MF: Parminder you founded VGC in 2011 and you’re a specialist growth investor. You’ve got a proven track record delivering very attractive investment returns, and you can see why when you’ve got the likes of Epic Games in your portfolio. You’ve got a £50million growth fund, interesting SEIS funds and now launching an EIS to bridge the gap between these funds and support the business.
PB: The team’s been together now for quite a long time, so we’re a combination of successful investors and operators, and that’s quite an important point to make. A lot of us have run and grown successful businesses and exited them. So, as well as working people in our team that worked at large corporates we’ve also built, grown, and sold companies. The big USP of our business is operational networks and operational focus post investment. So, whether it’s consumer, digital, media, technology, or gaming, we have built a broad network of individuals to support our businesses for growth. We tend to take a board seat as a team between us on every business, and we tend to always put in a non-executive or chairman as well alongside that. We sit at the intersection of the physical and digital worlds, so it tends to be across two main sectors of consumer and digital media, so FMCG products and services, health and wellness and luxury brands. What’s emerging for us now is this third element of the metaverse and using the technologies associated with that part of commerce to drive growth within our portfolio companies and investing in that space.
We’re currently investing out of our fifth SEIS fund. So, we do a million a year of seed capital to understand next generation technologies. We spent three years doing that with the Publicis Group in digital media, and we’ve now moved over to build an operating partnership with Amazon Alexa. It got signed off in Seattle about 18 months ago, so we’re currently funding voice tech businesses, the Amazon Alexa programme. We are building great operations and we’re growing revenues of between 100 and 400 percent a year and generating EBITDA and free cash flow in all these portfolio companies because our strategy is to sell to private equity or trade. So we are closing a gap that we have through EIS, and we’ve got a lot of inbound deal flow within consumer, digital media, technology, and gaming so we’re here now to essentially start with the £5 million evergreen EIS fund to help fill that gap.
MF: What is Metaverse, can you briefly explain what that is?
PB: Metaverse is based in the virtual world, where there are people buying property in the virtual world and there is a lot of commerce taking place in those environments. If you think about gaming and in game spending this year in video games is a market on its own, just in game spending that is worth $129 billion. We have people today buying virtual clothing, virtual sneakers. There’s a lot of brands now launching products in the virtual world, so you can buy virtual sneakers in the virtual world, which gives you access to those products in the physical world. This has been going on for many years and is a part of the market that’s going to be growing dramatically and we’re extremely excited about that and the prospects of that over the next 10 years.
MF: You’re starting an EIS fund. How would you sum it up as being different from anyone else?
PB: It gets the benefit of the whole firm, the network is available to everybody within our ecosystem. So, all the corporate partners, all the executives, all the co-investment partners, and all the exit partners are going to be made available to the portfolio companies that we support in the EIS fund. They are getting the gold standard for operational support and networks within consumer media and technology investing that they wouldn’t really find anywhere else. These are platforms, that we built over the last 10 years. So, it’s just a final piece of the puzzle that we’re going to fit in to our overall network, which gives them a unique advantage over other businesses. We are sector specialists, so we’re not going to be looking outside what we do. But at the same time, if we see businesses at EIS stage where we can bring the same amount of capital contacts that we can develop for our growth cap fund and the seed fund.
MF: Can you give the example of one company you’ve invested into that you’re excited about?
PB: Obviously SuperAwesome was our most recent success story, and we exited that to Epic about nine months ago. But now I think the sneaker resale market has gone mad globally and is a multi-billion dollar industry. We’ve backed Europe’s leading sneaker resale business, so it’s a called Kick Game. It’s a luxury brand selling hard to acquire luxury sneakers and streetwear brands like Off-White, Nike, Air Jordan, 1S, Yeezys and so on. We invested in that business a year ago at revenues of £1.8 million within a two-year period will grow top line from £2 million to £50 million, and the business will go from loss making to profitable. So, by the time we get to the end of June, we could find it selling north of a quarter of a billion and we went in at £6 million. So that’s probably one of our most exciting businesses to date.
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