The tech playbook
Foresight and Partners Group reveal the value creation methods used to grow their TMT businesses
Foresight first invested in Fresh Relevance in 2017, with a follow-on investment in 2021. Throughout our investment period, we focused on developing the product roadmap. From the beginning, our organic growth process centred around a few questions, such as: How differentiated is the platform? How strong is the revenue? How solid are the customer relationships? What does the management team look like?
The business initially opened an office in the US but subsequently pared it back to refocus on the core markets in the UK. Fresh Relevance had an ARR of £1.5m at the time of our investment in 2017, so a key part of our 100-day plan was to bolster that by increasing the headcount in sales and marketing, which ultimately drove revenue to grow nearly threefold.
A lot of our focus was on customer service and minimising churn
The 100-day plan was focused on the professionalisation of operations (sales, finance, etc) and governance, since they can be key challenges in a high-growth, cash-burning company.
The platform had a proven concept in the sense that it had been generating revenues and had credible customers at the point of our initial investment, so we helped build on that, but a lot of our focus was on customer service and minimising churn.
Covid was a difficult period for lots of companies, particularly for smaller-sized companies. Fresh Relevance had a very wide fragmented customer base, and while this cuts down risk, it was also challenging. Covid was also a time when discretionary marketing spending was pulled back, so it was important for us to drive value through long-term customers.
The C-suite was well formed when we made the initial investment. We appointed an industry-leading chair, Georges Berzgel, who was able to help the business streamline its processes and governance systems. And we appointed a female investment director to the board. We always take care when making chair appointments because we believe they can supercharge our assets’ growth.
The scale of our portfolio and the breadth of our funds now means we can bring top talent to the companies we support. Most of the new hires were appointed to the tech team and sales and marketing.
As part of our approach to sustainability and ESG, we ensured we paid attention to the professionalisation of the board appointments, along with their diversity. Improvements in governance were made, alongside creating 40 high-quality jobs.
Acknowledging that management is the expert here has been key to our organic growth success
We supported the company in this turbulent time by providing liquidity when needed, working with the board to ensure good cash management principles were always applied, and ensuring that the business did not have heavy exposure to certain kinds of demographics.
Acknowledging that management is the expert here has been key to our organic growth success because we know we can help with the operational guidance, but it’s very much working with the team and pulling in big industry players to chair positions where needed.
Return reaped by Foresight on exit
New jobs created during the investment period
Increase in the revenue of the business
At the time of our investment, Civica was a stable business with a robust track record of growth and strong customer feedback. However, its cloud presence was rather limited. It wasn’t a pure-play software business as it had a BPO (business process outsourcing) component to it. Consequently, a limited portion of revenue was being delivered via cloud products (only about 20%), which we scaled to more than 50% by the end of our holding period, led by the conviction that cloud offerings are the future of the industry.
Throughout this time, we put a lot of investment into quality reporting of recurring revenue drivers and adopted a new CRM system, created a CRO function and recruited a seasoned executive from Salesforce.
We saw several competitors struggle operationally when they replaced their enterprise systems, as they weren’t able to invoice customers, which we were cautious to minimise the risk of.
At Partners Group, we put a lot of emphasis on data-driven decision-making as part of our organic growth acceleration playbook.
The CRM being used by Civica at the time of our investment was essentially homegrown and hence, wasn’t fit for purpose in terms of providing us data. So, we upgraded it to Salesforce.
We put a lot of emphasis on data-driven decision-making as part of our organic growth acceleration playbook
We needed more data visibility and the decision to migrate was driven by this insufficiency. This enabled us to execute on our go-to-market initiatives, which included introducing customer segmentation to focus on accounts with the greatest potential and creating strategic account managers to develop holistic customer 360s.
We hired a new CEO (Lee Perkins from Sage) following the retirement of the previous executive, in addition to bringing in a new CFO, Martin Franks, who previously worked at two Hg-backed companies. Shambhavi Shambhavi joined from Salesforce as our CRO. We also created a new CPTO function, overseeing product and technology, and recruited Derek Wise to spearhead that. In total, Partners Group helped to create more than 2,000 new jobs at Civica during our holding period.
One of the highlights of our investment period was the building of a specialist engineering centre in India’s Vadodara city. We grew its number of engineers from about 60 to close to 700 at the time of our exit.
ESG was embedded in our investment thesis. When it comes to the E, we helped Civica to develop its first carbon-zero-footprint plan.
On the governance side, we continued to invest in cybersecurity. Civica has a well-staffed team dedicated purely to cybersecurity, and has added specialist software. On the social side, the company invests in more than 200,000 hours of training per year and emphasises diversity across the organisation. Civica is one of the top 100 businesses on the FT Diversity Leaders index.
We faced some operational challenges during Covid but, in the end, the shift to working from home reinforced the idea of our customers investing in cloud software. In 2020, we dealt with uncertainty, and then started seeing an uptick in cloud adoption from 2021 and 2022.
The other potential challenge we faced pertained to the implementation of systems changes. These enterprise-wide projects take resources and run the risk of disrupting your business, but our management team was able to execute them without having any operational issues. For instance, implementing a new CRM is a big process and affected different parts of the business. Getting it done in a way that doesn’t disrupt operations, took time and caution.
We also completed 24 bolt-ons during our investment, making sure that they are well integrated and fit into Civica’s culture, which all took time.
Growth in Civica’s Ebitda
Jobs created in the six-year holding period
Growth in revenue from cloud products during the investment
