We invest in growing businesses that sell services or software to other businesses
We like knowledge-based businesses. That is a broad phrase but to us it means IT, software, education and training, specialist business services and professional services. We never forget though, that knowledge always resides in people, and that it is people who make businesses. Basically, we really like people businesses.
We particularly like businesses that help other businesses manage their back-office and day-to-day operations, such as accounting, payroll, HR, finance, tax, insurance, and IT managed services. We are always keen to learn about new businesses however, and any service or technology related business with strong margins and valuable long term customer relationships will nearly always get us excited.
We prefer to invest in family or entrepreneurial businesses that have already established themselves and we like to invest alongside people.That is not to say that we will not buy a business outright, but we prefer to be in partnership with a management team or founder. Start-ups and scale-ups aren’t our thing and we don’t participate in funding rounds.
We are based in Brighton, which sits at the heart of what is one of the most entrepreneurial, fast growing, and exciting regions of the UK. We have immersed ourselves in the local business community and our investments to date are all within this local area. Sussex and the South East will likely remain our core focus for future investments, but we are not constrained by geography, and will happily travel to any corner of the UK for an exciting opportunity.
Our investment strategy is focused on what we know well
We have a simple set of investment criteria that has been refined over decades of relevant investment and operational experience. There are several common businesses model characteristics that we like to see in all our investments. We like businesses that have recurring or subscription-based revenue streams and whose services and products are non-discretionary in nature. It probably goes without saying that we like to see strong margins, good organic growth, and the opportunity to grow both of these, and we prefer businesses who are not reliant on a small number of key customers but have a large and fragmented customer base. We often also look for investments that can act as a platform for us to grow through further acquisition.
In terms of size of investment, we have a very flexible mindset and do not constrain our thinking to one way of doing things. Our primary focus is on the quality of the opportunity that an investment presents, and we are very comfortable starting with a small investment and building something much bigger or investing in a larger opportunity from the outset. On average we expect to invest between £20m – £40m in each investment from Cow Corner’s fund of committed capital. This can be either initially or over the life of the investment and we can be flexible for exceptions at either side of the scale.
The sectors that we like to invest in are those industries and activities that help other businesses run smoothly and safely
We focus on sectors and businesses where there is a combination or intersection of people and technology. Some examples of these include:
Education & training
HR, payroll, and health & safety services
Insurance and financial services
Business advisory services
Subscription technology services
We work closely with our investments, giving them a commercial edge to help them grow
We place as much emphasis on operational experience within our team as investment experience. We are operators ourselves, not consultants, with decades of experience of working alongside teams and businesses through good times and bad. This puts us in a great position to work with, and help, our investments in a positive and supportive manner. We typically do this by identifying and doubling down on growth levers and building talent and capability. Even more important than operational matters however is ensuring a shared vision and complete alignment between the investor (us) and everyone in the business – ultimately it is this more than anything else that leads to successful and happy outcomes.