Thursday February 14th 2019

Thursday February 14th 2019

News about 11 UK growth companies and/or accelerators + turnover in the GRID marketplace, 2nd – 8th October 2016:

Harris Tweed Hebrides £10m | Riverford Organic Farmers £47m | Matrix £21m | Comtek £12m | Malhotra Group £30m | JML £80m | Sellick Partnership | Red’s True Barbecue £15m | Cheeky Chompers £1.2m | Pashley Cycles £5m | LendInvest £32m

HARRIS TWEED HEBRIDES: Tweed cuts fine figure | Tommy Stubbington, The Sunday Times. October 2
DZ profile:
Business: the biggest maker of Harris tweed and exports more than two-thirds of its fabric
Location: Hebrides, Scotland
Staff: more than 200 people
Financials: Profits have doubled to £1.8m last year as turnover climbed above £10m
Investment: Ian Taylor oil trading tycoon (chief executive of the oil trading giant Vitol) and Conservative donor, whose wealth is put at £175m by The Sunday Times Rich List, rescued the company in 2005 with an investment of more than £2.5m.

RIVERFORD ORGANIC FARMERS: Now I know my onions, middle England can feast on organic | Laura Onita, The Sunday Times
DZ profile:
Business: growing and selling organic fruit and vegetables. Delivers about 50,000 boxes to customers each week. They hold a preset selection of contents that can include a variety of meats, eggs, dairy, fruit and veg. Box buyers spend an average £25 per order. Riverford has three sister farms (including one in France) and imports 18% of its produce from Italy, Spain and Morocco.
Launched: 1986
Location: Buckfastleigh, Devon
Founder: Guy Watson, 56. Watson’s two older brothers and sisters are all involved in the business. Ben oversees the Riverford farm shops, Oliver and Louise look after the dairy farm and Rachel is marketing director. Their parents, John and Gillian, leased the 860-acre Riverford farm near Buckfastleigh, a small market town in Devon, from the Church of England in 1952.
Staff: 525
Financials: made pre-tax profits of £790,000 on sales of £47m last year
Investment: He owns three-quarters of the business; his first wife owns the rest. Together with his second wife, Geetie Singh, 46, they own the Duke of Cambridge, an organic pub in Islington, north London, which Singh opened in 1998. It was one of the first organic gastropubs in the capital.
News:
1. Setting out, Watson paid his father £250 a month to rent three acres of land and paid £5 an hour for a plough.
In his first year he made £6,000 selling his produce to local shops from the back of his old Citroën. Just four years later he was supplying supermarkets including Waitrose and Sainsbury’s.
2. ….in the late 1990s he turned his back on the big chains. A fierce price war was raging, and … with his profit margins squeezed, he stopped selling to supermarkets. From then on, all his produce went into the weekly “veg box” offering that Riverford had launched some years earlier….Selling directly to consumers
3. In 2014, Riverford launched recipe boxes to match start-ups such as Hello Fresh and Gusto. But Watson is not too concerned about the competition in this area: “We’re just following along and I’m happy with that. I don’t think anyone is making any real money out of it.”

MATRIX: boss turned a gap-year idea into a business full of Eastern promise | Clare Hutchison, Evening Standard. October 3
DZ profile:
Business: product procurement and design company— it makes money by buying goods at a certain price and selling them at a higher one. The team has relationships with hundreds of suppliers in the Far East and can design and procure everything from apparel to promotional merchandise. Alongside Boots, Matrix counts British Airways, Primark, Accessorize, The White Company, Disney, BBC Worldwide and publisher Hearst as clients.
Launched: 1996
Location: Clapham
Founder: Charlie Bradshaw, 40,
Staff: 110, including staff in China and Hong Kong.
Financials: Turnover £21m in 2015; £27m forecast for 2016
News:
1. A few years ago, when it dawned on him that worker welfare was a key factor, he dived into the problem head first. Instead of relying on audits to assess factories, and ditching those that fail, Matrix seeks to train up the weakest. Bradshaw says that has led to less waste on the production line — reducing working hours, improving quality of life and fattening profits. Peter McAllister, director of the Ethical Trade Initiative, an alliance of companies, unions and NGOs that promotes respect for workers’ rights globally, describes Bradshaw as a tour de force, who is “willing to take risks, engage suppliers and break the mould”.
2. Matrix has a Queen’s Award for Enterprise.
3. He’s targeting even greater efficiency through 3D printing technology that could mass-produce goods, enabling firms to pilot product ranges and make smarter buying decisions. It could also shrink the product development cycle from three months to three weeks.
4. Then there’s near-field communication technology — the stuff that powers Oyster cards — that will gather data from the factory floor to identify improvements in manufacturing and working conditions.
5. Bradshaw also wants to be at the forefront of robotics, not to replace humans but to do unfulfilling and poorly paid work like putting caps on bottles. A robot will be trialled in a Matrix factory next month.

Brexit views divided between hope and fear | Brian Groom, FT. October 4

COMTEK
DZ profile:
Business: telecom equipment repair business
Location: north Wales
Founder: Askar Sheibani, chief executive, originally from Azerbaijan, came to the UK in 1972.
Staff: 200 people, half in the UK, including engineers from Italy, Greece and the Netherlands.
Financials: turnover £12m
News: Sheibani plans to mitigate potential harm from Brexit by transferring some activity to offices in Frankfurt and Amsterdam. He fears hiring staff from EU countries will be harder. Before the vote he planned to double the number of UK-based employees within three years. Now, “our best scenario is we will stay the same and in the worst case we would reduce the number of employees.”

MALHOTRA GROUP
DZ profile:
Business: family-owned leisure, care homes and property company. About 40 per cent of Comtek’s business is exports, mostly to Europe. The business is building three hotels and aims to construct seven care homes within five years, as well as opening half a dozen restaurants and bars.
Location: Newcastle,
Founder: Meenu Malhotra, chairman and chief executive, who came to the UK from India 37 years ago
Staff: expects his UK-based employees to rise to 1,200 this year, up 150 on a year ago, and to exceed 2,000 within five years.
Financials: turnover of £30m

JML
DZ profile:
Business: consumer products company specialising in retail promotions, TV home shopping and ecommerce.
Launched: 1986
Founder: John Mills, a leading Labour party donor and Brexit campaigner
Staff: 300
Financials: exports account for 40 per cent of its £80m turnover, including 15 per cent to Europe.
News: Mr Mills wants Britain to pursue policies to drive the pound’s exchange rate down further in order to make the economy more competitive and spark a manufacturing revival. JML imports products but has previously done some manufacturing in the UK, and could “easily” do so again. “At the moment these products all come from China, where we can buy them for two-thirds of the price we can get them made for in the UK.”

SELLICK PARTNERSHIP Andrew Bounds 
DZ profile:
Business: financial and legal recruitment firm
Location: offices in seven English cities
Founder: Jo Sellick, managing director
News: He says the department for exiting the EU (Dexeu) is seeking large numbers of lawyers with experience of contract law and Brussels, and he predicts that consultancy firms will “create a huge market for themselves” by advising clients on how to deal with a UK exit. As a provider of temporary and contract staff, Sellick Partnership could benefit.

Special Report: UK Entrepreneur of the Year. With a little help from our friends, family... | Andrew Bounds, FT. October 4

Three finalists in the EY Entrepreneur of the Year awards reveal how they raised cash and turned it into a business

RED’S TRUE BARBECUE
DZ profile:
Business: American-style smokehouse barbecue restaurant. After three funding rounds, the chain has eight restaurants from London to Manchester, with a Newcastle branch opening soon.
Launched: 2012
Location: Leeds
Founders: James Douglas and Scott Munro
Financials: turns over £15m
Investment: Started with an HSBC £300,000 bank loan and around £265,000 of their own money, and were soon looking to expand. Mr Douglas and Mr Munro were introduced to Ian Neill, former chairman of Wagamama, who put together a consortium of eight investors in the restaurant sector. Dubbed the “Super Eight”, they put in a combined £2m using the UK’s Enterprise Investment Scheme, which offers tax breaks. The two founders still own more than two-thirds of the business
News: Their aim now is to expand across the UK and the rest of Europe.

CHEEKY CHOMPERS
DZ profile:
Business: They created a chewable dribble bib, the Neckerchew - to stop babies dropping their teethers. Now Cheeky Chompers sells tens of thousands a month and has added three more baby products. The products are made in Glasgow. It has distributors in 33 countries and about two-thirds of sales are overseas. The pair received a huge boost from appearing on BBC television’s Dragons’ Den in 2013. They did not win funding, but the publicity increased sales.
Launched: 2012
Location: Scotland
Founders: Amy Livingstone and Julie Wilson
Financials: In 2013 they won a £50,000 Scottish Edge grant in an enterprise competition. Profits have funded the rest of their growth. Turnover reached £1.2m in the year to January, 2016 and the founders say the business is profitable.
Investment: Ms Wilson says keeping full ownership of the business has allowed them to invest and innovate.

PASHLEY CYCLES: steers growth with new contracts and vintage appeal | Robert Wright, FT. October 5
DZ profile:
Business: UK bicycle manufacturer. Maker of classic British bicycles. About 30 workers still weld parts of frames, ready bikes for the paint shop and carry out final assembly at Pashley’s factory in Stratford-upon-Avon. The group has been benefiting from demand for its sturdy cargo-carrying bikes that have traditionally accounted for 60 per cent of annual sales. Pashley’s Parabike was originally designed so paratroopers could carry them. Is able to offer roughly 160 products, catering to markets that others struggle to serve. Among the 8,000 to 10,000 bikes that it supplies annually, there are, for example, 100 to 200 tricycles designed for carrying freezers to sell ice cream. Long-term determination to carve out specialist niches, rather than to compete head-on with mass-market manufacturers. Pashley’s bikes are relatively expensive.
Its five-speed Princess ladies’ bike, for example, costs £695.
Launched: 1926
Location: founded in in Birmingham
Staff: Adrian Williams led a management buyout in 1994. He bought the group — of which he owns 73 per cent — from members of the founding Pashley family.
Financials: While Pashley does not publish financial figures, Mr Williams says annual turnover is about £5m.
News:
1. Named this week as the new supplier for London’s bike hire scheme …supplying roughly 500 bikes a year under the Transport for London contract. A week beforehand, J Sainsbury, the UK supermarket chain, announced plans to relaunch bicycle delivery of groceries in London using Pashley bikes. 
2. The company is the only surviving historic manufacturer making bikes on a large scale in the UK. The two other sizeable groups — Moulton and Brompton — were founded in the 1960s and 1970s respectively.
3. ….the process of surviving has not been easy. The company’s biggest recent blow came with the decision of the UK’s Royal Mail in 2010 to phase out use of bicycles for deliveries. Royal Mail had been Pashley’s most valuable customer. Production levels have recovered, however, with consumer bikes taking up the slack. The company is supplying the bike it once made for Royal Mail to other postal services — and is assembling the trolleys that have supplanted the bikes.
4.  Interest in Pashley’s classic bikes has grown spontaneously from pictures of celebrities riding its cycles, rather than the efforts of the company, which has never had a marketing department. “It’s only this year that we’ve thought that maybe we should bring in a bit of assistance on the marketing front,” says Mr Williams.
5. …the goals remain strikingly modest. Pashley has only recently taken over an adjacent building to store inventory, allowing it for the first time since the 1960s move to Stratford to store more than a day’s production of bikes. The expansion should help it meet export demand, which accounts for roughly 40 per cent of turnover.

LENDINVEST: Alternative mortgage lender posts a 133 per cent rise in revenue as profit flattens out | Billy Bambrough, City A.M.  October 7, 2016

DZ profile:

Business: Alternative mortgage company which is targeting the funding gap left by the retreat of high street banks from the sector. Manages around £300m on behalf of individual and institutional investors, and has lent £750m to professional property investors and developers across the UK.

Launched: was spun out of real estate financier Montello in 2013

Founders: Ian Thomas and Christian Faes, chief executive

Staff: 90 full time staff, up from 34 previously

Financials: LendInvest has posted a 133 per cent increase in gross revenues for the year to 31 March 2016. Revenue leapt to £32m, up from £14m in the year before. Profits for the lender remained flat however, at £3.4m, up from £3.3m for the year before was put down to an increase in employee headcount and investment in new technology.

Investment: Skype's founder invested £17m in this mortgage lender. In April, LendInvest announced a new funding round worth £40m in the form of a warehouse financing deal with investment bank Macquarie. LendInvest said the £40m, used to fund mortgages via its website, will allow it to grow and consolidate its position in the UK short-term mortgage market.

News:

1. Total annual lending almost doubled to £320m over the year, from £174m.

2. Over the summer Stephan Wilcke – the former executive chairman of OneSavings Bank – joined LendInvest as a senior adviser.

UPDATE:
Fintech and funding: LendInvest’s path from adversity to opportunity | Annabel Denham (editor at The Entrepreneurs Network), City A.M. 13 June 2018

3.  Faes and Thomas during a recent Leap 100 Breakfast: LendInvest was initially both “offline” and “pretty uninteresting”. It wasn’t until 2012, with £30m investors’ capital under management, that the founders became intrigued by the role tech could play. Fintech was on the rise, and companies like SEEDRS acted as inspiration. Tech could create a faster borrower experience, and building an online, easy-to-use investment platform could attract a wider pool of investors. LendInvest uses tech to match lenders and borrowers. In the early years, its bread and butter was supplying bridging finance to property investors; more recently it has branched into development finance, funding SME property developers to build houses across the UK, and offering buy-to-let mortgages.
4. On the investor side, the firm offers four broad channels:

• a Luxembourg-domiciled fund,
• an online investment platform for UK-based high net worth and qualified investors,
• multiple traditional funding loans from banks, and
• a retail bond that was listed last year on the LONDON STOCK EXCHANGE.

5. When the company was young, raising debt finance often felt like an uphill struggle.  ...but eventually an eastern European bank offered a £2m funding line, later increased to £6m. It is now “much easier...” The company now manages close to £800m for investors globally.
6. In 2015, Faes and Thomas sought their first round of external equity backing. LendInvest had hitherto been “bootstrapped”, growing its revenues year-on-year while making a small annual profit. Holding off on external equity was a hidden blessing: had they secured an early investor with its own vision, they may not have had the freedom to extend the offline business into an online platform as fully as they did.