Entrepreneur Alison Cooper founded her first venture when she was fresh out of university, launching a chilled sandwich distribution company in Germany, where she had spent some time during her degree. When the BSE crisis escalated in the 1990s, that business went through a challenging time, and although this armed Alison with skills to succeed in difficult times in the future, ultimately, she returned to the UK and started a new business- En Route International. It was on that flight back to the UK that Alison had a disappointing bread roll. She contacted the airline about her experience, and they invited her to meet with them. Alison launched En Route International two weeks later, and four months later the company won a £1.5m tender with that airline.
Alison came to sell En Route International 10 years later to the Emirates group (dnata). At that point it had a turnover of £14m, with offices in Atlanta, Dubai and Australia, and around 79 employees.
Alison now owns Palm Grove Investments, a property investment company which includes Boutique Holiday Lets, specialising in luxury holiday lets. She has also launched Alicia J Diamonds, a concierge service for special jewellery purchases, particularly engagement rings.
We asked Alison to share her views with us on the funding challenges often faced by female entrepreneurs.
You have launched a number of businesses during your career. When did you first think about attracting external investment?
I considered attracting external investment when running my first business – a chilled sandwich distribution business based in Germany. It was only after approaching the banks I really discovered the lack of finance products available to small business at that time. I was often, wrongly so, questioned about my commitment to my business, especially as a young female entrepreneur.
When it came to attracting external investment for En Route International, I found UK banks to be more approachable. That’s not to say it was easier, I still had a business supplying perishable food to the airlines which was often deemed high-risk. I would often have to use my home as collateral to secure finance, along with confidential invoicing and factoring. It was only when the business reached a turnover of £14m I needed to explore greater sources of finance. I was considered a bigger player within the market, bidding for bigger tenders. BCMS, a merger & acquisition adviser, helped me to find the right investor for the business, a company who understood the unique demands of the airline industry – dnata. This allowed us to release greater working capital to build the company.
How did you go about attracting your first external investment in your business?
External investment was initially achieved through factoring and confidential invoice discounting. I also drew upon a small number of contacts/ high worth individuals to generate a source of private investment. The greatest raise in finance to the business came via BCMS.
What were the barriers to attracting that investment?
From day one of the business I have ensured we maintained audited accounts which has often proved pivotal in securing greater investment. When looking to attract wider investment I was approached by a private equity firm interested in the business, however with the investment came many hoops to jump through and conditions to adhere to which I didn’t feel was right for the business.
I appointed BCMS to find a more suitable investor, which they did. Dnata have a clear understanding of how the airline industry works, the risks involved – perishable food, aviation, the safety risk in general of flying and the way in which contracts are put out to tender. BCMS found me a better fit, a more suitable investor for the benefit of En Route and the path it was on.
At what point does it become easier for a company to attract funders? Is there a tipping point in terms of company size or other metric?
To receive funding from the banks became a little easier as the business grew. As you increase in confidence and your concept is proven there definitely becomes a tipping point. The nature of the business will always be perceived as high-risk, however after we reached a turnover of £14m we certainly found ourselves in a stronger position.
Why did you decide to sell En Route International?
When I founded En Route, I always aimed to sell the business after 10 years. By that point it had grown substantially, although as it was operating in the airline market and with perishable food it was difficult to convince banks to lend money to the company. It was a suitable time to find an investor who could inject some working capital into the business and allow it to continue to grow. I decided to use BCMS to help find an appropriate investor. It was a great decision as it allowed me to concentrate on running the business and come up with creative new ideas, whilst BCMS looked for a perfect match for the business.
What did you look for in a funder?
Generally I look for “smart money”. That means that I want someone with knowledge of the sector, skills to help the business to develop and connections in the market. It is important to think about the impact of an investor on the business, besides the funding they bring. If the investor is a larger group, that larger group may have its own culture. Before the investment by dnata in En Route, I focussed a lot on our cash flow to make sure we could honour our commitments. After that investment, there was more working capital so that focus changed, and I spent more of my time on corporate politics.
Are different types of funder more or less appropriate at different stages of a company’s life?
I do think the type of funder changes throughout the different stages of a company’s life. As an early founder you look for guidance, a mentor and someone who can invest both time and money. As you become more established I think this changes, you don’t necessarily look for a mentor anymore, you still need to spend time networking and meeting new people however you have the confidence to make choices more independently.
What advice would you give to entrepreneurs looking to attract a funder?
To have a clear plan and a strategy in place, to allocate job titles and responsibilities and to map out your organisation chart in order to highlight any recruitment issues. I would also say ensure you can demonstrate clear due diligence with audited accounts and no skeletons in the cupboard!
You need to be clear yourself about what you want for the future of the business. If you’re looking to attract an investor, then you must be prepared for the culture of your business to change.
Ensure your website is up to date with your latest developments and testimonials to back up your success. Look into developing some positive PR, and ensure you advertise in appropriate trade press for the company. It’s important to keep up to date with marketing and PR, to remain actively engaged with your audience.
I would also suggest you research investors, learn about how they work and what they are like, talk to them. If you feel the investor is not right for the company or if you have doubts, I would say don’t do it.
As well as launching companies yourself, you are also an active investor. From the other side of the table, what do you look for in entrepreneurs?
When I first started investing in start-up business, I used to invest in the idea. Now I invest in the person. The question is whether that founder has the determination and business acumen to take this to where they want it to go.
What are the particular challenges female founders face in attracting investment, from your experiences of both side of the negotiating table?
I feel there is often an extra mountain to climb as a female founder attracting investment. Despite the year being 2019 it can still be a very male-dominated environment with a certain degree of social stereotyping still present. Women have the hunger and determination to succeed, and sometimes this can be unfairly questioned.
Often financial terms and unfamiliar language is thrown around that can make you feel isolated, and I would suggest to anyone looking to achieve investment, male or female, to learn the language of an investor. Take some time to research key terms, arm yourself with the knowledge you need to find the right fit for your business.
From 16 to 20 September 2019, we will be celebrating the role entrepreneurs play in London - and beyond - in our inaugural Entrepreneurs Week.
At 6pm on 17 September we are holding a panel event “Funding success; the female entrepreneur” at which Alison will be speaking. For more information please contact Kirsten Hendry.
If you require further information about anything covered in this briefing, please contact Sally Mantell, or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, August 2019