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The good growth blog: the future is wearable

The good growth blog is written by BGF’s executive chairman, Stephen Welton.

 

The world has witnessed its first $3 trillion company, Apple. The Californian technology giant passed the milestone valuation on 3 January, a remarkable achievement. The company is now worth more than a thousand times its value in the late nineties, but of course, that was before the iPhone, the iPad, the App Store and all the other innovations that have made the company so valuable.

Clearly, a great deal has changed in the last twenty-odd years, but it seems to me that the rapid rise and adoption of consumer technology has been one of the most important shifts. Laptops, tablets and so on have become essential items without which it is near impossible to play an active part in modern life. We’ve gone from a society in which it was unusual to own a mobile handset to one in which more than half the world’s population owns a smartphone – remarkable.

The next chapter will see us all donning ever more sophisticated headsets as we wander through the metaverse, courtesy of not just virtual but augmented reality – an interesting space and more to come on that front this year for sure. In many ways we are just beginning to realise the full potential of all this new tech as we move into the world of personalised data and insight to help manage our lives. One of the most interesting frontiers of that revolution is wearable technology. I am happy to say that BGF’s first investment of the year is into an exciting and innovative company in this very space. Myzone makes wearable heartrate monitors such as smart watches and belts along with software that makes exercise more engaging. It’s a fantastic global business operating at the intersection of technology and health, providing ingenious solutions to help people take control of their wellbeing. As we emerge from the festive season, I think many of us could use a little encouragement to ‘tighten our belts’ and get back in shape! And from a thematic standpoint, healthtech is likely to be one of the hottest sectors of 2022.

The Myzone investment is reflective of the way in which BGF operates and how we have helped to back hundreds of companies in recent years. We really try to leverage our network to help add maximum value to our portfolio. As part of the investment, Vin Murria, renowned British technology entrepreneur, “software queen” and valued member of our Talent Network, is joining Myzone as chair. She is also personally investing in the business. Vin has been a great friend and supporter of BGF over the years and I’m delighted that we have once again helped to connect an exciting UK business with her formidable business acumen.

The Myzone deal was the culmination of a fantastic year at BGF. We invested £600 million in 2021, over 50% more than in 2020, smashing our targets and setting a record for the largest yearly sum deployed by us since we were set up ten years ago.

As importantly, given BGF’s objectives to support a broad range of companies across the country and build a highly diversified portfolio, we made more than 70 investments in the year. Investing is one part of our activity; driving strong returns is the other. It’s very exciting that we also exited investments in nearly 40 businesses last year. BGF will post a record pre-tax profit in 2021, up from the £346 million of 2020, another sign of the health of our business and the health of entrepreneurship and innovation in the UK and Ireland. The robustness and resilience of our portfolio, not to mention the agility to react rapidly to changing circumstances or emerging opportunities, is truly remarkable.

Numbers by themselves can only tell part of the story, of course. Behind every deal is a great company, a motivated management team and a huge amount of effort. I’m happy to say that our investments and exits span the alphabet, including from Avingtrans, Aferian, Animal Care, Aptitude, Aqdot, ANDigital, AdvancedADVT, Arecor (our first IPO of a female-led business!), Accsys, Arborea, AD Williams, Ambisense, Aceleron, Antser, Appnovation and Alliance Transport all the way to Victorian Sliders, Virgin Wines, Wiser Funding, Woodall, Window Supply, XCD and Zotefoams.

It’s a really impressive performance – testament to the hard work of our investors, the broader team at BGF and our Talent Network. It also points to the health and vitality of the UK and Irish economy, which has created so many promising small and mid-sized companies, and provided so many opportunities for them to exit, whether by trade sale or public listing. Happily, the cupboard is not bare. Our pipeline is strong and I have every confidence that we will begin this year with ongoing momentum. There is no reason that 2022 can’t be just as stellar a year as 2021.

BGF did plenty more in 2021, of which I’ll give a brief summary here:

  • We opened our 16th full service office, in Newcastle. We already have a great franchise there (companies such as Cussins and Arcinova are a couple of exited examples) and masses of potential (for example, Bloom Procurement) so the future is bright on the Tyne.
  • We made a fantastic breakthrough with the successful launch of the UK Enterprise Fund, our partnership with Coutts that allows high-net-worth investors to access the small and mid-sized businesses we invest in. This is ground breaking and innovative for Coutts while being BGF’s first foray into managing money for private clients.
  • The establishment of the BGF Foundation, our charitable endeavour, is well underway. The Foundation will look to leverage the same approach and ethos of BGF, with a strong regional focus on local charities with more than just money. We will offer support and grants to small and mid-sized charities which improve life outcomes for disadvantaged children, young people and adults living in the UK and Ireland.
  • We created and delivered the UK’s first and highly innovative ScaleUp Week, a week of virtual debates with scaleup leaders across the UK, with active engagement from the Secretary of State for Business, Energy and Industrial Strategy, as well as the Prime Minister and the ScaleUp Institute. We hope to build on this in 2022 as the opportunity to increase the impact on scaleups is enormous.
  • We actively engaged in the wider debate in the UK around levelling up, building back better, and the road to net zero, increasing the reach and impact of BGF’s network to a wide range of stakeholders. Highlights included the booklet we published with Sir Anthony Seldon, the policy forum on female entrepreneurship, and the establishment of our clean growth advisory board. At a time when environmental, social and governance (ESG) investing is increasingly important, I am proud that this sense of purpose has always been at the heart of what BGF tries to do.

I started this blog talking about Apple. While BGF has never been an investor in the company, we are exposed to the ever-widening Apple ecosystem (as so many companies are and where there are great opportunities). There is another connection between us, too. The company’s famous logo featuring an apple with a bite out of it is said to have been inspired by the tragic death of the British computer genius Alan Turing, who committed suicide by eating an apple doused in cyanide.

The connection to us is that our London headquarters are in the building that first housed GCHQ in 1919, and it was the codebreaking unit of the originally and snappily named Government Code and Cipher School in which Turing did his ground-breaking work on computers during World War II. Turing’s scribbles have been used to signpost the floors of the building, and on the ground floor is a video art installation inspired by his “le Bombe” codebreaking machine. Hence, BGF is only two degrees of separation from Apple, and the intermediary link is the “father of modern computing” himself, Alan Turing. Perhaps the next Apple will be both British and green (see below) as we crack the code for the biggest challenge of them all, the drive to net zero. If BGF was to find and invest in that…

Like this Bramley cooking apple, the next Apple Inc. could be British and green

BGF Insights 01.10.2022
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