What it takes to scale in 2022: ambition, the right people and a growth strategy
With a month to go until Scaleup Week 2022, Aaron Baker, investor at BGF – the UK and Ireland’s most active growth capital investor – looks at the key ingredients for growth in uncertain times.
What a difference a year makes – the first Scaleup Week, launched by BGF and the ScaleUp Institute in 2021, happened virtually given the pandemic. This year, we’ll be meeting in person with growth businesses and scaleup leaders from across the UK coming together – but with the economy facing more varied and intense challenges than we imagined even at the start of 2022.
Faced with high inflation, a possible recession, and the urgency to reach net zero, the need to support scaleups is greater than ever before. The aim of Scaleup Week is to connect growing businesses with organisations and thought leaders that can support them to build resilience and plot a course to a sustainable future, driving the next decade of growth and innovation.
BGF has been on its own scaleup journey since it was founded in 2011 to address a longstanding shortage of funding for small and mid-sized UK companies. We’ve now grown to become an investor of real scale and influence in the market, having made over £3bn of investments into more than 450 ambitious companies with notable investments here in the Midlands, including Emma Bridgewater, Woodall Homes and Aceleron. Last year, we exited ten investments in the region, including the sale of Chase Distillery to Diageo.
So what does it take to scale in 2022? Alongside strong financial performance and a scalable model, three key ingredients for growth give us confidence that a company is an attractive investment proposition:
There is no shortage of drive and desire to succeed in the Midlands. Companies and business leaders with an entrepreneurial mindset seek out new ways of doing things and find opportunities even in the most challenging economic circumstances. We expect to see even more opportunity in the current disruption. We believe in the potential in the Midlands and the ability of the businesses that call the Midlands home to make a positive impact on the UK economy as a whole.
The right people
BGF is a minority investor, so having the right management team to work with is essential, but also a mindset that accepts that new people, and change more generally, is required to deliver growth and the full extent of ambition. That means quickly building working relationships based on mutual trust, and identifying skills gaps where BGF can add value, via our experience or our network, if needed. This goes beyond the leadership team – growth companies will only remain so if they attract, develop and retain the best people at every level.
A growth strategy
Growth ambition can take many forms: it might be product development, international market expansion, investment in tech and talent, or strategic mergers and acquisitions, or just disrupting an existing market. Whatever a company’s plans are, to attract outside investment they need to be clear on the destination, the ‘vision,’ and how they plan to get there, but also what happens if reality is different to expectations – for both positive and negative reasons. This is even more important given the degree of uncertainty companies are facing right now.