Wednesday January 1st 2020

Xercise4less £31m | Jojo Maman Bébé £47.8m | Dabbl | Public | Electron | Oakley Capital | K3 Capital

News about 7 UK growth companies and/or accelerators + turnover in the GRID marketplace 2nd – 8th April 2017:

XERCISE4LESS: Injured rugby player works it out in the gym | Laura Onita, The Sunday Times. April 2

DZ profile: Wright Leisure Limited

Business: gym chain with 47 budget gyms across the country from its base in Leeds. Membership fees start from £9.99 a month and there are 300,000 people signed up. Wright plans to open 200 gyms before he considers overseas expansion.

Launched: 2006

Location: Leeds

Founder: Jon Wright, 45,  ex-Harlequins rugby player, who retired injured at 22 years old. Became sales director at Pulse Fitness. He left after five years to advise gym owners, then opened his own fitness club.

Staff: 550

Financials: Pre-tax profits were £6.1m last year on sales of £31m. He hopes to finish this year with 60 gyms and sales of £42m.

Investment: £20m of investment from the BUSINESS GROWTH FUND, which holds a 28% stake. There may be a further fundraising to accelerate growth next year.

News:

1. For three consecutive years, Xercise4Less has earned a place in the Sunday Times Fast Track 100 list of fastest-growing private companies.

2. When it came to starting his first “health and fitness club”, in Castleford, West Yorkshire, he borrowed £500,000 from the bank and set about recruiting members. It got off to a rocky start, however, because the building contractor went bust halfway through fitting out. Two years later came the financial crisis and Wright almost lost his home, which had been used to guarantee on the loan.

3. A new wave of budget gyms gave him hope. He stripped out the club, put in more equipment and halved the membership price. Profits started to trickle in and a year later he opened a second site, followed by a third in 2011.

UPDATE: 
£42m boost for gym chain Xercise4Less owned by Jon Wright | May 13 2018, The Sunday Times.
Today, it has 49 gyms across the UK and 300,000 members. Wright, 46, plans to open 10 more by the end of the year and have 100 gyms by 2020. The latest investment has been funded by Swedish credit provider PROVENTUS CAPITAL PARTNERS.

JOJO MAMAN BÉBÉ: sales delight is tempered by ‘nightmare’ rise in rates | Joanna Bourke, The Evening Standard April 3

DZ profile: Jojo Maman Bebe Ltd

Business: upmarket baby clothing chain, has 70 stores across the UK and Ireland and has trade customers in 40 countries across the globe. Recently opened warehouse in New Jersey.

Launched: 1992

Location: Newport, Wales

Founder: Laura Tenison, managing director

Staff: employs over 700 people in the UK

Financials: revenues rising 7% to £47.8 million in the year to June 30. Pre-tax profits slipped to £3.7 million from £4 million.

Investment: MAGENTA PARTNERS took an undisclosed minority stake in 2011. Magenta is a specialist growth investor that was founded by the Singh Family Trusts. Tom Singh, the founder of New Look, is one of the UK’s most well-known retail entrepreneurs.

News:

1. The founder of JoJo Maman Bébé has warned of “nightmare” business rate rises: “Rates in our London stores are increasing dramatically — in one case a growth of 85% over the next few years.” Tenison added: “The business rates are a nightmare for all independent retailers.” However, the she is still looking to increase the size of the company’s  78-store portfolio.

2. Laura Tenison: 2003 received an MBE for services to business in the Queen’s New Year’s honours list; 2010 won Veuve Clicquot's Business Woman of the Year trophy

DABBL: The duo behind app bringing you affordable share-buying | Russell Lynch, The Evening Standard April 3

DZ profile: Dabbl Group Limited

Business: the UK’s first app-only stockbroker. Everything about the app, which launches this month, is pitched at entry-level investors to help build a connection with their everyday life. It has natty features like a search function, which shows related companies when users take a picture of a product or logo. Each company is given a “health score” out of 10 based on 25 independently assessed benchmarks, listing about 1200 shares so far. But another big draw of the Dabbl model is the price of trading. Dabbl charges 1% of the transaction value with a minimum of £1 (before the 0.5% stamp duty) — comfortably the cheapest around. Fees are capped at £8. 

Launched: 2015

Location: Kingly Street, Soho base of advertising agency Bartle Bogle Hegarty

Founders: Mark Ackred and Martin Slaney

Staff: 8

Financials: Revenue: pre-revenue,

Investment: £935,000 invested. Investors: The Garage, Soho and OSTC. Sir John Hegarty — the 72-year-old “H” in BBH and an early investor in companies such as Moshi Monsters creator Mind Candy — liked the idea enough to put his own money in and help the pair, who own 40% of the company each. BBH itself owns 8%, and Hegarty is among the investors who hold the remaining 12%. Veteran wealth manager and Bestinvest founder John Spiers is another backer.

News:  

1. Ackred says: “…we have had to strip back everything and go right back to the beginning. We built everything right through to the connection to Crest (the UK’s electronic share-settlement system) to keep the cost down.”

2. Ackred and Slaney reckon their average customer will buy shares about 12 times a year, spending around £400 a time, compared with an average £1200 currently. At the start, they expect it to be a high-volume, low-margin business while they build up a base and poach customers off their rivals. They’re aiming for about 100,000 customers by the end of their second year of trading, and if all goes well, a stock-market listing.

PUBLIC: David Cameron's ex-adviser Daniel Korski launches major govtech venture to back tech startups, public.io, backed by Robin and Saul Klein, Jon Moulton and more | Lynsey Barber, City A.M. April 4

DZ profile: Public Group Limited

Business: Will combine different aspects of the venture funding and tech accelerator model to help startups navigate wanting to work with government; and to improve technology in the public sector. The firm is starting off with the launch of a startup scheme, GOVSTART, a six month programme which will teach up to 10 firms how best to work with the public sector, including central government, the NHS, local government and charities, providing technology such as cyber security, cloud services, machine learning, analytics and APIs, in return for a three per cent equity stake. Korski said the ambition is to run the course on a regular basis to create a better supply of tech companies ready to navigate government procurement rather than to change the process in the first instance. But, that set up is flexible and may change over time, for example specialising in certain areas such as digital identity, and Public might consider other support such as a tech incubator in future.

Launched: 2016

Location: London

Founders: Daniel Korski, former top adviser to David Cameron, and Eileen Burbidge

Staff: The former managing director of Barclays Techstars accelerator, Mark Lazar, will head up the programme and it boasts an advisory board from across technology and the public sector that includes:

·       Google DeepMind's Mustafa Suleyman;

·       former government chief commercial officer Bill Crothers;

·       Estonia's chief technology officer Siim Sikkut;

·       Lord Paddy Ashdown;

·       Sir General David Richards, former chief of defence staff under Cameron.

Also involved in mentoring the startups are Passion Capital's Eileen Burbidge, former government chief technology officer Andy Beale, Co-op Group digital chief Mike Bracken, head of the government digital service (GDS) Kvin Cunningham and former White House adviser Brian Forde.

Investment: backing from high-profile names in the tech industry for the venture, with venture capital investor and son of the heir to the Heineken fortune Alexander De Carvalho. Investors include venture capitalists Robin and Saul Klein, private equity boss Jon Moulton, LV= chairman Mark Austen, Sir Thomas Agnew, a businessman and non-executive board member at the ministry of justice, and Passion Capital partner Stefan Glaenzer. Korski didn't rule out looking for institutional investors down the line, but for now has "plenty of runaway" from the current funds, the amount of which has not been disclosed.

News:  "We probably can't build the next Google but we could build the next PALANTIR," (billion-dollar valued US data analytics firm which works with many government agencies).

ELECTRON

Former Npower boss joins energy blockchain start-up | Nathalie Thomas, FT. April 4

Blockchain startup Electron has landed former boss of Npower Paul Massara as a director and investor | Lynsey Barber, City A.M. April 4

DZ profile: Chaddenwych Services Limited

Business: start-up that is hoping to use “blockchain” technology - a technology that is best known for underpinning digital currency bitcoin -to help British homes fitted with smart meters switch energy suppliers more efficiently. Electron believes blockchain could prove useful for recording data on smart meters, which are aimed at helping households cut their energy usage. The government wants smart meters to be fitted to every home in Britain by 2020 at a cost of £11bn. Blockchain is an electronic method of recording transactions and secured cryptographically so the data cannot be tampered with. Advocates of the technology highlight that the ledgers of transactions created are held and run by all of the participants and are not controlled by one central party.

Launched: 2015

Location: London EC2

Founders: Joanna Hubbard, previously an associate at consultancy MCKINSEY, and chief executive Paul Ellis, the former head of Europe at MARKETAXESS, the online trading platform.

News:

1. Paul Massara, former boss of German-owned utility company NPOWER, who left in 2015, is joining the board of Electron, a 12-person company based in London that is hoping to shake up the smart meter market - and has also ploughed an undisclosed amount into the year-old firm. Massara, is chief executive of NORTH STAR SOLAR, a solar storage firm.

2. But the rollout of smart meters has come under criticism from industry executives such as Vincent de Rivaz, chief executive of French utility EDF, amid fears that homes have been fitted with the technology that may not work when they change suppliers. Millions of homes have been fitted with the first generation of smart meters — dubbed “Smets 1” — which some suppliers warn may make switching difficult. Mr de Rivaz told a conference last week that these less sophisticated meters “make things more complex for the moment when a customer switches supplier”. 

3. A central IT system being overseen by a subsidiary of CAPITA, the outsourcing company, to enable the rollout of a more advanced generation of smart meters — “Smets 2” — has been hampered by delays. Electron is hoping to work with the Capita subsidiary, the DATA COMMUNICATIONS COMPANY, to improve the switching process. 

OAKLEY CAPITAL: Time Out IPO and German dating website sale boost Peter Dubens' OCM | William Turvill, City A.M. April 5

DZ profile: Oakley Capital Management Limited

Business: Private equity and venture capital firm and partner for mid-market businesses

Launched: 2009

Location: London SW1

Founder: Peter Dubens, Managing partner

Investment: quoted on AIM

News:

1.  has reported a shareholder return of 17 per cent for 2016, boosted by its flotation of Time Out. …reported a net asset value (NAV) per share of £2.31, up 16 per cent on the end of 2015. While the firm reported a shareholder return of 17 per cent for the year, it also announced a maiden dividend of 4.5 pence.

2. Oakley said it had raised net proceeds of £59m from the TIME OUT initial public offering (IPO) last June. During the year, Oakley also obtained proceeds of €43.3m (£38.9m) from a partial sale of German online dating service PARSHIP ELITE.

3. Oakley also agreed to sell HOST EUROPE GROUP to GODADDY and, after the deal completed this week, expects to collect proceeds of €14.6m.

4. On the acquisitions side, Oakley bought a portfolio of online property portals, including for Luxembourg and Italy.

K3 CAPITAL: "Disruptive" northern brokerage announces plans for initial public offering (IPO) in London | William Turvill, City A.M. April 6

DZ profile: K3 Capital Group Plc

Business: business sales and brokerage business

Launched: 1998

Location: Bolton

Staff: 100. Chief executive John Rigby

News:

1. The initial public offering (IPO) on the Alternative Investment Market (Aim) is scheduled for next Tuesday, with K3 expected to raise around £17.8m.  ….will have an initial price of 95p per share, giving it a market capitalisation of £40.1m. Proceeds from the float, which FINNCAP advised on, will be used to settle its purchase of another business, TRISKELL, and provide additional working capital for the group.

2. K3 also today announced the appointment of Ian Mattioli as non-executive chairman. Mattioli was a co-founder of Mattioli Woods Group, and floated the company on Aim as chief executive in 2005. Its market capitalisation grew from £22.5m to around £200m during his tenure.