Supporting Founders, Not Business Plans: Investing in Small Businesses Led for Innovation

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These companies are increasingly attracting the attention of large corporations and governments who are dominated by legacy products and processes and need innovation to adapt and stay relevant.

As an example, in January 2020, Pasta Evangelists, an online meal kit company that delivers restaurant-quality fresh pasta directly to customers by post, raised £2m from investors including Pembroke VCT.

At this point Covid had yet to make its mark but within 51 weeks the UK food delivery The sector has flourished as consumers searched for exciting new ways to cook at home during the various lockdowns. The result was that in January 2021, Barilla Group, the world’s largest pasta company, acquired a majority stake in Pasta Evangelists and in doing so was finally able to begin to unlock the direct-to-consumer market. .

Not only does this show that it is possible to sell pasta to Italians, but it also demonstrates the trend we are seeing in which large companies – such as Barilla – are increasingly looking to smaller companies when looking innovative products and solutions, as well as ways to directly reach the end consumer.

London start-up Thriva is another example of an innovative disruptor. Many of you reading this may have fitness watches that can track distance you have run or cycled and can even monitor your heart rate. But what about having a way to effectively track and gamify your own health to help keep you out of the doctor’s office?

One of our main theses is that the world is moving towards preventative wellness. Thriva has created a digital health tracking platform based on blood tests that allows users to take control of their own health. It’s a great example of company founders spotting a problem and creating a credible solution.

In the case of Thriva, co-founder Eliot Brooks has an inherited blood condition and previously had to take frequent absences from work for blood tests. Not only did it take days to get the results, but when they arrived it was unclear whether he was healthy or not – and impossible to spot trends because past results were not included.

The solution Brooks and his two co-founders created is a software company that presents users’ blood test results in a visual and intuitive way. An overview of the results written by a GP is also included, with specific recommendations if needed.

Like most innovative disruptors, Thriva didn’t set out to reinvent the wheel. They use the same third-party labs to process the tests as the NHS, but just use software to encapsulate the results in a way anyone can understand.

Thriva recently won a major government contract to track the disintegration of Covid-19 antibodies in people who test positive for the virus. While the UK government launched the contract through a public tender, Thriva won out over much wider competition because it had the ability to increase the supply and make it efficient manner. Its digital-first approach also meant it could easily integrate into government technology systems.

When investing in small businesses, in our experience, the best results are obtained by supporting the founders and not the business plans.

Take Paul Foster, an international crowd management expert who founded the event planning company, OnePlan. Consulting for major organizations such as Interpol, Paul saw the event planning space broken. It was dominated by clunky spreadsheets and expensive-to-run computer-aided design (CAD) software. His solution? He has created an intuitive, real-time platform to simplify and improve every step of the event planning process for event planners around the world.

OnePlan has a client list including some of the world’s best known brands such as Arsenal, Chelsea and the Brooklyn Nets NBA team, working with over 1,500 events in 50 countries. It’s another example of a small business that big organizations – in this case the giants of the sports world – look to for solutions, rather than creating them in-house or buying them from more established companies in their domain.

So, three examples of three very different innovative companies that are causing real disruption in the areas they operate. Using software to solve problems, their size and agility allow them to get things done much faster than their larger counterparts, putting them more and more on the radar as targets for collaboration or business opportunities. ‘acquisition.

Simon Porter is Chief Investment Officer at Pembroke VCT.

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