve their ambition and BGF is proud to be part of that mission.”
Will joined BGF in June 2011 as an investor covering London and the South East and his main role is to source and complete investments into SMEs in the region. He also works with the boards of five portfolio companies to drive value creation, including supporting acquisitions and follow-on investments. In this role, Will has completed seven investments across the technology, leisure & retail, industrial and business services sectors.
Before joining BGF, Will spent six years at Bank of America in London and the US, latterly as an Associate in the bank’s leveraged finance team, focusing on acquisition financing for Global Industrial and US Middle Market clients. After leaving Bank of America, Will studied for an MBA at London Business School, which he completed in 2011. He also has an MA in Economics & Economic History from the University of Edinburgh.
Having grown up on the coast in the south west, Will is a keen sailor, although his young family tends to distract him from much time on the water these days.
“What I love about the businesses that BGF backs is that they are usually still managed by their founders and that makes it much more personal and enjoyable if you can help them achieve their ambitions.”
- Cass Art (Board Director)
- Statesman Travel (Board Director)
- Semafone (Board Observer)
- Molecular Products Group (Board Observer)
- Cennox (Board Observer)
- Anstey Horne
BGF invests in Midlands’ toy company
Based in Wolverhampton, Wow! Stuff is a toy development business that creates or sources inventions from across the world and develops these ideas into marketable products sold to wholesalers and retailers globally. It generally owns the Intellectual Property of the toys or secures exclusive IP rights. Wow! Stuff also creates gifts and gadgets, which are sold under licensed brands such as Top Gear, Wallace and Gromit, Doctor Who and The Science Museum, London. The business currently employs 30 people. Some of Wow!Stuff’s most successful products include 2011 Christmas bestsellers such as the Air Swimmers, My Keepon and Flitter Fairies; and Dave the Funky Monkey, which upon launch in 2010 achieved sales of 250,000 units in 8 weeks and won Hamley’s toy of the year.
Wow! Stuff was founded by Richard North in 2006, together with Kenny McAndrew and Dr. Graeme Taylor who look after new product development. North is a serial entrepreneur who was credited by HSBC as Business Thinker of the year in 2010. Wow! Stuff was also nominated as winner of the Orange Innovation award at the National Business Awards and was included in the Sunday Times Fast Track 100 in 2010.
Wow!Stuff sought BGF’s investment to enable the company to bring new and revolutionary products to market, develop future innovations and expand into the US, where significant growth opportunities exist.
In October 2011 BGF invested £4.25m in Statesman Travel Group (Statesman), an independent travel management company providing a comprehensive service to blue chip corporate and private clients.
The BGF investment, together with additional funds from existing shareholders and support from Lloyds Banking Group, funded the strategic acquisition of Commodore Travel (Commodore) and helped to create one of the top 10 UK travel management companies in terms of transactional volume, with revenues approaching £100m.
Statesman was acquired in 2007 by its current management team, Joint Managing Directors Mervyn Williamson and Jon Langley, both of whom have had significant experience in the travel sector and led the management buyout of Phoenix Travel Group, together with its subsequent sale to TQ3 Travel Solutions in 2003. Non Executive Director Eric Brannan is an experienced travel industry veteran, having held senior roles at American Express and Hogg Robinson, and has worked closely with the management team since 2001.
In December 2014, Statesman appointed Drew Thomson to the board as Non-Executive Chairman. Drew is the former Chief Executive of Airmiles and BA Miles, and was the founder and former Chief Executive of Starcount, the social analytics company which uses mathematics to track the tastes and trends of 1.7bn people and 126,500 celebrities across 12 major social media networks. Drew was also Executive Chairman of Iris Worldwide, a digital media agency, where he led the development and international growth of the Iris group business.
The company has a blue chip customer base with strong representation from the financial services, professional services, property and media sectors. The business has also made significant progress recently in securing more professional service firms as clients with companies including an international accountancy firm who are now using Statesman’s new travel management application.
In July 2015, Statesman also acquired air fare consolidator Greaves Travel and merged into its Masterfare division to expand market share on popular routes to India, Africa, south-east Asia and Australia with British Airways and other leading carriers.