The next big thing
The VC who brought Five Guys burgers to the UK tells how to pick winners
Andrew Wolfson’s numerous career moves give you the sense he has always been looking for the next big thing. Thankfully, that’s now his job. Pembroke, a venture capital trust, isn’t a household name like Next, the high street bellwether his brother Lord Wolfson has run for more than 15 years, but it’s been involved with some well-known consumer-facing names.
One of its most recent successes has been helping to bring the American burger chain Five Guys to the UK. Pembroke became involved even before Five Guys had its first site this side of the Atlantic and, confident it would be a success, provided growth capital to fund the UK roll-out.
Its optimistic view of the brand was helped in part by Sir Charles Dunstone, the Carphone Warehouse founder who was instrumental in bringing it to the UK and is also an investor in Pembroke.
“That business has now grown to a size where a VCT can no longer invest [more money] but we have still got our initial stake in there,” Wolfson says.
Venture capital trusts can only invest in companies with gross assets of less than £16m, meaning entrepreneurs are backed at a relatively early stage. To counteract the risk, investors get tax breaks on investments up to £200,000, providing they keep their money in place for a minimum of five years.
Pembroke looks at businesses which have revenues of around £1m as, Wolfson says, this enables it to properly analyse the company and better ascertain what its future prospects might be. Success stories include Blaze, the light maker, Mexican restaurant chain Chilango, and Plenish juices.
“We look at what the founder is like, what they have achieved so far and how they have dealt with obstacles they have come up against,” Wolfson explains. “You can have a really great business and put the wrong management in and it won’t be long until it’s gone. Or you can have someone with a great vision and even with a bad business, they will get there.”
Vision is something Wolfson needs, especially as picking the right consumer businesses to back has always been a challenge. Add to that the uncertainty brought about by Brexit, and it has become even more crucial to pick something which the increasingly put-upon consumer will stick with.
“From what I see, while people are nervous about the future because there is uncertainty, especially with regard to Brexit, people are keeping their heads down and still developing products,” he says. “When Brexit happened I said I didn’t want any of our companies to use it as an excuse. We know there will be currency pressures but we wanted to look at possible efficiencies within supply chains and see if we could improve things like distribution and staffing. It made everyone look at their business which is not a bad thing.”
Wolfson was at Oakley Capital, the investment firm founded by entrepreneur Peter Dubens, when the two decided to launch Pembroke in 2012. The pair go back a long way, with Wolfson formerly head of operations at Global Inc, founded by Dubens. The company’s T-shirts changed colour when heat was applied to them and took the 1990s by storm. After two years, during which time the business grew from a turnover of £2m to £15m, Wolfson bought and ran Windmill Hill Tennis and Golf Resort, which he turned around from a loss-making business to a profitable venture during his 11-year stint from 1993.
Then, once again restless for change, he spent the next five years at various start-ups. But when in 2008 Wolfson married the woman he proposed to just 10 days after meeting her on a blind date, he wanted a more stable income.
When he discussed this with Dubens, there was a job on offer at Oakley Capital and a chance for the pair to work together again.
“Peter said he had just bought Tom Aikens’ restaurant business out of administration and that I should take that on,” he says. “I stabilised the business over two years and around the same time we had lots of opportunities coming to the office.”
This prompted the idea of Pembroke as a way to manage more directly and invest in the range of consumer-based businesses which were approaching Oakley for help.
So far it’s only had two investments which didn’t quite go to plan with Zenos, a lightweight sports car producer, and Cheekfrills, a women’s underwear brand, going through an administration process. But both companies have continued to trade thanks to new investment.
More recent investments include delicatessen and cafe business Sourced
Market, which had just its Kings Cross site when Pembroke backed it but now boasts four locations across the capital.
It also recently took a relatively unusual step in backing a clothing brand before it had made a sale, albeit its celebrity founder Alexa Chung had arguably proven her credentials with collaborations with Mulberry.
“Peter [Dubens] was instrumental in helping her make a decision she should start her own brand,” Wolfson says. “He helped her put together her team and to get the right chief executive and designer in place and it’s been fantastic. The collection has gone down well with retailers. We did back it pre-revenue but we did not see her as an unknown pre-revenue investment. You’ve only got to look at the collection to see her influence.”
Outside of work, the father of three is heavily involved in charity work, including MISST – Music in Secondary Schools Trust – whose genesis came through a chance encounter with the then head teacher of Highbury Grove School, Truda White, in 2005.
“She had a vision to put classical music into the school and we committed funding for a three-year pilot project that was so transformational for the school we continued to provide funding in subsequent years,” Wolfson says.
“In 2012, we met with Andrew and Madeleine Lloyd-webber, who agreed to co-fund an ambitious roll-out through the Andrew Lloyd Webber Foundation to make classical music compulsory in years 7, 8 and 9.”
All the students the charity works with are given a violin in their first week and have weekly lessons. It currently has more than 4,700 young people in the programme across 10 schools and White, who has since retired as a head teacher, runs the charity.