Meet the investor: Gary Robins, Radius Equity
When it comes to investing, the private equity firm director looks for positive thinkers, strong management teams and a clear exit plan...
Firm: Radius Equity
Name: Gary Robins
Where are you based?
I split my time between London and an office in Milton Keynes.
What kind of investor are you?
As a veteran of the private equity industry I am a positive investor, who looks to back businesses with a real ambition and drive to succeed. I want to work with people who have a clear vision of what their company can achieve and a defined exit plan so that they are in the best possible shape to deliver a strong return on investment to our investors.
What kind of deals do you finance?
Radius Equity is a generalist investment house, looking at making investments of between £1m to £5m in high-potential, early-stage companies and profitable, high-growth small and medium enterprises across a range of sectors.
We offer investments in companies that can achieve a strong market foothold and that can offer returns of at least two to three times investment with an exit horizon of typically three to five years – in order to maximise the benefits of the EIS/SEIS tax breaks.
We look at investments in any sector, as working across a diverse range can present an array of interesting opportunities.
What kind of person do you invest in?
I look for positive thinkers who can succinctly articulate the opportunities and risks in their sector. Management must have a clear strategy and confidence that setbacks and hurdles can be overcome.
How do you source prospects?
Potential investee companies come to our attention in a number of ways. We have our own network of private company investors, so we often have investors we work with regularly bringing in their own prospects. We also generate a number of leads off the back of our PR activity.
Around 50% of our prospects come through word of mouth.
What is your ideal investment?
We typically look for companies with a strong management team that has a clear plan to double or triple the size of the company over three to five years before exiting. A clear exit plan is vital to return cash to investors.
What are your USPs?
Radius Equity has one of the most experienced teams working on behalf of private investors in the tax efficient private equity sector. Unlike many other EIS providers, we are run like a private equity firm, giving regular updates to investors and giving them as much detailed information as possible on which to base informed investment decisions.
Bringing many decades of private equity experience to businesses which are seeking private investor capital puts Radius Equity at a distinct advantage – and sets us apart from many of our competitors.
We are also increasingly working with wealthy overseas investors, principally from China but also from other Asian countries, who are keen to invest directly in UK small and medium enterprises (rather than through a fund), giving them a route to entry into the UK market.
What are the hot sectors?
Businesses driven by consumer spending are particularly in demand at the moment. So that includes leisure businesses, bars, restaurants and hotels.
Technology businesses are also expected to do very well over the next few years.
Three things a company should be able to offer an investor?
- A management team which covers all of the necessary functions across marketing, operations and finance that a company requires
- A very clear business plan and strategy for success
- A detailed exit plan – Businesses and entrepreneurs should be able to tell investors how they are planning on exiting the company they are building, as well as showing evidence of where potential buyers have made similar acquisitions for a similar valuation.
What is the cardinal sin when looking for investment
Offering a half-baked proposition. Entrepreneurs need to fully think through and test their business plan before approaching an investor. Practice pitching your business plan to a sophisticated investor or a private equity professional before approaching your target investors.
What continuing involvement do you like to have in an investment?
We like to stay very closely involved with investee businesses to help them with their plans. Normally, an executive from Radius Equity will sit on the board as will one of our investors. Bringing an investor with significant sector expertise onto the board gives the business that extra experience that can be helpful as a business grows.
What has been your best performing investment to date?
In the mid-1990s, I invested £500,000 in Infobank on behalf of 3i, and another £1m a year later. It was an e-commerce platform headed by the ex-CEO of Microsoft UK. When it floated on the FTSE 250 in 1999 at the height of the tech boom it had a market cap of £2bn on only £5 million of revenue! We made £60m on a £1.5m investment.