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.”
In December 2013 BGF invested £3.2m for a minority stake in Cass Art, one of the UK’s leading independent art materials retailers. This was BGF’s 11th investment in London and the South East.
Founded in 2001 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, with an emphasis on nurturing talent, expression and art as freedom.
Cass Art’s first store was on Kensington High Street. Since then the company has expanded and now has six stores across London in Hampstead, Charing Cross, Kingston, Soho and its flagship store in Islington. The company now also has a national presence with stores in Bristol, Liverpool and Glasgow.
The business and brand has grown from strength to strength over the past five years and now employs over 130 staff. BGF backed the Cass Art team to roll out new stores in major cities across the UK and to develop its e-commerce platform (www.cassart.co.uk) which presents a significant opportunity to grow on a national scale.
Since BGF invested, Cass has opened three stores and significantly increased its e-commerce operations.
Cass Art attracts a wider and younger range of customers than traditional art stores by making art accessible with its high street locations, workshops and relative affordability.
Typical customers include a mixture of beginners, hobbyists, art students, vocational artists and professional artists, as well as children through the launch in 2009 of the award-winning Cass Art Kids range of products.
Management have also established many partnerships with London’s cultural institutions and art universities, including the National Gallery, the Royal Academy of Arts, the Royal College of Art, Design Museum and the Institute for Contemporary Arts, all of which are heritage institutions looking to appeal to a younger audience well-represented by Cass Art’s customer base.
The UK art materials market is highly fragmented with a handful of retailers accounting for just over a quarter of sales. Approximately 10% or 180,000 of all UK university students are enrolled in an Arts course with enrolment growing by 25% between 2004 and 2010. The market’s fragmentation and growing customer base both offer considerable opportunity for Cass Art to professionalise the UK market.
Mark Cass has been an avid art promoter and entrepreneur throughout his business career firstly as Managing Director of Craftsmith which his family bought from WH Smith in 1979. This was the largest arts and crafts retailer in the UK and was sold in 1984.
In 1979 Mark and his father Wilfred Cass OBE co-founded the Image Bank UK, the world’s largest film and stock photography library which was sold to Getty images in 2000. In 2001, he turned his attention to creating Cass Art, expanding the Company to six stores today.
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 joined the Cass Art board as Non-Executive Chairman. This appointment was made by BGF through its Talent Network.
BGF was introduced to Cass Art by the company’s bankers Barclays.
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
Statesman acquires Commodore International Travel
Statesman Travel Group have announced that it has acquired Commodore International Travel.
The combined entity will trade as Statesman Travel, with Commodore’s Masterfare remaining a distinct and separate brand. London remains the major centre for the business supported by its regional office in Manchester. The enlarged group will become a ‘top 10’ UK travel management company in terms of transactional volume, with revenues of circa £100 million and a staff of 150 people.
The Business Growth Fund (BGF), which has been established to invest in Britain’s fast growing smaller and medium sized businesses, has supported this acquisition. It will take a minority stake in Statesman and will sit on the board alongside the current management team, led by Mervyn Williamson and Jon Langley.
Statesman is known for its high levels of service and for seeking out and applying innovative solutions to set the industry standard in delivery. In tough market conditions, Statesman has increased sales by well over 50% since its acquisition in July 2007. This has been achieved through working in close partnership with its blue chip customer base, which includes strong representation from the financial services, professional services, property and media sectors.
Jon Langley, Joint Managing Director of Statesman Travel, commented:
“This investment and acquisition is fantastic news for both businesses, as well as our clients and staff. Commodore Travel is a well-established business with whom Statesman has much in common. We believe that there is a strong rationale for combining our strengths, both optimising the service that we offer our existing clients and expanding our capabilities to meet the needs of multi-national companies in the future. Together we can be a potent force in the travel management sector.”
Mervyn Williamson, Joint Managing Director of Statesman Travel, commented:
“We are committed to ensuring continuity and will be harnessing the benefits of the enlarged group for our clients. Customer service remains absolutely key to what we do.
This is a critical next step in Statesman’s ongoing growth and in the BGF we have a partner investor who will actively support this. In addition to funding, they provide expertise and high level contacts; they will sit on our board and will bring an edge to the business – all of which will be of great benefit to Statesman and our clients.”