haysmacintyre’s hot seat: 30 minutes with Simon Calver, BGF Ventures
We are delighted to feature Simon Calver, founding partner at BGF Ventures, the early-stage investment arm of BGF.
What led to BGF Ventures being founded?
BGF Ventures was conceived to fill a funding gap. While BGF Venture's growth capital teams have been focused on businesses already achieving £5m turnover and profitable, BGF Ventures are investing in early stage UK businesses within the start-up to scale-up bracket. Currently, we have £65m invested in 22 businesses and are investing at a rate of one business per month.
What led to your involvement?
I got involved in business early with my involvement in my family’s business interests! I used to stock the shelves at my grandfather’s supermarket and aimed to beat my dad’s sales targets when I looked after his fruit and veg stall over the summer; following that I did a computer science degree and it seems my whole career since then seems to have been at the intersection of business and technology so prepared me for my current role.
I joined the graduate marketing programme at Unilever, but spent most of my time in sales roles in the mid-80s. Then having joined PepsiCo, I led the global launch of Pepsi MAX outside of the US and went on to play a part in the restructuring and relaunch of its international business. I left PepsiCo as their VP for International Sales Operations, having spent a lot of my time in China and India.
My next stop was Dell, running the home and office business in UK and Ireland, with a P&L of $1.5bn and as Y2K was looming.
Then things changed for me after 9/11, when I had a calling to work with smaller organisations and experience what I saw as perhaps a more adventurous career. I worked on the turnaround of Riverdeep, a San Francisco-based educational software business and achieved a successful exit. Then I was asked by the investors to join Video Island and where I initiated the merger with LOVEFiLM. I spent seven years as the CEO of this business and completed the eventual exit to Amazon. Following that, I moved on to CEO at Mothercare to oversee its turnaround. I seem to love a challenge!
What role does BGF Ventures play in the funding landscape?
We offer what we call ‘patience capital’. The traditional investment model of raising external funds and therefore needing forced exits in short time frames is not relevant for earlier stage businesses. At BGF Ventures we invest off our own balance sheet so have the option of waiting as long as it takes to get the best return, not only the typical six to seven years.
However, managing the deal-flow can be a challenge. We see about 2000 business plans each year, meet with 600 or so companies and invest in 10 to 15. If you are looking to invest only a fixed amount per year, c. £50m in our case, then you try to be in the best possible companies you can. Unfortunately we can't invest in every single one despite there being great ideas out there.
We seek to create balance in our investments and risk profile. We have a responsibility to the fund in that respect, but also to young businesses to consider different sub-sectors and opportunities. We do look for businesses growing fast, for example 100 per cent year on year, that have the potential to go international, have great talent and have a product that has created high barriers to entry. For me, tech is not a sector, but an enabler to business... we should not be thinking about it in the traditional way as it provides platforms for growth for all businesses. I’ve seen this first hand through chairing Moo.com and Chemist Direct.
The challenge of investing is to try to see patterns for success but not be a slave to them or you will never see the next big thing coming. After investment we typically join the Board and spend a number of days per month with each business. Our goal is to be supporters to the founders, not to stop things happening... an image I like to think of is that we sit on the same side of the table as the founders.
What is next for BGF Ventures?
BGF Ventures is a start-up as well so we have a lot of affinity with founders. Rather than make a big noise at launch we wanted to let our investments do the talking as building a strong reputation for results is more important to us. BGF Ventures has recently launched into Ireland so we are hoping in time to find some great ventures deals there as well. Our goal is to build a long term successful company and as long as we continue to deliver commercial returns for our shareholders, we hope to be here in 20 years investing hundreds of millions in early stage businesses. We know those businesses we invest in have a choice of investor and so we remain humbled when they pick us.
What advice do you have for those seeking to build a business?
I’ve come to the realisation that wherever businesses are in the world, they have the same requirements for success.
I have four business principles that I hold onto and look for in others: place the customer front and centre; have a maniacal focus on what drives success - and do more of it; be ready to change and adapt as competition changes and finally, it is always all about the talent, hire the best team you can.
My learning about the market and being flexible comes from my time batting for Unilever against P&G and against Coke whilst at Pepsi. They were formidable competitors.
With talent, I’m a true believer that those first division leaders appoint other first division players and those in second division appoint those in the third. I spent over 30% of my time at LOVEFiLM recruiting, it is the most important job a CEO can do. Great talent can ride the bumps of a start up and I apply the same principles when reviewing BGF Ventures investments. The money goes to the right people.
Along with haysmacintyre partner, Natasha Frangos, Simon is a judge of the Startups Awards, a programme sponsored by haysmacintyre for over ten years. With £200m to invest, BGF Ventures is one of the largest UK and Ireland-focused venture funds.