Only a couple of weeks ago, I featured the founders of a VC firm on these pages. It was the first time I’ve done so. Often, these businesses are more likely to want companies they’re invested in profiled, or they just don’t like being in the press. But there are increasing numbers of firms investing in early-stage, fast-growth companies that want to share their story.
“We’ve already created almost half the number of jobs that HSBC claims it’s sending to Europe in the wake of Brexit [1,000],” says Rupert Hambro, one half of Hambro Perks. “It’s absurd to panic about it.”
Co-founder Dominic Perks explains why they describe themselves as a boutique advisory and investment firm and incubator, rather than a VC. “Optically, we’re often seen as just an investment company – or even erroneously as a VC fund. But we’re not; we’re company builders.” While Hambro has just seen Sipsmith, the gin firm he’s been involved in for a decade, sold to spirits giant Beam Suntory, Perks came up with the idea for Laundrapp, before bringing in a leadership team.
The pair founded their firm in 2013, after what can be described as a meeting of minds. Each had portfolios of businesses they were invested in: Hambro spent 25 years working for the family bank, Hambros, before becoming a chairman, and Perks, who’s ex-Morgan Stanley and McKinsey, started his portfolio after deciding he wanted to buy a business, taking out an ad in the FT and remortgaging his house to pay for the right one.
“When I met Rupert, we both had these portfolios of businesses. I’d been more active, more operational, while he’d been more of an investor and chairman. But we both had the same attitude towards backing people who look for and can find real solutions to real problems.”
“I always liked working with young people, and when Dominic walked into me office – I can’t actually remember why he did – but it was obvious very quickly that he had this very unusual and innovative brain, and I wanted to work with him. He’s always thinking of ways we can get involved... I know the word ‘disrupt’ is getting a little hackneyed, but every company we invest in is changing and improving areas of business that have not been properly been touched or looked at for however many years.”
The Hambro Perks portfolio (of almost 30 firms) includes those that are creating entirely new categories, like What3Words, which re-maps the world in three-metre by three-metre blocks. Tootle enables you to list your car (if you want to sell it) for free online, connecting you with over 2,000 dealers. Then there’s Unbound, the crowdfunding publisher, and Takumi, which puts brands in touch with social influencers. The pair have their own balance sheet but no fund, instead helping businesses financially via family offices, private investors and corporates.
“Lots of people walk in who we like very much, but we wouldn’t expect the speed of growth from their idea or business,” says Hambro. If you go into the office, after getting distracted by the pi-tops (the DIY computers aimed at kids but inviting to adults) in the reception area, you’ll walk into a large room rammed with incubated startups – eight at the moment. “If we can see that speed, we can find people to partner with them and fund them. It’s not all about the money, though: we help them to believe in themselves.”
Need for speed
In addition to focusing on finding firms that are capital light and which will apply technology to an opportunity, Hambro Perks looks for the ability to scale fast and cross-border: “the ability to internationalise is also something we’re particularly interested in,” says Perks. “We have a number of portfolio companies that are establishing themselves in the US. Most of our businesses are London-based. The talent we need and want to attract is European. Although, truthfully, London is Europe at the moment.”
Sector agnostic, Hambro Perks spends months researching a sector before focusing on companies looking to disrupt it. The firm has, for instance, spent the last year researching the insurance market. “That’s all in stealth mode, just quietly getting on with it. We have a dedicated team and talk to people in the industry, alongside doing consumer research. We really value that level of insight – and it’s pretty unique in the venture world. Perhaps on the West Coast you get it, but not a lot here,” says Perks.
On the back of the research, the team follows an “ideation process”, where numerous potential business ideas are floated and then filtered down to a few that have legs. “We also have in-house expertise there,” adds Hambro. “I’ve been chairman of two insurance brokers and started one reinsurance broker, for instance. If you put that together with who do we know in the industry and who can we go and talk to, we can do a considerable amount.”
But insurance is just one area the firm is looking at. Edtech, medtech – “the NHS needs all the help it can get, so we expect to increasingly see an abundance of talent finding technological solutions to make that world more efficient,” says Perks – are both sectors they’ve invested in, with portfolio firms like app-based repeat prescription and medicine home delivery firm Echo and digital textbook platform Kortext.
“We are in a digital revolution, and I personally find it extraordinary and exciting that we’re able to grow businesses at such a pace because of the internet,” says Perks. “But that means it’s hard to value and hard to measure success – to some extent we are in uncharted territory. The sheer speed of growth is dizzying and quite hard to understand using traditional metrics.”
“Look at Purplebricks,” says Hambro. “It didn’t exist three years ago, but it’s more valuable now than Foxtons. In February, it raised £50m in two hours to expand into the US. That business is actually a fantastic online/offline hybrid. The new mood now is to change the way people do things – to make it easier for them. Amazon will drop items off, Laundrapp will do your laundry, picking it up and dropping it off. All our lives are getting and will continue to get much easier.”