Fast-growing legaltech business Clarilis has raised a further £6m in a Series B investment to support its ongoing growth. The funding has come from Mercia’s Northern Venture Capital Trust Funds (VCTs), which were an existing investor in the business, and Gresham House Ventures, investing on behalf of the Baronsmead VCTs.

The funding will assist the company’s continued international growth and fund its sales, marketing and product development activities.

Clarilis, which is based in Leamington Spa and has an office in Singapore, is a leading provider of automated drafting technology. Its CLARILIS™ platform was designed to automate complex suites of precedents, such as Share Purchase and Facility Agreement suites with many ancillaries, parties and complex underlying deal structures. CLARILIS™ saves significant amounts of lawyer time whilst ensuring that law firms and in-house legal departments draft consistently high-quality documentation.  This creates time for solicitors to focus on what they do best – providing bespoke advice to clients and handling non-standard aspects of transactions.

Clarilis was co-founded by brothers James Quinn, a former solicitor, and Kevin Quinn, the technical architect of the CLARILIS™ platform and former lead developer. Since its launch in 2015, it has experienced consistently strong growth and now boasts an impressive blue-chip client base including Addleshaw Goddard, Baker McKenzie, GoCompare, National Grid and Slaughter and May.

Henry Alty, Investment Director at Gresham House Ventures, said:

While the legal world has arguably been a late adopter of technology, firms are realising that automation is essential to driving both cost efficiency and resilience across distributed workforces.

“In Clarilis we have found an ambitious business with a market-leading solution and exceptional customer satisfaction as a result of its fully managed service. It exemplifies the type of technology-driven and scalable business model that our investment team look for. We’ve been impressed by the impact that Clarilis has already had in the market and as the business expands, particularly into the South East Asian market, we are excited to be bringing our experience to bear and to help facilitate its growth.”

Tim Levett, Investment Chairman of Mercia Northern VCTs, commented:

“We are pleased to be investing once again in this leading LegalTech business, particularly in this current environment where the rapid adoption of user-friendly consumer software has fundamentally changed user expectations within enterprise. Regardless of the complexities of any business process, elegant automation and consumer-grade UX are the critical success factors that have set Clarilis and its platform apart, especially filling the void left by legacy software in this sector.  

“Mercia’s strong tech and SaaS investment credentials and experience combined with our ability to invest through the lifecycle of a business will be important to support the team at Clarilis as they continue to scale the business.”

James Quinn, CEO and co-founder of Clarilis, added: “It’s fantastic to have the continued support from the investment team at Mercia Asset Management and I’m really pleased they’re backing us again.  We are also delighted that Gresham House has chosen to invest.  Gresham House were the clear choice here given Henry Alty and James Hendry’s in-depth knowledge of the LegalTech space and excellent insight.  The Gresham House team also share our vision for the development of the Clarilis platform going forward. 

“This investment will provide the resources required to bring significant enhancements to our platform and to further scale the Clarilis team both in the UK and abroad. 

The uniqueness of Clarilis’ intelligent drafting platform and managed service is resonating with organisations globally – particularly as current market conditions highlight the importance of technology that can provide a strategic advantage.”

Investment Director, Jill Williams explains how important Mercia‘s core principles have accelerated our ESG journey and how best practice is vital moving forward.

Many businesses will have some degree of track record in ‘making a difference’. At Mercia, we have a track record of positive impact within the UK’s regions. This is as much a representation of our core corporate values as it is about driving a wider agenda around the regional funding gap, and the need for fast-growth SMEs to have access to critical investment.

Our history and values have therefore formed the foundations on which to build as we commence our ESG journey. Codifying these principles around environmental, social and governance (ESG) issues into our policies and culture is now a natural extension of our purpose.

ESG has always had a place on the Board agenda, but is gaining traction on its implementation, accelerated both by the lockdown and by the societal disruption seen during this period. Environmental issues have taken centre stage and the Black Lives Matter movement has gathered pace, while the role that business must play in the wider agenda of diversity, social mobility and ethical governance has become more nuanced and more pressing.

We want to share our outlook and decisions around our ESG journey to provide some insight and to support NEDs in assisting the Boards of our portfolio businesses in navigating this topic. We have only taken the early steps of our journey, but we are now defining our own internal strategy, whilst also developing our practice around investment decision-making and our active ownership of the businesses in which we invest.

Responsible investment

From every starting point a course of action must be plotted, in particular the means by which progress and ultimately success will be measured. Using a recognised benchmark that not only acts as a guideline but is also universally recognised and approved by your industry and peers is important. This will differ for each sector, but for us the gold standard methodology is the UN’s Principles for Responsible Investment (PRI). The six principles are “a voluntary and aspirational set of investment principles that offer a menu of possible actions for incorporating ESG issues into investment practice” – essentially a blueprint to follow that also provides the impact rationale behind each action. We have also been inspired by the UN’s Sustainable Development Goals when defining our guiding principles.

Understanding the value of ESG is what will make it sustainable. As much as there is a higher moral purpose, there still needs to be a commercial imperative. Mercia recognises that good ESG performance is associated with better business performance. Managing compliance and reducing exposure to risk is aligned with managing for value and should lead to strategic advantage. We are fully invested in our belief that our increased focus on ESG will allow us to create, grow and protect value and ultimately generate market-leading returns. This belief must be owned by the entire team.

Leading by example

Successfully facilitating the adoption of ESG needs to be led from the highest level in the business, but ultimately be owned and delivered by a person or team, depending on the size of the business. A formal role or division will need autonomy and time to audit, review and make the necessary changes in terms of how a business conducts its business within an ESG framework.

For Mercia, this will be how we develop our strategy and practice to incorporate ESG issues into our investment decisions and portfolio management strategies on an increasing basis. Our Responsible Investment team will consider the whole of our investment cycle, from deal origination and assessment, through ownership, and towards realisation.

Responsible Investment principles will be steadily integrated over the course of the financial year into our investment papers, portfolio reporting and investor communications. Both pre- and post-investment, we will embrace a unified approach and measures across the investment process.

We will increase training for our investment ream on ESG-related risks and opportunities. We will clearly define processes and increase visibility of ESG within the investment decision-making process as well as embracing the monitoring and review of ESG, developing key performance indicators and targets. We have started this process by my appointment as ESG project leader, and the training that I have undertaken with the British Private Equity & Venture Capital Association.

ESG translated across our portfolio

An essential role for our non-executives will be to help embed our ESG principles across our portfolio. Naturally, any ESG considerations will have to be driven and delivered by the portfolio companies’ management teams. Meanwhile, we will be guided by Boards around where they see opportunity for value creation or strategic advantage, and we will provide support where risks are identified. We would like to see ESG on our boards’ agendas because we know its potential to add value. And the sooner we start this process, the greater that potential.

Jill Williams is Mercia’s Investment Director, Private Equity

Mercia‘s Head of Portfolio Resourcing, Lisa Ward shares her thoughts on how to tackle the new, challenging landscape post-COVID-19.

Remobilising a workforce, post-COVID-19, is no easy task because of the layered complexities that both operational and moral obligations bring to bear. Not only has the last 19 weeks of lock down wreaked havoc on organisations, but equally, the resulting societal disruption will also impact the emergence strategies needed in order to recover and achieve the forward momentum required to leverage opportunities that will present in a new business context.

A data-driven return

For any Board, how it supports management to address and utilise data will be critical for success moving forward. Whether it’s the health & safety of the workforce or the assessment of both legal and operational risk, all decision making needs to be data driven. With current scenarios being so fluid, decision making will have to be a process guided by the latest regional guidelines and regulations, or even aligned to a city-based health status. How and when a business returns to work will likely be on an office-to-office or site-by-site basis. Specific location-based directives, issued by local councils or government bodies, will need to be well documented with the requisite company policies aligned to these regulations. This should include robust version control to ensure that an ‘at-that-moment’ decision reflects the governance issued at that time and for that location. As much as we are entering an uncertain period, it is possible that someone on your workforce will contract the virus and therefore, to safeguard the company and all its stakeholders, it is essential that everything is documented.

Keeping track

It is not always possible to provide a tech-enabled solution but tracking and the correlation of data should be pulled into a company’s MI dashboard because this information will be requisite for the responsible management of the business. If manually handled, this process will be time-consuming and possibly ineffective so technology might be the better solution. Not only can this work out to be more cost-effective in the long-term, but it would also provide additional peace-of-mind to the workforce. Efficient systems prevent the need for mass quarantine or shutdowns. If an employee catches coronavirus, traceable contact history can identify which other team members need to quarantine without closing the entire business. It can also isolate where contact took place so that preventative measures can be immediately instituted. The challenge however, and where management need to be guided, is around privacy issues and what could be interpreted as employer surveillance. Tracking apps are not always welcome in the workplace with employees having the right to refuse use of these apps. And this gets complicated from an HR perspective, because at what stage does tracking within the context of COVID-19 become a reasonable requirement and failure to follow instruction leads to possible termination of that employee. Guidance will be required to look at each company’s specific risks and requirements and evaluate the need for tracing, balanced against employees’ expectations in respect to protecting their health, and the need to maintain business continuity.

Business salvation

Apart for guiding the Board on risk and control policies, a tactical review will be essential to navigate the new way of working. New routines have been established by a distributed workforce, and in situations where there has been no discernable loss of productivity, there is also going to be evidence of improvements; co-operation, speed of decision making, successful task execution, self-initiation of projects and problem solving that has either been enhanced because of the circumstances of lockdown, or is new behavior entirely. This should not be lost because of the application of pre-COVID-19 workplace conventions such as being office-based, nine-to-five or not embracing remote of flexible working.

The high-productivity rates, ‘always on call’ mindset, the focus and agility that may have been demonstrated during lockdown or because many employees were furloughed however, is not sustainable in the long-term. It has shed a light on how, with certain adaptions and changes in routine and location, a distributed workforce can positively impact a business and these learnings should be embraced and wherever possible, leveraged. If a company can support the three key tenants of communication, care/coaching and connectivity, any Board should be considering the opportunity that ‘a new way of working’ or being ‘digitally present’ offers. It is important to understand that this should not just be about cost-savings or company-biased improvements, but a chance to reset the culture, improve employee engagement and implement / improve key agendas such as diversity and ESG. It is also the time to reflect on what new skills are required to maximise on both the business opportunities and equally, manage the ubiquitous use of digital that now defines business development, marketing and indeed, most business engagement. In addition, which team members have demonstrated these or other ‘hidden’ talents and characteristics during lockdown. This will be essential to be able to balance the expectations of both the business and its employees during the recovery period, but importantly, it will provide the Board with the chance to evaluate what is required to harness the opportunities that will surface of this business recovery.

This transition to a new way of working won’t necessarily be easy because the impending recession will further impact the demand for hard decisions to be made; redundancies, contractual mitigation and other changes that will affect the current and future talent of the business as well as other stakeholders. This will be compounded by the implications of furlough and what will be the inevitable fallout of claims and counterclaims due to, in some instances, the hasty implementation of the Coronavirus Job Retention Scheme. As the Board take stock of the impact of the realistic and immediate cost-savings and future revenue opportunities that lockdown has exposed, it will be essential that strong HR leadership and the inclusion of external specialist advice is sought to ensure that the employees tasked to push on into this new future have both a business and moral roadmap to guide them.

Lisa Ward is Mercia’s Head of Portfolio Resourcing

 

 

 

 

 

 

 

 

 

 

 

 

 

Mercia‘s Head of Portfolio Resources, Lisa Ward writes how businesses have been affected in many different ways due to the global COVID-19 pandemic and why a shift in mentality is on the horizon.

As we anticipate the passing of the hurricane that is COVID-19, many businesses will be left to deal with the wake of issues that it has uncovered. No one has been immune to this pandemic and it will have undoubtedly affected every business in some way, often for the long term.

I’ve spoken with many members of our Non-Executive network in last 19 weeks of lockdown and perhaps unsurprisingly, there have been common themes in those conversations.

The evolution of Governance and debate about what arising conversations matter is just one example. Social movements such as Black Lives Matter have been a timely reminder for Boards to re-evaluate what measures, including ESG, they use to gauge success more broadly. Whilst the board agenda might not fundamentally change, there might now be new agenda items or a shift in emphasis of existing ones.

Secondly, it goes without saying that the economic environment in recent weeks has been the toughest for many years. Portfolio management teams have shown real resilience in what will possibly be one of the most trying times of their executive careers. Their dedication to the business, employees and shareholders has been thoroughly tested. As we begin to unwind, there are many things your board will be considering, but I’d like to highlight two for consideration:

  1. We can easily forget the reality of the immediate past. Partly, this is a protection instinct. Now is the time to reflect in order to ensure we learn from recent events. There’s a wealth of research that shows that our memory isn’t as consistent as we’d like to believe. What’s worse, we’re often guilty of changing the facts and adding false details to our memories without even realising. Instead, we should encourage taking stock and reflect upon how we dealt with these extraordinary circumstances. What worked well? What could we have done better? What can we learn from this unprecedented and challenging experience?

2. With remote working, we have literally had a ‘zoom’ window into the home lives of our colleagues and employees. Many of us, myself included, have had the impossible task of juggling home schooling, work, home life and health. No one is immune from burnout. Arianna Huffington (author and founder of the Huffington Post) has recently written about her own experiences and said it best in her concluding weekly remarks on Thrive Global, May 30th:

“Now, with burnout in the spotlight, companies have a fresh opportunity to step up, for the sake of their people and for the health of the bottom line. Focusing on people’s actual experience at work is no longer a nice-to-have, it’s a must-have for anyone who wants to succeed in the long run”.

Weathering a storm is part of life and can be stressful for individuals and businesses alike. However, no matter how dark the skies become they will pass and the blue sky beyond, which never leaves, will be seen once more. With effort and discipline, we can search for the positives within the negatives and use these to become better boards, companies and people.

Mercia’s EIS fund principal Peter Dines discusses with Dr. Paul Mattick the recent sale of a portfolio company for 8x cost of investment.

The pair also discussed:

– The Mercia groups investment model
– Our EIS is a venture capital investment with downside protection
– This exit illustrates the potential when investing with Mercia

A biotech company which is developing new treatments for patients with serious spinal conditions has completed a £2.25m funding round led by Mercia Asset Management to help to continue its ground-breaking research and bring its first products to market.

Locate Bio has secured the investment from Mercia’s own balance sheet, its EIS fund and the MEIF Proof of Concept & Early Stage Fund, which is managed by Mercia and part of the Midlands Engine Investment Fund, and the Future Fund.  Together with earlier funding rounds from Mercia and MEIF, it brings the total raised by the company to over £8m.

Locate Bio’s first product, which is at the pre-clinical development stage, will help patients who require spinal fusion surgery, where bones are permanently joined together to overcome low back pain. It uses a type of bone protein to remove the need for a bone graft. Its second therapy will be for the biological renewal of the intervertebral discs and will help those suffering from degenerative disc disease, a painful condition affecting 33 million people in the US and EU.

Locate Bio is a spin-out from the University of Nottingham and based on the research of Professor Kevin Shakesheff, a world-leading expert in regenerative medicine. The company, which initially started out as a contract research organisation, first received investment from Mercia in 2018.

John von Benecke, CEO of Locate, said: “I am delighted by the continued support of our lead investor. This investment will allow us to maintain the excellent progress with our lead product and further the development of a pipeline of synergistic products.”

Dr Ian Wilding, Chairman of Locate said: “This investment comes at an important time for the Company as it enters an exciting phase. Despite the uncertainty and disruption that COVID-19 has brought to so many industries, the Locate team have relentlessly executed against its aggressive timelines and the additional funding announced today is a welcome validation of the progress that has been made.”

Peter Dines, Chief Operating Officer of Mercia, said: “We are very pleased to continue to support John and the team at Locate. Their lead product has the potential to disrupt a $3bn market, and we remain excited by the prospect of helping to build a world-leading business.”

Ken Cooper Managing Director, British Business Bank, added: “We are pleased that the MEIF Proof of Concept fund has been able to support further investment into Locate Bio.  Along with the bank’s other programmes the MEIF funds are investing to support SMEs in the region and are still very much open for business. This second round of funding recognises a business which has continued to make good progress despite the difficulties caused by Covid 19.”

The Midlands Engine Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.

Dr. Paul Mattick, Mercia‘s Head of Sales and Private Investor Relations, discusses how diversification and repeat investment impacts performance:

– Mercia creates the most diverse EIS fund in the market
– Diversification is important when investing in high-risk companies, to limit exposure to companies which will fail
– Repeat investment enhances exposure to our winners
– Our Investor Centre provides all our reporting, including tax certificates

Specialist asset manager, Mercia Asset Management PLC,  has sold its stake in The Native Antigen Company, a leading producer of infectious disease reagents, to global life sciences tools company LGC. The sale of The Native Antigen Company is for a total cash consideration of up to £18.0million.

Mercia has supported The Native Antigen Company since it commenced trading, investing from both its EIS funds and its own balance sheet and held a 49.4% stake. The company, which was spun out of the University of Birmingham , is anticipated to generate an 8.4x return on its original direct investment cost and a 65% internal rate of return (“IRR” ) and a 12.1x return on a blended third-party managed funds investment cost and a 31% funds IRR.

Mercia’s Chief Operations Officer Peter Dines sat on the company’s board as a Non-executive Director between 2015 until today’s exit was announced.

The Native Antigen Company is one of the world’s leading suppliers of antigens that are used in antibody testing kits for and research into emerging diseases. It was one of the first companies to start production of the COVID-19 antigens in February this year and has been heavily involved in the fight against the virus since then. The company also played a key role in supplying products to combat both the Zika and Dengue virus in 2016 and 2018.

The acquirer, LGC, is a global leader in the life sciences tools sector and hosts the UK National Measurement Laboratory. The company provides a comprehensive range of specialty genomic analysis tools, measurement tools and supply chain assurance solutions, underpinned by leading analytical and measurement science capabilities.

Dr James Wilkie, CEO of University of Birmingham Enterprise, saidWe are delighted that the Native Antigen Company, which started life as a University of Birmingham spinout, has gone on to become one of the world’s leading suppliers of infectious disease reagents, and made such a huge contribution to the frontline fight against COVID-19.  We look forward to hearing about the continued success of the company and its technology following this acquisition.”

Dr Nick Roesen, CEO of The Native Antigen Company saidJoining LGC is a very exciting new phase in the development of the Native Antigen Company. We will be an integral part of LGC’s fast growing clinical diagnostics business and we are excited to join such a well-respected organisation that shares our purpose and mission, and that will support our diagnostic customers by providing even more world-leading products and services.”.

Dr Mark Payton, Mercia Asset Management, CEO, said the deal demonstrated Mercia’s ability to grow value through the life cycle of a company: “Mercia and our university partners play a critical role in creating some of the UK’s most exciting regional businesses scale. Our EIS Funds are instrumental in supporting early stage businesses as has been the case with The Native Antigen Company.  I am proud of the part Mercia has played in the company’s journey, not just as the major capital provider, but also as a critical partner in helping the business to achieve its potential.”

Mercia‘s Investment Director, Jill Williams speaks alongside Ward Hadaway to discuss supporting Mercia’s portfolio through COVID-19 and what issues and challenges that have been encountered.

 

SleepCogni has been awarded a third round of funding from the UK’s innovation agency, Innovate UK in the form of a continuity grant. The funding will be used to pivot its existing, patented insomnia therapy device onto an online platform in response to the Covid-19 pandemic.

The grant will enable SleepCogni to expedite its vision for a virtual care pathway which combines a Cognitive Behavioural Therapy for insomnia (CBT-I) biofeedback device with real-time analytics; enabling clinicians to diagnose and treat sleep disorders remotely. Data visualisations and dashboards will support clinicians and therapists in the evaluation, management and personalisation of their relationship with patients, which will also remove geographical barriers to the delivery of care.

The pandemic has led to rapid adoption of virtual care and remote monitoring technology, helping patients and physicians stay connected whilst avoiding physical contact. In addition, Covid-19 has, for several reasons, pushed and in some cases, forced consumers to manage their own health and wellbeing via online resources and apps.

Since inception, SleepCogni has formed exciting collaborations with several organisations, including two prestigious universities and world-leading CBT-I specialists. To support this next phase of development, SleepCogni will collaborate with DareData Engineering and Amazon’s AWS Activate program to deliver cloud-based data collection, processing, analysis and visualisation.

This Innovate UK award, combined with an additional financial injection totals a six figure sum investment in the business over the last month. This follows on from SleepCogni’s ‘Biocatalyst grant funding’ award in September 2019 for its large-scale clinical trials in collaboration with Sheffield Hallam University.

It is anticipated that this development will build on recent international recognition with SleepCogni being shortlisted for two highly coveted awards at the CogX Global Leadership Summit & Festival of AI & Emerging Technologies. https://cogx.co/

  • Good Health and Well-Being Award
  • Best Innovation in Diagnostics

Richard Mills CEO of SleepCogni says:

“This grant will allow us to rapidly pivot in order to meet the demand of the new world of virtual care and remote monitoring. We’re passionate about improving the patient experience and to this end, our focus will be on ensuring patients feel engaged and informed throughout the identification, assessment and management process by providing access to their physiological data – levelling out the information exchange and knowledge sharing between clinician and patient.

“We selected DareData as data partner because of their capability and experience in understanding physiological data. Their expertise will support the build of a robust, scalable and secure data infrastructure platform”.

Sam Hopkins, Co-Founder and Senior Data Engineer & Scientist at DareData Engineering;

“We are excited to assist in architecting the data infrastructure for SleepCogni’s unique wearable device. The number and granularity of the data streams that need to be gathered, processed, analysed, and turned into actionable information provide the type of rare technical challenge that we thrive on.

“DareData is committed to delivering a state-of-the-art technical solution built on top of Amazon AWS and Snowflake Data Warehouse. These technologies will provide us with everything that is required to safely encrypt, store, anonymise, and analyse the plethora of sensor data that is required to make a real difference in a person’s life”.