Quarterly Investment Briefing – Q3 – People powered investment

‘People powered investment’ provided the theme for the third Quarterly Investment Briefing which took place at TLT Solicitors office at 1 Redcliff Street yesterday afternoon, 27th September. At the event over 30 active or potentially active investors, managers of investors and enablers of investment activity gathered to hear from a couple of speakers and to share, learn and network.

As the host of the event, I opened with a quick explanation of what I was thinking when I came up with the theme – in essence, I was interested to hear how people have helped make or break investment in the experience of our speakers – as investors and as founders. There’s no question that there’s a lot more to successful investment than the transfer of some cash – the non exec directors who provide an independent, umbrella view of the strategy and direction, the investors who interrogate the proposition and impact its course, the senior management team who make the day-to-day decisions for example.

The data unfortunately isn’t very forthcoming on the topic – and so we took a quick tour of some insights from BDRC’s SME Finance Monitor to get us thinking. As the slides linked below indicate, there’s still much work to be done on the gender balance of founders, and the wider executive team, according to both BDRC and Beauhurst’s new ‘people’ function. I used a small sample set of the 25 companies who’ve raised equity investment in Q2 and found that 36% have a woman in their founding team or senior management. We talked briefly about the role of broader diversity in making investment successful but only really to say that more research is needed.

Our first speaker was Nick Davies, Founder of Neighbourly who challenged the audience to think about a different perspective to their investments. As a certified ‘B Corp’ Neighbourly have changed their articles of association to reflect a focus on people, profit and planet and have undertaken significant steps to ensure their actions reflect this commitment to profit and purpose. Neighbourly are one of 12 B Corps in the region and I’m confidently assured that there are many more West of England businesses in the pipeline who, if successful will be legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment. Nick drew a simple illustration to help us appreciate the tension his company is helping to overcome, I’ll leave him to explain how Neighbourly is bringing budgets out of those revenue focused companies to unlock more philanthropic impact.

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Nick also introduced the crowd to a blog originally posted on Medium entitled ‘Zebras fix what unicorns break.’ The article, and Nick’s swift introduction to it, identify a new notion of fast growth company – a zebra, but why a zebra? The article states:

  • To state the obvious: unlike unicorns, zebras are real.
  • Zebra companies are both black and white: they are profitable and improve society. They won’t sacrifice one for the other.
  • Zebras are also mutualistic: by banding together in groups, they protect and preserve one another. Their individual input results in stronger collective output.
  • Zebra companies are built with peerless stamina and capital efficiency, as long as conditions allow them to survive.

Interestingly, Nick had his own take on the zebra vs. unicorn debate, suggesting that Neightbourly can straddle the two and deliver greater returns whilst still keeping purpose at the heart of the business. Read the full article here: https://medium.com/@sexandstartups/zebrasfix-c467e55f9d96

Nick and I also chatted about the impact the B corp certification has had on the people he works with and his approach to raising investment. He described the roles that he and his CEO have carved out and the benefits he’s seen from the Non Exec Directors that he works with now.

Estrella Green recently helped Frog Capital to re-brand to become ‘the CEOs VC’ and as such they provide scale-up expertise and capital for tech leaders. Natasha McKenzie of Estrella Green asked questions of Shirin Dehghan, senior partner at Frog Capital and successful founder and CEO turned VC. She founded, expanded globally and subsequently sold her mobile communications business Arieso. A University of Southampton Engineering alumna, Shirin has over 20 years’ experience in the software and mobile communications industry which she now uses when making investment decisions at Frog Capital (focusing on Series B investments who are generating £2-3M revenues) and as Non-exec Chair of Opensignal, a UK based company that sets the gold standard for mobile experience globally. Shirin shared some of her ‘rules of thumb’ for growing a business, my favourite being ‘hire slow, fire fast’ which she reflected was much harder when working at Board level. She also talked about getting the right people onto the business bus, and then working out the right seat for them – illustrating her point with a story from her own leadership journey.

We rounded off the event with my traditional whistle-stop tour through some region focused Beauhurst data. We learnt that there are 842 companies tracked by Beauhurst in the West of England of whom 294 have received equity investment and 339 received grant funding. We also discovered that Seedrs have seen an additional 11 regional deals since the last quarter and that Molson Group’s recent raise of £6.3M through BGF Growth Capital saw them join the top 10 fundraisings since the records began in the region. For the full low down, have a look at the slides linked below.

As always, my heartfelt thanks go to the sponsors who make the Quarterly Investment Briefings and this newsletter possible – TLT Solicitors, KPMG and Smith & Williamson.

If you are an investor and you would like to join the next QIB, taking place on 6th December, please sing up to join the newsletter group here: http://bit.ly/ESQIBFORM

If you are a founder and you’d like to include your proposition for investors to consider at the next event, please send it to me by lunchtime on the 5th December – my email is below.

Read more about the QIB here: https://www.scaleupgenerator.co.uk/articles/qib-101

Briony Phillips Associate Director and Scale up Enabler at Engine Shed Briony.phillips@engine-shed.co.uk