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YFM Equity Partners
December 2020
1
Investor Workshop
British Smaller Companies VCT plc
British Smaller Companies VCT2 plc
22
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
3
If you have any technical difficulties during the webinar, please contact [email protected]
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
1010
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.
1111
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
0
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
1515
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 | [email protected]
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Managevideo
operations
CU STOMERSATISFACT ION RATI NG
20
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
-
10
20
30
40
50
60
No.
enq
uirie
s
Monthly VCT enquiries
2929
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
3030
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
32
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)
33
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)
35
YFM Equity Partners
35
David Hall, Managing Director
What lies ahead
3636
What lies ahead
Brexit• Direct Impact –
state aid• Indirect Impact
Regulatory Fundraising
3737
What lies ahead: Brexit
Direct Impact: State Aid
• Early indications• Business Energy &
Industrial Strategy (BEIS) Review
Indirect Impact
• Covid-19• Economy
3838
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
4040
Q & A
