Industry events / 09 June 2021

BVCA HighGrowth 2021 - Day 2 review

BVCA HighGrowth 2021 - Day 2 review

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 full review of Day 2 at BVCA HighGrowth 2021 below.

Culture, values and keeping the doors open: BVCA High Growth 2021 summit Day 2

They quip that America and Britain are two nations divided by a common language. In other words, just because they speak the same lingo on both sides of the Atlantic, it doesn’t mean that everything is culturally the same. 

The need to get the fit right when it comes to culture and values was the theme of much of Day 2 of the BVCA High Growth 2021 summit. Growing companies need to listen to both what their employees and what their customers are saying about what they value, and to think about how this will change as they expand and move into new countries. Investors need to listen too. 

On your bike

In a session on “preserving culture & values in a rapidly scaling business”, Matthew Elson, CEO of SHE software, showed the importance of listening to employees. Early in the company’s history, he gave share options to most people in the business, but he found most people didn’t value them. A bike to work scheme, on the other hand, was “super-popular with staff”, even though it was a small thing.

In a session on expanding beyond borders, Mark Keeley, Partner at growth-focused private equity investor ECI, warned against underplaying the cultural nuances. He concluded that culturally, in some ways it’s a lot easier for a British firm to expand into Europe than into the US.

Some values are becoming so common in developed markets, though, that they’re close to seeming as natural as the air we breathe. These fall under the ESG banner, which includes the push for decarbonisation, for greater diversity in recruitment, and for fair treatment of workers all the way to the very end of the supply chain. In a panel discussion on the role of ESG in value creation, Michael Marshall, Head of Sustainable Ownership at RPMI, said scoring well or badly on ESG could be the difference between getting RPMI’s capital or not. RPMI manages the UK’s railway pension schemes.

Growth: mind the equity gap

The other big theme of the day was growth.

Talking of differences between the US and UK, that holds true for money as well as culture. In a forensic analysis of the equity gap between the two countries, Judith Hartley, CEO of British Patient Capital and British Business Investments, part of the government’s British Business Bank, found that average deal sizes for growth funding were much larger in the US. That holds true for whichever round you pick, from £1.2m vs £1.8m in Round 1, to £23.3m vs £65.7m in Round 7. She warned that if this gap isn’t closed, fast-growing British firms will keep relocating to the US. 

Never mind the gap with the US – what about the gap within the UK? Paul Scully, minister for small business, consumers and labour markets, complained in a morning talk that a business in the East Midlands with the same growth prospects was half as likely to secure growth equity as a business in London. He called on the sector “to include the rest of the country in London’s success”. On the positive side, though, Henry Whorwood, Head of Research & Consultancy at data company Beauhurst, said that although London continued to dominate, more of the funding was regional in the past. Leeds and Manchester are the top locations outside the capital. 

A fad is bad, a trend is your friend

Speakers also talked a great deal about what they’d learned during the pandemic about how to keep growth companies growing at a challenging time. Michele Giddens, Co-CEO of Bridges Fund Management, laid out several key lessons, including investing in trends, not fads, and prioritising digital. She set out a charming example: a portfolio company, World of Books, a second-hand bookseller set up when the founders noticed charity shops throwing books out for landfill. The pandemic saw a sudden collapse in the supply of books from charity shops, but World of Books was resilient because of two digital capabilities. One allows people sell their books by scanning their barcodes. One that uses sophisticated software and pricing algorithms allowing the company to price in a nimble and sensitive way. 

Founders also talked, though, about the absolute basics of survival in a tough time. For example, in a session on how growth company entrepreneurs adapted during the crisis, Michael Eder, Managing Director, Student Beans, set out a three-pillar approach to preserving cash. He stopped paying the bills, ramped up the credit control and asked everyone to take a pay cut. 

The past year or so has been tough for some growth companies, but most managed it well – often with the help of their investors. As Michael Moore, director general of the BVCA, put it in the day’s opening session: “Last year was about economic survival; the resilience of this industry was something to behold.”