Plus highlights from the portfolio, including:
• LYMA
• OnePlan
• COAT and more...
Pembroke VCT’s current offer is now open. We are looking to raise £40 million with an over-allotment facility for a further £20 million.
We are delighted to bring you some exciting updates from Pembroke VCT. In the year to July 2023, we have committed £8 million to new companies and an additional £13 million to the current portfolio. Our assets under management (AUM) are now at £216 million, featuring a diverse portfolio of over 40 growth-stage companies.
At Pembroke, our ‘milestone’ approach is focused on delivering long-term stable capital growth, accompanied by annual dividends and special dividends upon profitable exits. Our approach centres on investing in a diversified portfolio of companies operating within three key sectors: Consumer, Technology and Business Services.
In this edition, we will introduce you to our latest investment in SeatFrog as well as providing updates on the following portfolio companies: LYMA, Secret Food Tours, One Plan, Thriva, HotelMap, Credentially, COAT and Smartify.
We are also shining a spotlight on the travel industry, which is experiencing a post-covid boom according to industry experts and Pembroke portfolio company founders including HotelMap, SeatFrog and Secret Food Tours.
In the ever-changing market landscape, adaptability is crucial for a business to succeed in the long term, especially considering the fast-paced changes we see today. I am sure you have heard over the course of the last two years the word ‘pivot’ used when reading about business strategies. I would like to explain how we at Pembroke see the difference between pivot and evolve, two terms that are frequently used interchangeably but have distinct meanings. A ‘pivot’ results in a significant shift in a company’s central strategy or business model in response to market changes. When an existing business model is no longer viable, it becomes necessary to make a decisive switch to discover new possibilities. This usually involves substantial changes to the business model, a refocus on cashflow and overheads and a drive to profitability over revenue growth.
On the contrary, business ‘evolution’ implies a step-by-step refinement of pre-existing strategies, taking new learnings and building them into future strategy. It emphasises minor alterations to boost the competitive advantage, improve products, streamline operations and revise marketing strategies. This permits companies to innovate and stay relevant without drastic shifts.
The core difference between pivoting and evolving lies in the scale and speed of change. Pivoting is a major, quick shift, often driven by urgent or necessary changes. By contrast, evolution is a slower process that adapts, enhancing the core identity. Pivoting can be disruptive, whereas evolution carries less risk.
Both these strategies have their place. Pivoting allows reinvention in the face of threats, while evolution promotes steady progress by refining strategies. At Pembroke, we encourage founders and management teams to continually evolve to take advantage of opportunity as and when it presents itself. However, if a company needs to pivot, we work closely with them to help ensure survival.
by Andrew Wolfson CEO, Pembroke VCT
Founded in 2018, SeatFrog aims to improve rail travel by providing a consumer app that allows real-time bidding for first-class upgrades. By incentivising upgrades and filling empty seats, this benefits both customers and operators, contributing to a greener and more sustainable transportation system. SeatFrog is scaling its offerings with ticket sales and a “Train Swap” solution, launching with the Department for Transport, designed to reduce ticket changing costs by 85% and boost customer satisfaction. SeatFrog is revolutionising the rail industry while promoting a sustainable future.
100% renewal rate among UK operators
£43m passenger savings on upgrades
300% increased operator revenue
SeatFrog has experienced impressive organic growth, acquiring over 70% of new customers through word of mouth. It has exclusive partnerships with major train operators, covering billions of journeys, including a recent partnership with Trenitalia. Since its launch, SeatFrog has saved passengers £43 million on upgrades and increased operator revenue by over 300%. With a 100% renewal rate among UK operators, SeatFrog continues to expand its portfolio.
Our mission is to be the platform of choice for rail, helping people fall in love with taking the train again, and enabling operators to run more profitable networks full of happier, less stressed passengers — it’s long overdue.
Iain Griffin
Co-founder and CEO of SeatFrog
With over half of UK rail passengers seeking better value, SeatFrog’s vision and dedication to enhancing the travel experience for passengers and train operators stood out. Its disruptive model, market fit, and outstanding team made it a clear choice for a Pembroke investment. We’re excited to support SeatFrog’s growth as it expands its offerings and reaches new markets.
Fred Ursell Investment Director of Pembroke Investment Managers LLP
In the last year, some outstanding accomplishments have positioned LYMA as a leading player in the wellness and skincare industry. The LYMA ecosystem has continued to evolve since our first investment in 2018, with the creation of the world’s most powerful at-home laser device, endorsed by the likes of Gwyneth Paltrow, Kim Kardashian and Victoria Beckham.
This offering has now been enhanced with the new Lyma Skincare, a dynamic serum and cream duo hailed as the breakthrough in combating skin ageing. Operating on a subscription basis, this 30-day regimen amassed a waitlist of 30,000 enthusiasts eagerly anticipating its debut and transformative effects.
Following this growth, LYMA has won a range of well-deserved awards:
Honoured with The King’s Award for Enterprise for International Trade after successfully doubling its revenue in 2022 thanks to its US expansion.
Achieved an impressive 11th position in The Sunday Times’ 100 fastest-growing companies in Britain for 2023.
Ranked 13th in the highly respected FEBE 2023 rankings. FEBE Growth 100 is an annual list and recognition programme highlighting high-growth private companies.
Our mission has always been to empower individuals to lead healthier, happier lives, and we believe that radiant skin plays an integral role in achieving that goal. With our new skincare range, we aim to elevate the standards of beauty and self-care by offering products that are both effective and environmentally conscious.
Lucy Goff Founder of LYMA
Secret Food Tours was named the Travel & Hospitality Awards Winner for 2022 during one of the most challenging years the travel industry has ever faced. Since then, it has won the Best Food Tour of 2023 in the esteemed USA TODAY awards. The business has expanded to over 60 locations with 200,000 annual clients, and continues to thrive through executing a scalable strategy for global growth, attracting diverse clients seeking authentic and immersive food experiences.
Secret Food Tours takes great pride in the overwhelmingly positive feedback from customers, with some tours garnering over 27,000 5-star reviews. This speaks volumes about the company’s ability to consistently deliver on its promise of providing incomparable food experiences. As it continues to pave the way for unique food tours, we eagerly anticipate the exciting developments that lie ahead for Secret Food Tours.
OnePlan, the event planning platform, has achieved remarkable success since becoming the Official Supporter of GIS Mapping and Digital Twin Software for the Paris 2024 Olympic & Paralympic Games.
The business utilises cutting-edge technologies like GIS mapping and advanced software solutions to create dynamic digital twins of physical venues, transforming event planning and execution.
OnePlan is developing a digital replica of The Crypto.com Arena in Los Angeles for day-to-day operations, allowing virtual experiments with concert layouts, sponsorship signage, lighting setups, and other crucial logistics for events such as concerts and the Grammy Awards.
OnePlan has also partnered with The Beirut Marathon, revolutionising the race’s organisation. Highly recommended by the race director, Ehrabi Nael, OnePlan’s successes streamline event planning and contribute to sustainability efforts, setting new industry standards with a global impact.
Recently, OnePlan partnered with ExCeL London, a large conference centre in the UK, for its upcoming 25,000 sq m expansion project. ExCeL uses OnePlan’s software to aid client decision-making, reducing the need for in-person visits. Additionally, OnePlan is helping ExCeL London achieve its goal of becoming a carbon-neutral venue by 2030.
We initially invested in HotelMap in 2018 and have recently completed a further investment of £1.8 million. HotelMap’s cutting-edge technology platform automates complex hotel booking. The HotelMap platform is available as an Enterprise SaaS platform to event management companies or as a Managed Service for event owners.
In the post-pandemic world of transformed travel and low employment in the events and hospitality sector, HotelMap’s solution to provide booking efficiency and automation is more attractive than ever.
Thriva Solutions, the innovative health tech company, recently partnered with the renowned health and beauty retailer Superdrug.
By leveraging Thriva’s advanced technology, Superdrug can now offer an unparalleled in-clinic health testing service, giving individuals deeper insights into their well-being and empowering them to take proactive steps in managing their health effectively. With Thriva already extending its blood testing kits to 165 clinics and pharmacy sites nationwide, this partnership is set to reach even more people in the UK, enabling them to proactively take control of their health.
This partnership demonstrates a shared commitment to driving innovation in the health sector, paving the way for further advancements in personalised healthcare services.
During the pandemic, HotelMap developed a new Enterprise SaaS product to license to event management companies. ‘HotelMap Pro’ is built specifically for large event organisers and venues. Operating in 512 cities across the globe, HotelMap has gained immense popularity among the largest event organisers worldwide, including Reed Exhibitions, Informa, DMG Events, Clarion, and Financial Times, as well as corporate organisers such as Cisco, Xero, and Amazon Web Services.
We recently invested a further £2 million into Credentially, which specialises in healthcare recruitment software. After establishing a growing presence in the UK, Credentially has begun expanding into the US, aiming to make a global impact on the healthcare sector. The innovative tech business has boosted its sales team capacity and expertise with experienced professionals familiar with the US healthcare landscape.
This will be key to Credentially’s success in delivering services customised to meet the varied needs of American healthcare providers. Beyond the US, Credentially plans to expand geographic reach from 3 to 10+ countries.
This award recognises tech businesses demonstrating the highest levels of innovation, customer engagement, growth and a robust plan to deliver sustained financial success.
We have invested a further £2 million into B Corp Certified company, COAT Paints. COAT emerged as a digital challenger within the paint market and is revolutionising the digital landscape for the new generation. Through its digital solutions such as the Colour Quiz or its on-demand production approach, data serves as the driving force behind COAT’s operations. This ethos propels the company’s ongoing expansion while providing a sustainable premium product that is entirely made to order.
The dynamic paint business has further evolved its trade, selling directly to interior design and property businesses and diversifying its geographical sales presence in Europe. Since Pembroke’s most recent funding round in June 2022, COAT has significantly improved the strength of its management team through the addition of an experienced CFO, Commercial Director, and International Director – supporting strong growth across all business areas.
COAT’s entire paint range is driven by data. Unlike others who batch manufacture, we mix colour to order and use data to constantly refine our offering. That means zero waste, minimal working capital in stock, and the most agile and responsive product range.
Rob Abrahams
Co-founder and CEO of COAT
Founded in 2015 by the duo Anna Lowe and Thanos Kokkiniotis, Smartify was born out of a passion for helping people build meaningful connections with art. Today, it proudly holds the title of the world’s most popular museum app, with more than four million unique users. Users of the app enjoy a seamless experience with millions of digitised artworks from 700 of the world’s greatest cultural attractions, including The National Gallery, The Louvre, The Smithsonian and 25 of the 100 most-visited museums in the world.
Since our investment in 2020, Smartify has achieved significant milestones, including winning four of the prestigious Webby Awards and being a finalist for The Spectator’s Economic Innovator awards. Smartify’s triumph is a testament to its outstanding contributions to the world of art and technology. The company is a strong source of digital experiences, including AR, VR and Spatial Audio. It’s also a significant brand partner for organisations like AT&T and Taschen, thanks to its extensive user base.
As the travel sector emerges from the depths of the pandemic, indications suggest that the industry has found its stride once more – but perhaps not as we once knew it. We spoke to industry experts and three of our portfolio companies in the sector to put these predictions to the test. We explored whether the resurgence of travel is a temporary phenomenon fuelled by pent-up demand or a permanent adjustment.
The pandemic almost crippled the travel industry. Among many players, there is a consensus that the impact was truly catastrophic. Others do not dwell too heavily on its impact and instead celebrate the innovation and competition it has inspired.
The World Travel and Tourism Council (WTTC) has predicted that by the end of 2023, the travel and tourism industry will reach a value of $9.5 trillion1, just short of the record levels seen in 2019. This is a phenomenal comeback by any stretch – and as industry veteran Richard Segal put it,
But what are the driving forces behind it and what does the face of this resurgence really look like?
A travel sector tapestry: is the industry back for good?
“The bounce back is just incredibly strong and quite the turnaround of events.”
Some companies that came through the pandemic emerged stronger than ever. Steven Potter, Founder and CEO of HotelMap, noted that
Potter added that the industry was fraught with legacy complexities, which the pandemic brought to an abrupt end. Booking systems can now be optimised by data science, and in the age of AI, customer support services no longer require costly translators. A good example is the changes Direct Ferries implemented by introducing algorithms and AI. As former Executive Chair of the business, Richard Segal commented on how it gave the company flexibility on booking prices in line with demand. Two years ago, Direct Ferries had no data scientists on the payroll. Fast forward to today, and there is a growing data science team.
This seems to be where a significant opportunity lies. Many of the industry experts suggested that digitally enabled businesses are the future. The optimisation technology brings to the customer experience and broader business operations is highly efficient and fundamentally profitable.
If it’s possible to say the pandemic incited seismic positive change, that is nowhere more true than in the travel sector. It encouraged many businesses to pause for thought and implement the necessary change. In tandem with shifting working patterns, travel habits have been forcibly changed too. This is partly due to ‘Bleisure’ – the trend that blurs the historical lines between business and leisure travel, and is commonly deployed around weekends.
Iain Griffin, Founder and CEO of SeatFrog said,
The pandemic is not the first, and nor will it be the last crisis the travel industry will face. Smart entrepreneurs with a sensible vision need investors with a deep understanding of the challenges that these businesses might face. Oliver Mernick-Levene, co-founder of Secret Food Tours expressed this when looking back at how he guided the business through the pandemic, saying that,
– spotlighting a significant opportunity for the sector to tailor offerings accordingly.
That being said, the 2023 traveller is showing a preference for upfront costs. There’s been a surge in luxury-end all-inclusive holidays with transparent upfront costs. Closer to home, the staycation seems to be experiencing fluctuating popularity - but end-to-end journey planners with tremendously detailed, yet user-friendly features are on the up.
With the travel and tourism industry being such a major cog in the global economic engine, this seems like a pragmatic approach. It is forecast that by the end of 2023, the number of jobs globally in the sector will grow to 320 million2. The investment opportunity here is potentially quite extraordinary – but what is evident is that innovation must be at the heart of every vision.
“two years off gave the industry time to innovate.”
“I think the opportunity is honestly in three-day trips away”
“ultimately, you need an understanding and trusting investor that backs your vision when the going gets tough.”
As Pembroke continues to grow, we are pleased to announce some changes to our team.
We are delighted to share the promotion of our Head of Portfolio, Jamie Kennell, to the position of Chief Investment Officer (CIO). Jamie takes over from Andrew Wolfson, who, having previously combined the role of CEO & CIO, remains as our CEO.
Jamie has 30 years of experience in private equity and venture capital, with notable roles at 3i Group and Beringea. Since joining us in May 2022, Jamie has profoundly impacted the strategic thinking of our portfolio companies’ founders and management teams, particularly concerning their business strategies and cost structures. Jamie has exceptional knowledge, leveraging an extensive background in board-level engagements and commercial expertise, providing invaluable insights.
Pembroke is committed to adding value to our investments and we will be looking to grow the team further over the current year as we build for the future.
In May 2023, we hosted a dynamic CFO Forum in partnership with Grant Thornton UK LLP, tailored exclusively for founders and CFOs from our portfolio.
Grant Thornton delivered an insightful presentation to kick off the breakfast event, providing a comprehensive overview of the following topics:
1. M&A trends in the market and timing considerations for a transaction
2. Changes to due diligence requirements and proactive ways to prepare in advance of due diligence to ease the load on Finance Directors and the wider team
3. Key recommendations to consider as part of a tax health check prior to a transaction
Phil Mickler, COO of fashion brand and former Pembroke portfolio company ME+EM, also joined us as a keynote speaker. With his invaluable experience, Phil shed light on the complexities and triumphs of the exit journey. Pembroke exited ME+EM in March 2022, having sold its stake to Highland Europe.
Important information and disclaimer: This document is issued by Pembroke Investment Managers LLP (“Pembroke”), a limited liability partnership incorporated in England and Wales with registered number OC379193 of 3 Cadogan Gate, London SW1X 0AS. Pembroke is authorised and regulated in the conduct of its business by the Financial Conduct Authority. Pembroke has prepared and approved this document and the information herein as a “financial promotion” for the purposes of the Financial Services and Markets Act 2000 for persons reasonably believed by Pembroke to be of the kind to whom it is permitted to communicate financial promotions. This document has not been approved by any relevant regulatory authority and does not constitute an offer or invitation in respect of the sale or purchase of securities in any jurisdiction, or of any of the businesses or assets described herein. No offer to sell investments is being made on the basis of the information contained in this document. Before investing, (prospective) investors should read the relevant prospectus and/or key information document, available from www.pembrokevct.com as these documents contain important information about any offer, including charges, tax and specific risk warnings.