Industry events / 09 June 2021

BVCA HighGrowth 2021 - Day 2 key takeaways (part 3)

BVCA HighGrowth 2021 - Day 2 key takeaways (part 3)

Across the 2 day event Crestbridge will publish a brief rundown of key takeaways from each session as the event unfolds. 

The event, which is deemed to be the UK's leading event for growth companies partnering with venture and growth capital, took place virtually for the first time and featured entrepreneurs, management teams and investors as they share their thoughts and experience on what it takes to succeed in today's environment.

Read our key takeaways below from the third part of Day 2 at BVCA HighGrowth.

The role of ESG in value creation

Panel moderated by Leon de Bono, Assistant Director General, BVCA

Richard Colbert, CFO, Monica Vinader

  • Sells affordable jewellery.
  • Tries to understand company’s environmental footprint.
  • Only uses 100% recycled silver and gold, only use sustainable packing. 
  • In supply chain does social auditing to ensure safe working practices and fair pay
  • Good ESG creates barrier to entry against competitors, but improvements such as biodegradable plastic will make it easier for new entrants to tear down this barrier to entry, since they can adopt new breakthroughs more easily, as new companies.  

Michael Marshall, Head of Sustainable Ownership RPMI
Investment manager for the UK’s railway pension schemes. 

  • We need to achieve rate of return significantly above inflation to meet our liabilities, and this is easier if our investments have good ESG.
  • We therefore expect most businesses to have ESG value creation strategy in place because ESG is important to overall returns of our members. 
  • We have framework for assessing fund managers and co-investments. Scoring well or badly on ESG can be a difference to getting our capital or not. 
  • Challenge around data. Have worked with BVCA and others to come up with frameworks for disclosures because don’t want to burden small businesses. 

Karen McCormick, Chief Investment Officer, Beringea
Minority investor.

How can you create value from a venture perspective through ESG?

  • We looked at how we could reduce our own footprint, and then looked at how to apply these lessons to portfolio companies. 
  • Developed framework of about 45 areas, which looked at where the company is today, and where wants to be, in the future. 
  • Vast majority of portfolio companies don’t have resources to devote specifically to ESG, so we help them with this. For example, help them with carbon offsetting, taking carbon out of value chain. 

Matt Truman, Founding Partner, True Global
Retail and consumer sector investor.

  • Most important ESG area is to focus on your own internal culture, since this gets the best teams to work for you. 45% of our team is from ethnic minority. Our diverse workforce means we can understand the diverse consumer market better. 
  • We rolled out our own mental health program to all portfolio companies during the pandemic.
  • Signed portfolio-wide deal with leading cardboard supplier to reduce waste.

Snap poll: When can an investor add the most value focusing on ESG?

  • 56% say in pre-acquisition planning.
  • 44% say after acquisition.
  • 0% say when preparing for exit.

All change: Preserving culture & values in a rapidly scaling business

Panel moderated by Cindy Casciani, Managing Director, EquityChair

Dan Adler, Partner, Apiary Capital

  • Invests in lower mid-market UK companies.
  • Should looking at culture and values be part of due diligence? Yes: culture is always huge contributor to what makes a company do something well.
  • Will do formal management due diligence, but it’s important to go beyond this, by getting to know the team. 
  • We also push the management team to get to know us as well, to understand if our culture fits theirs.
  • I was involved with healthcare business, where CEO ex-military, very driven, incentives well-tailored to what people wanted: e.g., on exit, the receptionist would get new kitchen. 

Shirin Dehghan, Operating Partner, Frog Capital

  • Series B investor.
  • Am big believer that culture comes from top, so go through detailed assessment of company, as proxy of what the culture might be like more broadly in the company. 
  • Valid to reject acquisition offer on grounds of the acquirer’s values? If management team feels doesn’t want to sell to particular acquirer, will support that because the M&A will fall through anyway as acquirer does due diligence and realises this. 
  • Did work when CEO to educate people in what share options actually meant. But believing in the destination is the most powerful thing. 

Matthew Elson, CEO, SHE software

  • Our two investors were quite small, so easier to assess their culture. Didn’t feel need to do Glassdoor assessment. For me, was more about gut feel in meetings. 
  • The culture has to adapt. Becomes less informal. For me as CEO harder to have person to person impact. Sense of original team losing control a little. There are national differences in style, so culture does adapt. As company has grown, have had to be more deliberate about how to manage and develop culture, including geographical collaboration. 
  • We use psychometric tools early in recruitment process to see if potential hires are right cultural fit for us. 
  • You have to expect much will change if get acquired. For some staff this will work out well as new opportunities, some staff like smaller outfit and will move on. That’s natural. 
  • How do I consider particular priorities of staff? Early on I gave options to most people in businesses but found most people didn’t value them. Bike to work scheme was super popular with staff, though a small thing. This means should listen to what people’s priorities are. 

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