Wednesday January 1st 2020
News about 10 UK growth companies and/or accelerators (turnover in brackets) in the GRID marketplace, 13th – 19th March 2016:
GO Outdoors(£181.4m | Made With Glove | Visijax | Kisha | Grind & Co £5m | 3Rings | Cambridge Epigenetix | Clarke Energy £250m | Starship | Leather Satchel Company(£5m | 60 Hope Street £4.5m
Off-GRID: Bullionvault (£374.5m)
GO OUTDOORS: Demand for bikes has fuelled the retailer’s expansion | Peter Evans, Sunday Times. 13 March
DZ profile: Go Outdoors Limited
Business: Britain’s biggest outdoor goods retailer. Has 57 stores across the UK which sell goods including waterproof clothing, tents and bicycles.
Founders: Formed after founders John Graham and Paul Caplan bought Sheffield’s Camping and Caravanning Centre
Staff: 2,500 people. Chief executive Chris Matthews, former Dixons executive.
Financials: Last year the chain posted pre-tax profits of £3.1m on sales of £181.4m
Investment: established in 1998 through a management buyout by John Graham and Paul Caplan, who still own half of the company. The rest is split between private equity investors including 3i and YFM.
Investment: backed by private equity groups - YFM EQUITY PARTNERS backed the original management buyout in 1998, and 3i invested £28m in the company in 2011.
1. A surge in demand for mountain bikes has led to a £10m investment in expanding its store network. Will add an extra 250,000 sq ft of retail space before the end of the year, including three new megastores and cycling concessions within most of its 53 existing shops. Will create more than 2,000 jobs, although many of them will be temporary roles in the peak summer season.
2. The expansion comes as Go Outdoors is rumoured to be planning a stock market listing later this year. Rival chain Mountain Warehouse has hired Rothschild for its own float, which would value the company at about £200m.
Go Outdoors retail chain explores sale | Lauren Fedor, FT. May 10
3. recorded a turnover of £202m last year, with earnings before interest, tax, depreciation and amortisation of £14m — a 20 per cent increase on the previous year.
4. Go Outdoors said on Monday that the UK chain was in the “initial stages” of discussions with potential investors in an effort to fuel further expansion of the business. Mr Matthews has hired KPMG to explore a sale of the privately owned group declined to say whether the group’s owners were seeking a full or partial sale of the business.
5. Mr Matthews, a former executive at Dixons Retail, is overseeing a £10m expansion plan to add six new stores to the group’s portfolio and hire an additional 2,000 people, including part-time and seasonal employees.
6. The company is investing heavily in its cycling business, rolling out cycling-focused stores and aiming to position
7. Competitors: JD Sports bought Blacks and Millets in 2012. Last year, Cotswold Outdoor and Snow & Rock combined with Cycle Surgery and Runners Need under the brand of Outdoor and Cycle Concepts, following their acquisition by PAI Partners, a French private equity group.
JD Sports buys Go Outdoors for £112m | Press Association / The Guardian, November 28, 2016.
8. JD Sports has acquired retailer Go Outdoors for £112m from its private equity owners. Under the deal, JD Sports will buy the 58-store chain – whose products range from tents to bicycles – from YFM Equity Partners and 3i Group. The purchase will add to JD Sports’ stable of outdoor brands such as Blacks, Millets and Ultimate Outdoors.As a result of the deal, the Go Outdoors founders, Paul Caplan and John Graham, will leave the business.
Gadgets built into clothes are attracting a growing number of start-ups | Kiki Loizou, Sunday Times.
MADE WITH GLOVE
Business: wearable technology product, which is still in development, combines a traditional leather glove with a heated element that is triggered by a hi-tech sensor when the temperature drops.
Location: Manchester science park
Founder: Michelle Hua, 39. Gave up a well-paid job as a property lawyer to set up her business
Investment: So far, she has pumped more than £10,000 of her savings business
News: Support has come from the Greater Manchester Business Growth Hub, a government-funded service that offers mentoring and workshops for fledgling firms.
Business: has developed a jacket fitted with motion-activated lights that glow when a cyclist lifts his arm to signal he is turning. The company offers other hi-vis clothing and bags too. The washable jackets and bags are made in China. Has customers in America and Germany as well as Britain
Founder: chairman Mark Bernstein, 56.
Investment: Bernstein has invested about £1m of his own cash – and funded about 40 patents - into the two-year-old business, and hopes to raise another £1m from investors soon.
News: What’s next for Bernstein is clothing that can converse, “so workers can connect to each other and to their control rooms. My jacket could send another jacket messages. It’s a billion-dollar opportunity,” he said.
Business: Its “smart umbrellas”, made in Croatia, send a message to the owner’s mobile phone if they are left behind in a bar, say, or on a train. The app also sends regular weather forecasts, so users know when to carry their umbrellas. Since her co-founders launched Kisha two years ago, they have sold to 30 countries.
Location: North London
Founder: Marija Butkovic, 33
Investment: They raised more than £50,000 of funding from relatives and friends. The next step is to secure a further £150,000 and launch a new line of more stylish umbrellas.
News: well aware that technology giants are on the hunt for young companies with a smart proposition — and hopes they will sniff out Kisha. “Big businesses are keeping their eyes on start-ups developing new technologies that they could acquire,” she said.
*BULLIONVAULT: How I Made It: Paul Tustain, founder | Laura Onita, Sunday Times.
DZ profile: Galmarley Limited (BullionVault)
Business: Peer-to-peer site that allows investors to buy small stakes in gold bars – i.e. a chunk of 400oz gold bars, which cost about $500,000 each.. Today BullionVault looks after gold worth more than $1.3bn — equivalent to about 11% of the Treasury’s reserves. The company collects fees for storage as well as for buying and selling. The 34 tons of gold and 530 tons of silver owned by its 55,000 users are stored in vaults in London, Zurich, Singapore, Toronto and New York.
Location: Hammersmith, west London
Founder: Paul Tustain, 53. his first start-up, SAM Systems, founded in 1990, sold financial software to big names including NatWest, Lloyds and Deutsche.
Financials: Last year it reported a pre-tax profit of £3.9m on sales of £374.5m.
Investment: £275,000 from 30 family members and angel investors. Steady growth encouraged the World Gold Council and Lord Rothschild’s Augmentum Capital to invest a total of £12.5m in 2010. They each took an 11.4% stake. The founder owns 45% of the business.
1. He has no plans to let his stake go — unless he receives an offer he cannot refuse. “I’m not looking for an exit, nor planning for an exit, but that doesn’t mean I wouldn’t sell,” he said.
2. Today half of his customers come from Britain and the rest are spread across mainland Europe and America. Tustain is not tempted to expand into countries such as India and China. “We know people there love gold, but there is a world of difference between them liking the product and us making a successful business out of it,” he said.
3. Tustain now splits his efforts between BullionVault and WhiskyInvestDirect, which uses the same investment formula for scotch.
GRIND & CO: London coffee chain on perfecting its blend of cool and high quality | Clare Hutchison, Evening Standard. 14 March
DZ profile: Grind & Co Ltd.
Business: Group of espresso bars, cocktails bars and restaurants in London. USP — serving quality coffee at high volume. The staff make 200 coffees an hour, far more than the average café, Abrahamovitch claims. The coffee, a blend of Mexican and Guatemalan roasted specially for Grind, was created to appeal to the masses.
Founder: David Abrahamovitch, 30, business partner, former BodyRockers band member and DJ, Australian, Kaz James
Financials: 2015-16 turnover £5m
Investment: They pitched the idea to about 15 prospective investors before settling on a deal with Links of London founder John Ayton and private equity veteran Diarmid Ogilvy, who led a £1 million-plus investment round.
1. “…closing at 6pm or 7pm seemed insane since we were paying rent 24 hours,” he says. A trial of an espresso Martini recipe — since picked as one of London’s best — convinced them to get an alcohol licence. After further fine-tuning of the coffee shop-cum-cocktail bar, the pair believed they had a blueprint they could roll out at more sites.
2. The investment helped bring in talent such as operations director Sophie Roche-Garland from Soho House.
3. Having issued a Grind Bond on crowdfunding site Crowdcube that raised £1.3 million, Abrahamovitch and James are planning four or five more, including their own roastery, and to develop a wholesale business.
3RINGS: Tech man gains firepower outside Dragons' Den | City Spy, Evening Standard. 14 March
Business: tech business which helps families keep an eye on elderly relatives living alone.
Founder: Steve Purdham, the serial entrepreneur, who ran SurfControl, a FTSE 250 web-security firm that was bought by America’s Websense for more than £200 million
Investment: Failed to secure £300,000 Dragons Den investment in return for 10% of business. Westfield Health the health insurer has just confirmed it has ploughed more than £600,000 into the company, although it did not reveal its stake.
CAMBRIDGE EPIGENETIX: secures $29m financing | Clive Cookson, FT. 14 March.
DZ profile: Cambridge Epigenetix Limited
Business: CEGX, a spin-out life sciences company spun out from the University of Cambridge, is seeking to exploit epigenetics — nature’s instructions for switching genes on and off, which are similar to a second genetic code. Cambridge Epigenetix will use recent discovery of techniques for identifying the chemical tags that determine whether or not genes are active in specific cells.
Founders: Prof. Shankar Balasubramanian and Dr. Bobby Yerramilli-Rao, chairman. Prof Balasubramanian, Cambridge university, invented the world’s most successful technology for reading DNA. His first company, Solexa, founded in 1998 as a university spinout to commercialise a new superfast way to sequence DNA. Solexa was acquired for $650m in 2007 by Illumina, based in California, which used its technology to become the world’s market leader for reading genes.
Staff: Geoff Smith, newly appointed chief executive, joined the company from Illumina where he was vice-president for product development.
Investment: has secured $29m in financing from venture funds including Google’s GV, Wellcome Trust’s SYNCONA, SEQUOIA CAPITAL, NEW SCIENCE VENTURES and CAMBRIDGE ENTERPRISE. Tom Hulme, GV general partner has joined the Cambridge Epigenetix board.
1. Genomes are a DNA blueprint. Scientists have long recognised that the genome, the DNA blueprint for an individual, must be controlled by chemical tags or markers, which determine the activity of genes in different cells in varying circumstances from embryonic development to old age. …these epigenetic tags can switch genes on or off in different circumstances …may be shortlived or long-lasting — sometimes even passed on to future generations. For example grandchildren of women who were pregnant during great famines such as the Dutch “hunger winter” of 1944-45 show metabolic effects two generations later. Many human diseases, including cancer, and autoimmune and neurological disorders, reflect aberrant epigenetic activity.
2. A recent report by Citigroup pharmaceuticals analyst Andrew Baum estimated that the epigenetic oncology market would be worth $10bn a year by 2025. Some drugs with an epigenetic mechanism — turning off cancer-related genes — are already on the market, including Vidaza and Istodax from Celgene of the US, Zolinza from Merck of the US and Dacogen from Otsuka of Japan.
Liverpool gives its verdict on Budget 2016 | By Paul McClean and Andrew Bounds, FT. 17 March.
Budget case studies:
DZ profile: Clarke Energy Limited
Business: builder of renewable energy power plants, selling equipment for combined heat and power plants, and one of Britain’s fastest-growing energy companies. It sells clean-energy generators to sites including Guy’s and St Thomas’ hospitals and the Shard in London. Customers include Great Ormond Street and Bart’s hospitals. It imports GE gas engines from Austria and integrates them to provide electricity, heat and steam. It also services the engines once installed. Some of its plants use waste gas from recycling to produce electricity.
Location: Knowsley, on the edge of Liverpool.
Founder: Jim Clarke, 65, Scottish entrepreneur - in Liverpool, selling spare parts for engines.
Staff: 1,100 people in 17 countries. Alan Fletcher, board director
Financials: more than 60 per cent of its £250m yearly earnings come from outside the UK
Investment: Buyout house 3i bought a small stake to fund expansion overseas in 1999, selling out to Clarke in 2010. ECI PARTNERS, which owns high street retailer Evans Cycles, injected further cash in 2012 and controls about one third of the business. Management, led by Clarke’s son Jamie, 36, owns a small equity stake.
1. Alan Fletcher says because the government was paying out more in subsidies than it had expected and was on course to meet its renewable energy target, the government cut payments for waste plants. “The government favours wind and solar energy but that does not provide base load power. It could hit jobs here and in our supply chain,” Mr Fletcher says. He says a wind turbine would work for an average of 2,000 hours a year, while an engine running on waste gas would clock up 8,500 hours.
2. In this year’s Budget, he wants to see promises of investment in transport infrastructure in the north realised.
3. Mr Fletcher would like more resources for UK Trade and Investment, the organisation that supports exporters, which had its funding cut last year. “UKTI has been first class,” he says. “They have helped us to get work in countries like Cameroon, Tanzania and Kenya.”
Green energy boss cleans up | Daniel Dunkley, The Sunday Times. August 21 2016.
4. reported a pre-tax loss of £6.3m on revenues of £233m last year.
5. Has hired KPMG to find new investors. Clarke is considering selling his majority stake and his paper fortune stands at about £175m, based on a £350m price tag for the company. American buyout firms, including KKR and TA Associates, are said to have expressed early interest. Guy Hands, the tycoon who leads Terra Firma, is also expected to monitor the sale.
Business: specialises in making software and apps for virtual reality, the immersive technology tipped to be the future of gaming.
Location: premises above a trendy bar in Liverpool’s “Baltic Triangle” — a former industrial area that is now home to a burgeoning start-up scene
Founder: Martin Kenwright
Staff: Clemens Wangerin, managing director, originally from Frankfurt
News: Last year the company built CyberCook, a cooking app where users “can even get in the pan as they cook”, and it has just released vTime, a social network app for chatting to people in a variety of exotic virtual locations.
LEATHER SATCHEL COMPANY
Business: the family business makes hand-make bespoke leather satchels and other goods
Location: Knowsley, Liverpool
Founder: Steve Hanshaw
Staff: Keith Hanshaw, managing director
Financials: “In 2009, the business was turning over around £350,000 a year. Now our satchels alone generate £1.5m, and the whole business turns over around £5m a year.”
1. The company’s sales have surged over the past five years, which Mr Hanshaw attributes to the success of rival business THE CAMBRIDGE SATCHEL COMPANY, run by Julie Deane. As well as expanding at home, overseas sales have also risen sharply. “We only started exporting in 2010, but now 80 per cent of our bags go abroad,” he says. “Many go to Asia….”
2. Mr Hanshaw is clear about his hopes for the 2016 budget. “It should be easier to give tax breaks to companies with approved exporter status,” he says. “If it’s made in Britain, and a lot of the money from it is going into the economy here, the VAT should be nil or 5 per cent. That would give us a real competitive edge. It could bring British manufacturing back onshore, and the value added to the economy would be phenomenal.”
3. The government doesn’t do enough to support British manufacturers like us; we’ve had to begin a Kickstarter project to raise extra funds.”
60 HOPE STREET
Business: Restaurateurs with two outlets on the same street running between two cathedrals. There are also independent shops, the Philharmonic Hall and Everyman Theatre. Regarded as one of the best restaurants in the city and frequently hosts footballers, entrepreneurs and Liverpool’s business elite.
Founders: brothers Gary and Colin Manning
Financials: turns over £4.5m
1. Gary says the chancellor has done his industry no favours. “The government are asking the private sector to pull us out of the mess the economy is in but it does not seem as though there is any relief. We are getting hit with pensions, the living wage, business rates. Our wage costs are going to increase 8 to 10 per cent.” If the lowest paid get a rise, others will want one to maintain pay differentials, he says. It would also affect the Mannings’ suppliers, which could increase their prices.
2. The support that was available has also been axed. 60 Hope Street worked with “GrowthAccelerator”, a government service that was closed last year. It paid half the costs of training and introduced managers to mentors. “We put better procedures in place and made a lot of efficiencies. It had a material impact on the business,” Gary says.