YFM Equity Partners · 2020. 12. 15. · • The key deals and improved marketing profile...

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YFM Equity Partners

December 2020

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Investor Workshop

British Smaller Companies VCT plc

British Smaller Companies VCT2 plc

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Agenda

2.30 Welcome Peter Waller, Chairman British Smaller Companies VCT2 plc

2.35 A lockdown exit … Business Collaborator Wes SimmonsCEO, Group BC

2.45 Performance and Portfolio Review David Bell, Head of Portfolio, YFM

3.00 Navigating Covid-19 …Wooshii Fergus Dyer-SmithCEO & Founder, Wooshii

3.10 New Investments: Market & Activity Ian Waterfield, Partner, YFM

3.25 What lies ahead David Hall, Managing DirectorYFM

3.35 Questions & Answers Facilitated by James Savage, Portfolio Director, YFM

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How this webinar will run

Throughout, you can use the Q&A function to set out your question in writing

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If you have any technical difficulties during the webinar, please contact tracey.nice@yfmep.com

James will collate questions during the webinar and group them appropriately

After the presentation, James will direct your question to the appropriate panellist

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YFM Investor meeting

Wes Simmons

December 2020

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• Provider of collaboration software to the Construction Supply Chain and Asset Owners– Business Collaborator traded as Group BC and was formed through a buyout of the

business by management and YFM in Nov 2014– Richard Beaton (who the VCTs had previously invested alongside at Selima) joined

as Executive Chairman– The business was run by Sanjeev Shah and Steve Crompton and had some

excellent technology and functionality– The business did well in the first couple of years but started to struggle as some

key projects took longer and needed more development work than envisaged– I came in Jan 2018 to resolve some of the business issues

Group BC overview

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• What were the problems– The company had great functionality, some of which was ahead of the market– The business was very technology focussed

• Development work with no reference to the market opportunity• Too many customers systems had development tweaks• Not invented here bias

– The sales team was expanded but marketing wasn’t – Due diligence in customer acquisition was poor– Cash was not king! – The company didn’t know how to say No

• Whilst there had been good progress in many areas improvements were required to maximise value

Group BC in 2018

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• Short term – Cash, costs, marketing and difficult projects• Medium term – Sales, focused development, clear direction• Longer term – Partners, its OK to say No

Repositioning Group BC

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

5,500,000

6,000,000

Actual 2017 Actual 2018 Actual 2019 Runrate 2019

EBITDA Revenue Sales Pipeline

£ revenue £ EBITDA

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• Key deals raised the profile– HS2, Highways England and Heathrow

• The key deals and improved marketing profile interested potential investors

• With YFM and KPMG adopted a “we aren’t looking to sell but…..” approach

• Came down to Autodesk and Bentley• Autodesk were leading but the product fit didn’t work for

them• Bentley came back with a revised offer, paying a strategic price

for the business.• Bentley completed in 2 weeks to beat the Budget deadline and

the lockdown!

The outcome

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YFM Equity Partners

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David Bell, Head of Portfolio

Performance & Portfolio Review

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Investments of £24.0m• 6 new investments, £22.8m• 5 furthers, £1.2m

Realised Proceeds of £25.9m (£18.3m uplift on cost)(2 full, 1 partial, including debt repayments)

Total Returns BSC 5.7%, BSC2 4.1% (June 2019 to Sept 2020)

Key updates since June 2019 (both VCTs)

Past performance of BSC or BSC2 is no guide to future performance and the value of investments may go down as well as up and you may not get back the full amount invested.

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Historic Quarterly Total Return

Past performance of BSC or BSC2 is no guide to future performance and the value of investments may go down as well as up and youmay not get back the full amount invested.

• Positive Gains in second half of 2019• Big provision in March 20 due to Covid-19 lockdown• Recovery over the last 6 months

-25

-20

-15

-10

-5

0

5

10

15

£ m

illio

ns

Both VCTs

By Quarter

Cumulative

1212

Historic Quarterly Total Return

Past performance of BSC or BSC2 is no guide to future performance and the value of investments may go down as well as up and youmay not get back the full amount invested.

• Some strong realised gains last year• Re-valuation due to Covid lockdown• Recent gains due to recovery in valuations

-30

-25

-20

-15

-10

-5

0

5

10

15

Sep-19 Dec-19 Mar-20 Jun-20 Sep-20

£ m

illio

ns

Re-valuation

Realised gain

Cash funds

Net income

Eikon Sale

Business CollaboratorSale

CovidProvision

ValuationRecovery

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Eikon• Investment of £5.0m in March 2018• Digital post-production services for film producers• Strong sales growth / Growing market share• Partial exit via secondary buyout in October 2019• 2.2x cash return, plus residual stake

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Portfolio Review: Realisations

Business Collaborator• Investment of £3.3m in November 2014• Collaboration software to the construction sector• Enhanced product and sales proposition• Strengthened the management team• Sold to trade buyer in March 2020• 4.4x cash return on investment

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2020: Covid-19 Challenge

• 75% provision of Retail portfolio – recovery possible• 34% of Travel provided (net of ACC cash) – hoping for 2021 recovery• Strong recovery of Technology sectors

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20,000

40,000

60,000

80,000

100,000

120,000

140,000

Dec-19 Mar-20 Jun-20 Sep-20

Portfolio by Sector

Realised

Other

Retail

Travel

Business Services

TMT - Product

TMT - Data

TMT - Services

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Top 10 Portfolio by value

Past performance of BSC or BSC2 is no guide to future performance and the value of investments may go down as well as up and you may not get back the full amount invested.

Company Type of business Value£m

Cost £m

%Nav Years

Matillion Cloud-based integration technologies 18.8 3.8 11.6% 4

Intelligent Office UK Business process outsourcing 8.0 4.9 4.9% 6

ACC Aviation Aviation Broking and professional services 7.6 0.4 4.7% 6

Unbiased Tech-enabled marketplace for professionals 6.1 4.9 3.8% 1

Springboard Retail performance data tools 6.1 3.7 3.7% 6

Arcus Global Cloud-based public sector software solutions 5.3 4.9 3.3% 2

Deep-Secure Cyber and IT security software 5.1 1.5 3.1% 11

KeTech Rail communications and defense products 4.6 3.0 2.8% 5

Elucidat E-learning authoring software tools 4.0 3.5 2.4% 1

Wooshii Tech-enabled video production agency 3.8 3.6 2.3% 1

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Portfolio Review: characteristics

Portfolio characteristics are based upon reported valuations as at 30 September 2020, adjusted for new investments to date

39%

61%

VCT RULES(%)

Pre Nov 2015

Post Nov 2015

Less than 1 year

Between 1&3 years

Between 3&5 years

Greater than 5 years

19%

18%

28%

35%AGE OF

INVESTMENT(%)

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The world’sgreatest video studio at your fingertips

linkedin.com/in/fergusdyersmith | fergus@wooshii.com

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Managevideo

operations

CU STOMERSATISFACT ION RATI NG

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Creators

Countries

Formats &Uses

Point-of Contact

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16,000+Creators worldwide –managed by 3 regional offices

UK HEAD OFFICE

NORTH AMERI CANOFFICE

CENTRAL EUROPE OFFICE

Delivering great content in any language, in any time zone, in any format, in any style

Anywhere intheworld

C-19

300200100

0Apr May

Sales

Feb Mar

Sales

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WE KNEW

We had to react

We had cash

Video wasn’t going anywhere

There would be winners and losers

Companies would need to increase communications

Wooshii was designed for remote

Assess

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SO WE

Took our time

Re-budgeted, cut once and as deep as we couldFocused sales on Biotech and Technology

Innovated – Remote Direct

Act

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THERESULT

Result

New accounts suchas AmazonGrew existing accounts like IQVIA, ALJ

October a record month for sales (despite

losing travel)

Remote Direct has become a mainline product

Now hiring in both LA and UK

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YFM Equity Partners

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New Investments: Market & Activity

Ian Waterfield, Leeds/Manchester

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VCT enquiry levels

• Lockdown hit enquiry levels• Unpredictable enquiry levels over the Summer• High volume of opportunities since Autumn

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10

20

30

40

50

60

No.

enq

uirie

s

Monthly VCT enquiries

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Enquiry analysis

Technology

B2B

Retail

Manufacturing

HealthcareFood

Financial

2020YTD enquiries - business sectors

London

South East

South West

MidlandsNorth West

Yorkshire & NE

Wales, Scotland &

NI

2020YTD enquiries - location of business

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Conversion funnel

VCT opportunities 2019 2020 YTD

Enquiries 389 377

Offers made 9 7

Offers accepted 6 6

Completed 7* 2

In process 3

• Similar overall level of enquiries in FY20 Bigger investment team, origination focus

• Conversion delay - 3 offers accepted pre-lockdown, 3 post-lockdown

*One opportunity completed based on an offer from the previous year

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Marketing automation software

SaaS solution targeted at UK SMEs

Leeds based with 45 employees

Founded 2010 as a marketing agency

Pivoted in 2017 to software solution

Series A investment by BSC VCTs of £4m in

2020

– investment overview

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Informal introduction from our local network

in July 2019

Contributed to adviser discussion

Referenced within local market

Formal presentation as part of wide process in

February 2020

Well positioned with the management team

Lockdown in March 2020

– the journey (pre-lockdown)

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Fundraising process resumed in June 2020

as trading well

Increased reliance on email marketing provides positive market dynamic

Exclusivity in July

Phase 1 due diligence with sector expert

Strong ambition, need to build out the plan

Expert became chair elect and worked with team on plan over the

summer

– the journey (post-lockdown)

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Plan for significant headcount growth,

focused on sales and development

Phase 2 due diligence with professional

advisers

Financial, tax, legal and management due

diligence

Customer referencing, technical and sales due

diligence

Investment completed 20 November 2020

Clear post-completion plan – strategy, senior

hires and KPIs

– the journey (completion)

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YFM Equity Partners

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David Hall, Managing Director

What lies ahead

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What lies ahead

Brexit• Direct Impact –

state aid• Indirect Impact

Regulatory Fundraising

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What lies ahead: Brexit

Direct Impact: State Aid

• Early indications• Business Energy &

Industrial Strategy (BEIS) Review

Indirect Impact

• Covid-19• Economy

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What lies ahead: Regulatory

VCT Conditions

• Age• Amounts

Recycling

• Time

Tax incentives

• Seen as cost

3939

What lies ahead: BSC VCTs Fundraising

Annual Capital Consumption*BSC

£m

BSC2

£m

Total

£m

Investment 18.0 12.0 30.0

Dividends, Buy-backs, Operating Loss 9.5 7.0 16.5

Annual Capital consumption 27.5 19.0 46.5

Illustrative Cash 31.3.21 27.0 17.0 44.0

Illustrative NAV 31.3.21 100.0 65.0 165.0

* Figures are for illustrative purposes only

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Q & A