“Emotional intelligence is absolutely critical,” Andy Gregory, BGF

“The fundamental foundations are very good,” says Andy Gregory, CEO of growth capital investor BGF. He’s discussing the appeal and the health of the UK economy. “There is lots of innovation across different industries, including strong sectors such as life sciences and technology, and there are great academic institutions helping to simulate that.”

“There is also a great entrepreneurial culture in the UK,” he says.

One cloud on the economic horizon for Gregory is the impact he feels the Government’s changes to employers’ National Insurance contributions may have on entrepreneurs looking to scale their businesses. But overall, he is upbeat and has worked with ambitious businesses to overcome more significant challenges in recent years.

Partner not purchaser

Founded in 2011 as the Business Growth Fund, BGF has invested £4.5 billion in more than 600 small and medium-sized businesses and to date has exited well over 200 of those.

“We only do minority investments and that's a big differentiator,” he says. “Lots of institutions do minority investments, but it's all we do. So, we are very focused on being a junior partner, supporting and helping companies to grow.”

In the case of Manchester-based bakery St Pierre Groupe, that business went from revenue of £48m in 2018 when BGF invested £8m, to over £100m by 2021. There then followed a sale to global bakery giant Grupo Bimbo that gave BGF a 9.6x return on its initial investment.

With a high volume of minority investments — there are currently 360 businesses in BGF’s portfolio — Gregory says data plays a significant part in analysing performance and evolving its business. But for all the value data brings, he says there is no substitute for emotional intelligence.

The importance of emotional intelligence

Those entrepreneurs, founders and family business owners are rarely motivated by money alone, says Gregory. Selling a slice of their business is a big emotional decision.

“For them to bring someone into that shareholding, into the company and onto the board is huge. And often it is not just about numbers. It’s about cultural fit.”

As such, Gregory says he’s learned to keep the PowerPoint deck up his sleeve in meetings and focuses instead on talking about the business and with entrepreneurs, getting to understand their motivations and ambitions.

“Emotional intelligence is absolutely critical. We listen. We understand. We build trust,” he says.

That trust is vital, because a key part of BGF’s value-add is in the guidance it can provide.

The value of trust

As businesses mature, founders will likely encounter a host of questions and growing pains, from identifying when to bring in a CFO to building a sales strategy to enter new markets or planning technology investments.

But investments in technology can be fraught with risk.

The PwC UK CEO Survey found 44% of CEOs say their organisation lacks understanding about the potential ROI they can get from technology investments and 26% believe technology investments carry a high level of risk — making the role of a trusted advisor all the more important.

A key component in BGF’s approach is maintaining a local presence around the UK. Gregory says that is critical to building those trusted relationships the business relies upon — even if operating 15 offices for a 200-person organisation may seem counterintuitive.

“We assess it continually, because it obviously costs money to operate that many offices,” he says. “It creates logistical and cultural challenges. So, it is not done lightly. But we believe it is very important and there's still a lot more going for our approach than against it.”

A focus on regional and future success

Gregory says over 75% of its business is outside London and the South East. Its regional presence has been a swing factor in significant successes.

“We invested in a software developer in Bristol called Amdaris,” he says. “Lots of other firms were interested, but one of the reasons they went with us was because they were down the road from our Bristol office and got to know our team there very well.”

Gregory is keen to talk about the growth of businesses in cities such as Bristol and says the business conversation in the UK needs to be more inclusive of success stories outside London and the South East.

He also wants to see more exposure given to diverse founders and entrepreneurs. Both factors are critical, he says, in providing role models who will inspire future generations of entrepreneurs across the UK and unlock further growth for the UK economy.