News about 12 UK growth companies and/or accelerators + turnover in the GRID marketplace, 28th August – 3rd September 2016:
Monzo | Atom Bank | Starling | Bread Holdings £63.7m |Tiger UK £40m | Hollywood Bowl | Nutriment £3.1m | Not on the High Street | Propercorn £10m | Little Dish £6m | Smart Pensions | The Gym Group £36.1m (6 months)
The latest challengers to high street lenders are start-ups with mobile apps | Kiki Loizou, The Sunday Times. August 28
DZ profile: Monzo Bank Limited
Business: UK digital-only challenger bank - online banking app with goal of becoming a “financial hub” from which customers will control all their money: tracks a user’s daily spending in real time, helps compile an expense report when a receipt is uploaded and retrieves penalty charges automatically should someone forget to tap out with their card at a train station. More than 200,000 people have registered, with 35,000 using Monzo to keep tabs on their budgets. ...app has won a restricted banking licence and Blomfield expects the current account with overdraft facility and a direct debit service to be up and running next year. ....offers pre-paid cards that monitor users’ spending to help people to manage their finances.
Location: Old Street, east London.
Founder: Tom Blomfield, 31, chief executive
1. changed its name from Mondo last week
2. ...one of a cluster of start-ups hoping to build a new-age mobile bank with no branches. It joins names such as ATOM, TANDEM and STARLING, which have the green light from the Financial Conduct Authority to start work.
Monzo plans crowdfunding push to deepen ties with customers | Hannah Murphy, FT. November 19, 2017
3. … is planning to launch one of the UK’s largest crowdfunding efforts next year to give customers in the fast-growing bank what it calls “a greater share of ownership”. ...intends to make a further cash call of between £10m and £30m in 2018. The group wants to expand its 200-strong team to between 300 and 400 people next year to prepare to offer more retail banking services. The digital bank has already raised about £4m in total through crowdfunding.
4. …. funding round of £71m earlier this month from existing investors including Passion Capital and new US backers such as GOODWATER CAPITAL, STRIPE and venture capitalist Michael Moritz, through his charitable investment vehicles. The round valued the company at £280m.
5. ..is rolling out current accounts to its half a million customers after receiving a full banking licence in April this year, and aims to close its pre-paid cards business next year.
6. Mr Blomfield said he expected the company to float on the stock market in the next three to five years.
7. ...plans to provide additional services, from discounts at shops to mortgages offered by third parties. However, it has experienced several operational hiccups in recent months, including system failures.
Digital bank Monzo’s losses more than quadruple | Nicholas Megaw, FT. July 2, 2018
8. Losses in the 12 months to February reached £33.1m from £7.9m, with £71.2m customer deposits - equivalent to less than £150 per account. ...said it would work towards profitability by cutting customer support costs and increasing revenue from lending....is not expected to be profitable for years.
9. Earlier this year it introduced overdrafts as its first lending product to about 37,000 customers. Although the bank expects to have 1m current accounts by autumn, 80 per cent of new customers do not deposit their salaries with it. ...the figures show the group’s slow progress in encouraging customers to adopt it as their primary bank.The company, which initially offered a distinctive pink prepaid card, started moving its users to full current accounts last September.
10. Competitor ATOM BANK has focused on mortgage lending, while TANDEM has launched credit cards and STARLING is expanding into business and wholesale banking.
US backer lifts Monzo to £2bn valuation | Liam Kelly and Emma Dunkley, The Sunday Times.April 7 2019
11. …is close to raising £100m of fresh funding which will almost double its valuation and help Monzo overtake REVOLUT as Britain’s second-most valuable fintech start-up, behind the small business lender OAKNORTH. ….valuing it at $2.5bn (£1.9bn), six months after it raised money at a valuation of £1bn ….will mean that Monzo’s valuation has multiplied by almost 250 times since it first raised cash at an £8m valuation in June 2015.
12. In October, Monzo raised £85m from institutional backers, led by American venture capital groups GENERAL CATALYST and ACCEL. Two months later, it secured £20m in less than three hours from 36,000 investors through crowdfunding.
13. Monzo has signed up more than 1.5m customers since its launch and claims it is adding about 28,000 a week. … particularly popular with users under 40, attracted by its “hot-coral” debit cards and its app, with the ability to help sort cash into “pots”. …Tom Blomfield, 33, envisages Monzo becoming a one-stop “control centre” where people can easily manage their incomes and outgoings, such as mortgage payments, savings and energy bills. He sees these services being provided by third-party brands that pay commission to Monzo.
14. Last week, the bank launched an Isa paying 1.14% interest in partnership with OAKNORTH. It also has a tie-up with TRANSFERWISE for international payments and is trialling the use of paid-for business bank accounts.
DZ profile: Atom Bank Plc
Business: mobile lender which holds deposits and grants business loans. It expects to make a range of business and retail products available next year after a further £100m funding round.
Founder: Anthony Thomson, 62. He also co-founded Metro Bank.
Investment: has raised more than £120m of investment. Is backed by big names including Neil Woodford, the Spanish banking giant BBVA, former Treasury minister Lord (Jim) O’Neill, veteran private equity guru Jon Moulton and Sir Peter Vardy, the car dealership tycoon.
Atom Bank, created by Metro Bank, sees red | Aimee Donnellan, The Sunday Times. October 1, 2017
1. has 26,000 customers. The banking app is aimed at customers aged 18 to 34. It uses face and voice recognition as part of its security process.
2. The accounts for the year to the end of March showed the app was downloaded 83,429 times. It has attracted savings deposits of £800m. Losses climbed to £42m last year because of higher staff and operating costs. The latest results bring Atom’s losses since launch to a total of £70.4m.
3. In April, Thomson recruited the music and TV star Will.i.am as a strategic adviser. His share-based deal, tied to public appearances and social media promotion, is estimated to be worth £4m. Will.i.am, who found fame with the Black Eyed Peas and as a judge on BBC1’s The Voice, was a founding shareholder in BEATS ELECTRONICS, the headphones company created by Dr Dre.
Business: mobile bank, working on a current account to be launched early next year.
Founder: Anne Boden, 56, began her banking career at Lloyds in the 1980s and later worked for Allied Irish Bank.
Investment: raised £50m from an American investor this year
Artisan bakers rolling in the dough | The Sunday Times
Business: owner of Gail’s Artisan Bakery, a chain of artisan bakeries, and The Flour Station, a string of sourdough bakeries in London.
Financials: Revenues climbed to £63.7m. Pre-tax profits increased to £4.8m compared with £2.8m the year before.
Investment: entrepreneur Luke Johnson’s Risk Capital Partners has a 33.6% stake in Bread Holdings, which it bought in 2011.
has a big stake
1. The company behind saw its sales rise by 42% last year. Bread Holdings said its Gail’s division saw turnover leap by nearly a third thanks to high-end breads, including cherry and currant sourdough. The business, which also sells cakes and pastries, is expected to see further sales growth and new store openings in the coming year.
2. Last year Bread Holdings paid £426,000 to JAMIE OLIVER ENTERPRISES for a 50% stake in The Flour Station, a string of sourdough bakeries in London.
3. Two years ago there were reports that Bread Holdings was plotting a float, although it was waiting until it had grown to sufficient size before making a move on to the public markets.
Business: UK arm of Scandinavian retail chain Tiger
Founder: Tiger’s UK operation was set up in 2005 by Philip Bier, a Danish freelance photographer, and his British wife. The couple were in their forties and had no retail experience. They have pocketed a £1m dividend after presiding over 11 years of growing sales and profits.
Financials: Turnover at the group’s 37 shops £40m last year, with pre-tax profits rising by more than 12% to £5.4m.
HOLLYWOOD BOWL: Strike! Bowling alleys in City float | Peter Evans and Ben Harrington, The Sunday Times
Business: Britain’s biggest chain of ten-pin bowling alleys
Launched: Hollywood Bowl was created in 2010 when pubs company Mitchells & Butlers sold its bowling business.
Investment: private equity owner Electra, which owns 85%, bought the operator two years ago when it was known as The Original Bowling Company. The buyout firm had attempted a listing, only to pull back as the EU vote approached.
News: Electra has revived plans for a £280m stock market listing, is understood to be selling its whole stake and has instructed the investment bank Investec to run the float, which could see shares begin trading by the end of next month.
NUTRIMENT: Baked beans for us, wild venison for dogs | Laura Onita, The Sunday Times
Business: posh pet food business which produces more than 200 tons of food each month. Its dog and cat ranges contain raw meat and fish with ingredients such as coconut oil, seeds and spirulina, which is an algae “superfood”. The products are stocked in 350 independent stores. Customers can also order via the Nutriment website. Fresh British meat and vegetables are delivered to Nutriment’s two factories every morning to create such dishes as wild venison with duck and beef, which costs £4.95 for a 500g tray. The cat range includes a Scottish salmon dish for £2.45.
Location: Camberley, Surrey
Founder: Suzanne Brock, 45,
Financials: reported pre-tax profits of £14,300 on sales of £3.1m last year and hopes to double revenues this year.
News: remortgaged her home and sold her Range Rover Vogue to raise £70,000 Brock borrowed a further £70,000 from her mother to launch Nutriment in 2013. Two months later Brock took a lease on 10,000 sq ft of factory space and recruited 10 staff so she could try out her natural food recipes for dogs. She used contacts in the industry to buy machinery on credit so she could prepare the food and store it. Sales took off within weeks, and turnover was £1m in the first year.
NOT ON THE HIGH STREET: Knitting pretty | Oliver Shah, The Sunday Times
Business: online marketplace, which connects shoppers looking for quirky gifts with a network of 5,000 independent sellers
Financials: sales rose 19% in the year to last March. It made an underlying loss of £1.6m.
Investment: has raised £21m from backers including Hubert Burda Media, the German publisher of magazines such as Wedding and Your Home. Existing investors — Index Ventures, Industry Ventures and Eight Roads — also backed the fundraising round.
1. Plans to use the money to attract new retail “partners” with marketing events. It wants to improve its website by adding features such as Apple Pay.
2. Simon Belsham, who joined as chief executive from Tesco.com last year, said Not on the High Street was looking for more “high-quality, innovative and unique” brands to sell. Recent additions include Lauren Aston, a Devon-based designer who knits chunky blankets and cushions with giant needles.
PROPERCORN: Popcorn explosion | Kiki Loizou, The Sunday Times
Business: makes low-calorie popcorn in flavours such as sweet coconut and vanilla. Has 15,000 stockists, including Selfridges and Waitrose. At present 10% of sales are overseas.
Location: Islington, north London
Founders: Cassandra Stavrou, 32, and Ryan Kohn, 33.
Financials: Last year it notched up sales of £10m
Investment: has raised £7m for global expansion from from Piper, the private equity firm behind jewellery maker Monica Vinader and posh swimwear brand Orlebar Brown. JamJar Investments, a fund set up by the founders of Innocent Drinks, has also put in money.
News: Innocent co-founder Adam Balon is set to join Propercorn as chairman.
LITTLE DISH: American pie for toddlers | Oliver Shah, The Sunday Times
DZ profile: Healthy Kids Limited (Little Dish)
Business: sells organic food for toddlers - 100,000 dishes a week. Products include low-salt pizza and chicken and butternut squash pie.The products are stocked by SAINSBURY’S, TESCO and other large supermarket chains.
Location: Notting Hill, west London
Founders: Hillary Graves,46, a marketeer, and John Stapleton, a co-founder of the New Covent Garden Soup. Graves has since been joined by her former private equity executive husband, Dean Brown, 45.
Financials: is on course to double sales to £12m this year (£6m)
1. Graves said the business had struck a partnership to manufacture meals in America and was choosing a US retail chain as a partner.
Children’s meal firm Little Dish gets big funding helping | Peter Evans, The Sunday Times. September 3 2017
2. ... has secured a £17m investment from an American backer ....will put the investment from PROFILE CAPITAL into expanding at home and launching in the US. ....will launch its first advertising campaign. Graves said Profile Capital would bring knowledge of the US market, as well as financial backing.
SMART PENSIONS: The best way to build a Nest egg | Andrew Bounds, FT. August 29
Business: online workplace pensions platform that uses Legal & General to manage its assets. Smart Pension cuts costs using software — financial information is pulled from DueDil’s database of online accounts, documents can be signed electronically, and the platform also syncs with online accounting packages. Have signed up more than 10,000 employer schemes with 80,000 members who each pay a flat annual 0.75 per cent charge.
Founders: Will Wynne and Andrew Evans
Investment: have raised £10m from tech whizzes. L&G’s venture capital arm recently took an undisclosed stake in the company.
1. Legal & General Investment Management’s chief executive Mark Zinkula praised Smart Pensions’ “powerful digital platform”, saying it has made auto-enrolment “scalable and affordable for employers and their employees with minimum cost and disruption”.
2. formidable competitor in Nest, the government provider. Nest was set up to plug the pensions gap before the state decided to compel companies to do the job. It is free for SMEs and 100,000 use it, with more than 3.3m members, half the market. Nest charges just 0.3 per cent for its annual management fee, although it also levies 1.8 per cent on contributions. This enables it to bring in income early: Smart Pensions and others have to wait for the pots to build. Still, Nest burnt through £104m in 2015/16 and had just £24m income. It still owes the government £387m, giving Whitehall a big incentive to allow it to keep competing with private providers. For now, Nest remains the safest pension option for workers and employers, and investors would be wise to be wary of its competitors
3. Private providers face another challenge too: contributions will start to rise. Currently, employers and employees must each put in 1 per cent of salary. By April 2019 the figure will climb to 3 and 5 per cent, respectively.
THE GYM GROUP: benefits from no-frills trend | Paul McClean, FT. September 1.
Lean Gym Group ready to bulk up |Peter Evans, The Sunday Times. August 28, 2016.
DZ profile: The Gym Group Plc
Business: Low-cost fitness chain with 80 sites and plans to open up to 14 more by the end of next year. membership costs an average of £16 a month. Has invested heavily in technology — joining is online only, wi-fi is free in all gyms — and has expanded aggressively into new cities, with much more to come. Member numbers climbed to 424,000 in the six months to June, up 23% on the same period a year earlier.
Location: Guildford, Surrey
Founder: John Treharne CEO, a former England squash international
Financials: revenues up 25.1 per cent to £36.1m, six months to June. pre-tax profit£3.4m — up from a £3.3m loss in the same period last year
Investment: floated in November with a valuation of about £250m
1. ...reportof deal with JJB Sports founder Dave Whelan to acquire some Fitness First sites.
2. resignation of directors: Philip Newborough, founding investor, and David Burns, who joined the board when PHOENIX invested in 2013.
UPDATE: How pay-as-you-go chain built up its muscle and plans to bulk up further | Courtney Goldsmith, City A.M. March 6, 2017
3. … the second largest budget gym in the UK with 89 sites and 448,000 members as of December compared with 376,000 members in 2015. 15 new branches were added in 2016. Net debt down to £5.3m from £7.1m in the previous year. ...plans to open a further 15 to 20 gyms per year
4. While mid-market operators spend about 25 to 30 per cent of their turnover on staffing, The Gym Group spends less than six per cent …no shelves to stock or pools to clean,no reception and other administration duties. Members apply online and are issued a pin number to save on costs.
5. ...also uses technology to shape each gym to its community. Motion sensors evaluate what equipment is used most often and when so the company can ensure there will always be enough treadmills. ....wants to push its relationship with tech even further by collecting data on customer exercise habits like a Fitbit.
Strong sales at Gym Group as brand expands | Camilla Hodgson, FT. August 30, 2018
6. ...revenue up a third in the first half of the year as it pushed on with its expansion programme and customers embraced its premium services. Revenues rose 36 per cent to £58.3m compared with the same period last year, while profits, before one-off costs related to acquisitions, rose 8 per cent to £7m. On a statutory basis, pre-tax profits fell 14 per cent to £5.1m.
7. opened six new gyms over the six months to the end of June, + additional 13 sites with the acquisition of EASYGYM in July, bringing total to 147. ...average number of total members up 34 per cent to 664,000.
8. chief executive John Treharne will step down in September — although he will remain on the board — to be succeeded by chief financial officer Richard Darwin.
Gym Group accelerates expansion as revenues jump | Alice Hancock, FT. March 19, 2019
9. ...revenues up 35 per cent from £91.4m in 2017 to £123.9m last year. Profits before tax up 8 per cent to £10m ... average membership over the year rose by 165,000. runs 222 fitness clubs and has more than 1m members, offers membership for as little as £14.99 a month.Richard Darwin, chief executive
10. … said it had doubled the number of sites since mid-2016, opening 17 new outlets last year as well as acquiring 13 sites from rival EASYGYM. It now operates 158 fitness clubs and plans to open another 15 to 20 locations in 2019 — including its first “small-box format gym”.