Globalisation on pause? How scaleups can navigate today's uncertainty9:30 am - 10:30 am
In conversation with Sarah Fatchett, CEO of 365 Response
At an early stage, we had a number of companies approach us to see if we would sell-out the whole company. We weren’t looking to do a full exit as we love what we do, so it was something we chose not to pursue. Initially, we got a lot of inbound interest from a number of private equity firms and we decided to pursue one particular offer – it was a good, actually aggressive offer, but when we went through the finer details in the terms, we felt they weren’t right for us as a business.
We met Rob Johnson from BGF’s Yorkshire team along that initial process and had a number of conversations with him. As a business, we are driven to create new ways of delivery for our customers. It’s not all about the money; it’s about value. As such, we wanted a partner that was willing to support high-growth businesses in the UK and one that had shared values. That was core to us.
We would describe ourselves as social entrepreneurs. We’re absolutely in the private sector; we want to drive cash, value and employment; we want to make a profit for good so we can employ as many people as we can on proper contracts with secure jobs. We want to return our tax pounds back to the UK Government which is now in need more than ever of dynamic, strong entrepreneurial companies; and we want to do that responsibly. For us, BGF felt like a secure, long-term partner that shared this ethos. What also motivated us about BGF was the brand – BGF has established a great reputation as the most active growth capital investor in the UK and has a proven track record of helping growth economy companies scale. The reason for that is that we look to bid for large public sector contracts, so the reputation of the partners we work with is equally as important as our own in these processes. We wanted a partner who could support us in formal tendering for government services – one that was credible, authoritative and had the right values for us.
When did you know?
When COVID-19 hit, we weren’t in a distressed state – in fact, it had the opposite impact, because of the services we provide to front-line support, such as Ambulance Trusts, the NHS, social care, special educational needs providers and businesses that supply those services. All of them were suddenly front and centre to what the Government needed.
Unlike many businesses, we didn’t need the money and we didn’t need to do the deal – we have always maintained strong cash flow and careful stewardship of our finances. However, what did become apparent in the early stages of the pandemic was that we would really benefit from a partner to help us navigate the now constant new unknown, because we didn’t know what was coming next and it all seemed such a strange and unusual environment. Our ambition is to pursue a joint strategy of build and grow and also buy and grow and to take the opportunity of finding like-minded companies that we can work with to form a partnership chain. As such, we needed a partner that could rapidly move with us; someone who could sit on the board with a strong, external voice and great strategic connections with a whole host of businesses across different sectors.
Another key element was access to capital to bring in potential acquisitions and a really good process to invest in high quality talent and product. We’re really struck by the concept of building talent density and building on being the employer of choice for the best talent out there – this is something that’s extremely important to us.
What is it that has made the business successful to date?
There’s not any one thing that makes the business a success. It’s a combination of many things. I started the business when I was 40. Lots of people think that start-ups happen when you’re young, but those businesses don’t have 25 years of deep operational knowledge and understanding of every single problem that is being faced by their customers; I’ve been at the front end of those problems; I’ve been frustrated by those problems and I have a burning sense of fury from the lack of digital solutions that has driven me to solve them.
I’m trying to solve a problem where the end point is if people don’t get access to their care, support, or their school there could be dire consequences. As a business, we have a burning desire to do something about that. It is not just about coming to work; you have to want to solve these problems to do what we do. Because of that, we do things ten times faster and ten times smarter than anyone else. As such, we never stop. As a team, we work really, really hard.
We’re constantly adapting as a business. At the end of the day, we knew we wanted to solve the issue of getting people access to care and special educational schools quicker, better and safer than ever before. That’s why our motto is: Driving Care Everywhere.
One of the things that’s not seen as innovative or exciting in health, education and social care is logistics. We believe that it’s the oil in the engine of these systems. You succeed or fail from being able to get from A to B. People’s attention on getting the A to B right in our space was frustrated by operational demand; the technology was poor, non-existent or worse, plucked from other industries and did not account for the unique needs of these users, and yet, the private sector was teeming with new development. You had Über and Lyft and all these mobility and tracking technologies for consumers, and then you go into day-to-day life as either a patient, or a staff member in the NHS or a special educational needs pupil and it can be all paper and spreadsheets. So that is our biggest motivation. For us, this is the last bastion that needs to be done. It’s technology that has been proven in other sectors, so all we needed to do was to design our own marketplace and logistics technologies and bring them to market with all of our deep sector expertise and knowledge.
Why we think we’re different is that we are a set of operational users and knowledge gurus who work with our own brilliant coders to design the perfect workflow and solve each pain point across the user pathway. It really helps we can speak the same language and fully understand the complexities our customers face. That’s what makes us a success. It’s about listening and immersing yourself in the sector and being open to inventing something that you might not have realised you needed.
We would really like to fast-track our acquisition strategy – we would like to buy a company that works really well with us and fits in with us so that we can spread our customer base and cross share our products with their products. Alongside our plans to acquire, we plan to rapidly grow our current products. We want every SEN school to have access to our technology; we want every NHS Trust to be able to buy better and smarter for their transport supply chains. We are driven to get change for good everywhere.
We want to focus on the UK. We already have a strong presence across England and Wales; we’re in Scotland; and we’d really like to move into Northern Ireland.
What advice would you give to other business owners embarking on their funding journey?
Do not move until your numbers are straight. Be really clear on what you want to do, what you want to spend it on and why you want to spend it. Really, really understand your market. You may have a great idea, but does the market really want it?
Now, I would ask the extra question: what has changed as a consequence of COVID-19? The NHS, social care and education sectors are going to be very different. It’s going to be a really, really long recovery process and I think that’s going to be enormously impactful on people’s ideas. The budgets are going to be different; the focus is going to be different. We’re going to get into a recovery phase, where there’s going to be ill health, waiting lists and priorities of investment in different cases and clinical care models and are going to be different. People’s needs, the impact the pandemic has had on mental health, and the impact of what everyone has lived through is going to affect what people want to buy.
Raising finance is a really positive thing to do as a business owner, because it helps you to be even more resilient and think differently. Everybody needs to take a cold look at their business or organisation and think about what they want to do now. Yes, we’ve had some good experiences during COVID-19 being able to support the front line, but what does that mean tomorrow? Part of it is more long-term, but then sometimes if feels like there’s no point in thinking beyond tomorrow, because you just don’t know what’s going to happen. As a result, the board has to do both. It’s very much about plotting a path through the unknown.
What lesson have you learned through the investment process?
Think of a number, in terms of hours it’s going to take you, times that by an infinite amount and allow yourself the time! I knew the investment process was going to be hard work when it came to the numbers and the amount of due diligence. BGF is very good at targeted and focused due diligence and making sure it’s appropriate and proportionate to what you’re doing. I learned that it was massively hard to do all of that, plus managing the new COVID-19 implications, home-schooling two children, while raising finance, managing the company and setting up new services for clients.
The lesson I’ve also learned is to take more planned time out. I also implemented an employee assistance programme too late. We’ve just done it now and I wish I had done it six to 10 months ago before COVID-19 hit, so the team, and myself, could have accessed various types of support that we needed.
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