The Insight

Edition 2: Realising value

March heralded the end of our financial year and marked the one-year anniversary of lockdown. As we publish this issue, there is growing optimism supported by early but strong evidence of economic recovery. Although there is plenty to reflect on from the past year, the timing of this second issue suggests that we must look forward and embrace, with confidence, the opportunities that the new financial year brings.

The last 12 months have shone a light on Mercia’s strengths, notably our hybrid business model and Complete Connected Capital solution, as well as the talent and commitment of our team and of the management teams of our portfolio companies. Together, these strengths made our business and our portfolio companies resilient through the pandemic, and able to emerge in a strong position to capitalise on the opportunities ahead.

In saluting the SMEs that form the economic fabric of the UK, we must also highlight the experienced and knowledgeable individuals that make up the ecosystem that supports these growing businesses. Our regional network of non-executive directors, advisers, subject specialists and investment stalwarts have helped our portfolio company leaders keep their hands steady on the tiller as they navigated the choppy waters over the last 12 months.

With considerable unrestricted cash to put to work, Mercia will look to continue its success in the domestic UK market in which it invests. We will continue to build stronger local networks that reciprocate Mercia’s trust and support, as well as growing our investment team on the ground across the regions. Our emphasis will be on how to deploy supportive capital responsibly at an ever-increasing volume to satisfy a growing need and demand.

We have much to share with you in this issue of The Insight.

A point of view

by Dr Mark Payton

Dr Mark Payton, CEO, comments on the power of core values.

At the start of the pandemic in March last year, it was difficult to predict where anything was heading. As we were preparing to start our new financial year, the immediate challenge for us was to determine if what lay ahead was a repeat of 2008 or if not, were we getting ready for the aftermath of another 1999? The ubiquitous question in every boardroom had to have been, “what is the next 12 months going to look like?”

Julian Viggers, CIO:
Realising value:
six exits mark a successful year

Mercia has solidified its position as one of the country’s leading regional investors, able to drive significant and profitable realisations through its Complete Connected Capital model. Julian Viggars, Mercia’s CIO, provides an overview of the Group’s exits in the financial year last year, including OXGENE which made headlines in March 2021.

Software & eCommerce:

Platforms for growth

The Software and eCommerce portfolio collectively accounts for approximately 25%  of Mercia’s direct portfolio by value. The latest update  demonstrates the growing strength of the portfolio and Mercia’s ability to identify and nurture early-stage businesses to create value for our shareholders and fund clients. Innovation, and how the UK’s regional businesses are driving this, will play a significant role in the UK’s economic recovery.

Spotlight on our debt funds

Mercia is often known as a venture capital investor, but it is our debt funds that have also underpinned Mercia’s strong position supporting growing businesses as they emerge from the effect of the pandemic.

Paul Taberner and the team manage more than £114million of funds of both public and private sector clients including the British Business Bank and Greater Manchester Pension Fund.

Snapshot of our developing portfolio:
The Northern VCTs

Oddbox

Eat Good. Do Good. Stay Odd.

Oddbox is a fruit and vegetable box delivery service based in London. This social impact business, fighting food waste on the UK’s farms, was co-founded by husband-and-wife team Emilie Vanpoperinghe and Deepak Ravindran. This eCommerce business offers consumers the choice of regularity of order and the size of the boxes they receive, direct to their home through a mobile app.

Read More

Pure Pet Food

Fresh natural food. Long healthy lives.

West Yorkshire-based Pure Pet Food is an online direct to consumer manufacturer of natural health food for dogs and cats. Its mission is to provide pets with customised, healthy, convenient pet food through differentiated air dried or dehydrated recipes. Mercia’s Northern VCTs invested an initial £2.0million to support co-founders Mathew Cockroft and Daniel Valdur Eha develop a more personalised offering.

Read More

#OneMercia

Mercia’s year of progress is arguably best encapsulated by the growth of our team. From London to Edinburgh, the Mercia team now stands at over 100 staff with further opportunity for several additional roles that are currently live on our website. This gives us a significant presence in the regions and brings with it a depth and breadth of knowledge that we believe is unique to an asset manager that provides capital across venture, private equity and debt.

This expansion of talent does not come without its challenges, especially for those new starters that onboarded during periods where it was impossible or difficult to meet colleagues in person or to be exposed to the strong Mercia culture. And of course, there were also challenges for those team members that have been driving Mercia’s performance throughout the last year, whilst having to manage so many new types of pressures.

Resilience, therefore, has been a central theme for Mercia; how people withstand the dramatic changes wrought by COVID-19 and then be flexible (and tough) enough to embrace the opportunities that will come with a post-pandemic resurgence. Understanding the resilience that is needed from the processes and infrastructure demanded by new working habits is also key. Businesses grow through creativity and curiosity, the loss of which cannot be allowed to become a casualty of lockdown. At Mercia we have endeavoured to remain connected with our colleagues with fluid and intuitive initiatives.

Across Zoom, Microsoft Teams and, when the safeguarding and guidelines allowed, face-to-face meetings, Mercia’s leadership team has ensured that frequent and transparent communication has remained a priority throughout the year – not just with employees, but also with our investors, shareholders and investees. In many instances, this digital engagement has been better suited to some audiences and more regular outreach has been facilitated because of how cost-effective and timely this communication is. Many of our forums and seminars will remain as digital events; some will become hybrid to ensure that we do not lose out on the additional advantages that come with meeting in person, and we will host all the recordings via our newly expanded Mercia Hub on the website.

Read more about understanding the need to build resilience
Register for The Better People webinar hosted by Janet Grant

#OneMercia

Mercia’s year of progress is arguably best encapsulated than by the growth of our team. From London to Edinburgh, the Mercia team now stands at over 100 staff with further opportunity for several additional roles that are currently live on our website. This gives us a significant presence in the regions and brings with it a depth and breadth of knowledge that we believe is unique to an asset manager that provides capital across venture, private equity and debt.

Resilience, therefore, has been a central theme for Mercia; how people withstand the dramatic changes wrought by COVID-19 and then be flexible (and tough) enough to embrace the opportunities that will come with a post-pandemic resurgence. Understanding the resilience that is needed from the processes and infrastructure demanded by new working habits is also key. Businesses grow through creativity and curiosity, the loss of which cannot be allowed to become a casualty of lockdown. At Mercia we have endeavoured to remain connected with our colleagues with fluid and intuitive initiatives.

Across Zoom, Microsoft Teams and, when the safeguarding and guidelines allowed, face-to-face meetings, Mercia’s leadership team has ensured that frequent and transparent communication has remained a priority throughout the year – not just with employees, but also with our investors, shareholders and investees. In many instances, this digital engagement has been better suited to some audiences and more regular outreach has been facilitated because of how cost-effective and timely this communication is. Many of our forums and seminars will remain as digital events; some will become hybrid to ensure that we do not lose out on the additional advantages that come with meeting in person and we will host all the recordings via our newly expanded Mercia Hub on the website.

This expansion of talent does not come without its challenges, especially for those new starters that onboarded during periods where it was impossible or difficult to meet colleagues in person or be exposed to the strong Mercia culture. And of course, there were also challenges for those team members that have been driving Mercia’s performance throughout the last year, whilst having to manage so many new types of pressures.

Mercia podcasts

New to the Mercia Hub is our podcast offering, one of the interviews was a fireside chat with nDreams’ Patrick O’Luanaigh and Mercia’s Venture Partner Ron Ashtiani.

 

Listen here

Portfolio portal

Purpose-led and making an impact

We caught up with two of our Electronics, Materials and Manufacturing portfolio businesses that are both making an impact and are at the centre of the global shift towards sustainability.

Tribosonics is a technology business that allows its partners to manage, monitor and reduce carbon emissions while at the same time driving an impressive apprenticeship programme in the local community.

Faradion is a world leader in non-aqueous sodium-ion cell technology, pioneering the next generation of advanced low-cost battery technology that provides cheaper, cleaner energy.

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