Tapping into right advice valuable for entrepreneurs

Lisa Mitchell of STATS with colleagues Derek Smart and Pete Duguid. Picture: Simon Price

FINDING the right type and amount of funding to grow a business can be a challenge, but getting the right support to help stimulate that growth can be just as difficult. For most owners or chief executives of small or mid-sized companies, identifying and appointing a chairman is a completely new experience – and the first hurdle is gaining access to the right people.

“The entrepreneurs that we meet want someone around the board table who has been there and done it and can share his or her experiences,” agrees Gemma Hamilton, an investor at Business Growth Fund (BGF), the UK’s most active provider of growth capital.

“Finding the right person with first-hand knowledge of growing a business or significant board level experience isn’t always easy – particularly for management teams who are busy trying to grow their businesses.”

BGF was launched in 2011 by five of the UK’s biggest banking groups – Barclays, HSBC, Lloyds, Royal Bank of Scotland, and Standard Chartered – with £2.5 billion to invest in growing companies with revenues of between £5 million and £100m. In return for an equity stake, BGF makes initial investments usually between £2m and £10m and can provide follow-on funding to its investee companies.

But the cash is only half the story. BGF can also provide the management teams it backs with access to a network of more 2,000 board-level executives, who can provide guidance to management teams and help with strategies, usually in non-executive roles.

“Most entrepreneurs want to remain in control of their businesses, but they also want support, which is why BGF dedicates resources and people to building our network,” explains Hamilton.

“Giving entrepreneurs access to such a broad range of talent is one of the unique selling points for BGF. Firms realise that we don’t only supply growth capital but also contacts.”

One of the ways in which BGF brings entrepreneurs together is through its annual CEO and chairman days and other networking events, which allow business owners to share their ideas and experiences and even start to collaborate.

Get-togethers are also run for finance directors, meaning that more specialist knowledge and expertise can also be swapped between portfolio companies.

Having access to such deep reservoirs of talent has been a key factor in helping some of the Scottish companies in BGF’s portfolio to grow.

Accessing the right support – especially at a time when the oil price is so low – has been an important consideration for Katy Gifford, who was appointed as chief financial officer at Ellon-based chemical technology specialist Aubin Group in 2014.

BGF invested £2.25m in 2013 in Aubin, which was founded in 1986 and which supplies cements and stimulation chemicals used in drilling and preparing oil wells for production.

“The majority of our chemicals are exported to markets in the Middle East,” explains Gifford, who has worked with companies including Wood Group and S4 Advisory. “With the oil price being so low, we can offer advice to our customers on which chemicals to use to help reduce their costs.

“It’s great to know that we can access the knowledge and expertise from other businesspeople who are connected with BGF. If we need to pick their brains about new markets or particular customers then we know that they’re there to help.”

Another business in the North-east that has benefited from BGF’s cash and expertise is STATS, a Kintore-based firm that designs, manufactures and installs pipeline isolation and intervention tools to increase safety and minimise downtime to production in the oil, gas, petrochemical and power industries.

BGF invested £7.8m in 2012 to back the vision of chief executive Peter Duguid, who founded the company in 1998 alongside his sister, Lorraine Porter. As well as funding overseas expansion and the growth of STATS’ range of devices, the cash has allowed the company to continue to invest in its people too.

It’s not just a question of recruiting expertise from outside either. Companies in BGF’s portfolio are also encouraged to recognise the talent in their own organisations, as was the case with Lisa Mitchell, commercial director at STATS.

After studying law and management at the Robert Gordon University in Aberdeen, Mitchell worked at GTC Group as first a systems manager and later as the technical department manager, before moving to Cosalt Offshore, where she was commercial manager and then commercial director.

Mitchell joined STATS in 2012 as a contracts manager and quickly worked her way up through the ranks before being appointed as commercial director last August. [2015]

“Listening to advice and learning lessons from business people who have ‘been there and done that’ should be an important part of any commercial operation,” Mitchell explains.

“Having the financial backing from BGF is really important for our business, but what’s equally as attractive is the level of support and advice that we can tap into through its talent network.”

One of the companies that entrepreneurs could approach for advice is Edinburgh-based Jumpstart, which specialises in helping businesses to use HM Revenue & Customs’ (HMRC’s) research and development (R&D) tax relief scheme.  BGF invested £3.4m in Jumpstart in 2014 to help the business expand throughout the UK.

“Right now, we’re identifying £1.4 million in eligible activity every single week,” says Shona Quigley, financial director at Jumpstart.

Quigley previously served as finance director at Barrie & Hibbert, where she was involved in its sale to Moody’s Analytics, and worked with InterGen, one of the UK’s biggest independent power generation firms.

“It’s very inspiring to learn more about the other businesses that are connected with BGF and to learn lessons from the women and men who have grown their own companies, or have board level experience, and have been involved in some amazing success stories. Being able to tap into the expertise is a real bonus.”

This article appears in the Spring 2016 edition of Vision Scotland. An online version can be read here. Further information about Vision Scotland here.