Benula Capital – Miles Hunt interview with Steve – Part 1
On 18th November 2016 Benula Capital invested into idibu. The man behind Benula is Miles Hunt. He came to our annual get together in Barcelona – a great opportunity for me to interview Miles on different topics.
This first one focuses on: 1. Background on Benula Capital 2. How Benula choose which companies to invest in 3. How Benula differs from other investment companies. Part 2 will focus on why they invested into idibu.
Steve: It’s a great pleasure to talk to you today. We’ve been working together for over a year with you providing great advice to the Idibu business, and of course the company that you share with Simon Lawton, Benula Capital, very recently became an active investor into idibu. You’ve got a fascinating history, having successfully set up a large procurement business, recruitment businesses such as the Empresaria Group and played a major role in Appsco. But today, I’d like to focus mainly on Benula Capital and the work you’re doing there. Could you give me some background?
Miles: Sure. So, Benula Capital really came about as a sort of a next stage after Empresaria. After a period of time on the beach with family, I decided enabling others to get and succeed as I had some success seemed to me like a better way to spend time. So what I did was, I decided to go and apply capital, my own capital, and some friends’ and family capital into an investment company, focusing on the recruitment sector and technology associated recruitment.
Steve: So can you tell me a bit about some of the businesses that you’ve invested in already?
Miles: We’ve got in chronological order Darwin Recruitment which is a technology recruitment company based in Billericay focussing on the European markets. Davidson which is in Australia, a national multi-sector specialist staffing group and with a very interesting HR consulting practice. We have Oasis HR which as the name suggests is HR recruitment. They also have an interesting data analytics business resourcing inside helping with the HR analytics. There is Jameson Legal. Jameson Legal as the name suggests is a legal recruitment business operating out of London and the Middle East and soon-to-be out of Asia as well. And most recently, we have investment in idibu. So, that’s five so far.
So, some interesting businesses all of which are different in their own way, and each of them hopefully sort of going to be also growing and creating opportunities.
Steve: And how do you choose the businesses that you’re going to invest in?
Miles: The three criteria that I would set myself to get involved in businesses, and by involvement, includes intention to invest is one, are they like-minded people. I mean there’s no doubt this industry is one that’s populated by heroes and villains, and sometimes you can’t really establish whether who’s what initially. If they are like-minded with a set of values and integrity of purpose and approach which, if it resonates with me, then that’s the first tick in the box.
The second is ambitious companies, ambitious people. Ambition is important.
The third thing is can I realistically add value? Is there a belief I can add some value to this investment?
And if those three things are ticked, then generally it’s a good starting point. So that’s the starting point of any entrepreneurial investment is that those three criteria are met.
In terms of which sectors or which opportunities, obviously, the industry itself is changing so fast and the one constant is change. There are certain models or certain approaches within recruitment itself which are proving to be successful, and there are other more traditional, transactional job filling type recruitment which is proving to be yesterday’s model.
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The approach that companies have to doing business, the extent to which they’re actually adapting to becoming more either focusing on the candidate experience and talent pooling and talent ecosystems or focusing on their client solutions that their capabilities are increasing and moving beyond the transactional sort of resourcing and recruitment process, then that’s something which I look for.
Because we’re very much a volatile sector, our fortunes mirror the fortunes of the market we serve. In many ways our performance is accentuated or is an increased version of whatever that market is facing. I look for sectors which are going to be less volatile or where there is something going on there which gives us a sense of there’s going to be an opportunity for growth for whatever reason. So, technology recruitment is particularly where I’m focused on because of structural change going on there. But there are other sectors which still get good money if you look at doing things differently.
Another area which I focus on is the geographic focus, and my experience is very much international recruitment. There’s no doubt that while there is a great risk with internationalizing businesses, there are great opportunities also for people who get it right in markets which are less developed than some of these more developed countries like the UK or the US.
Steve: Do you think beyond financial investment, are there differentiators that Benula has vs other investment companies?
Miles: Yes, if you look at the investment world, you can break it down into different categories. And by investment world, if I were a recruitment company or anyone looking for investment, what are the options if I’m wanting to retain control or interest in my business because obviously, one option that people always think about is trade buyer. Well, trade buyers obviously they’re going to be buying your business.
If you ignore trade buys… you got the banks. You can go and borrow money. But if you want equity investors, private equity obviously people talk about the private equity in terms of institutional money.
They’re looking at companies that have got profits of over £2M a year, and if you’re below that, then you’re not really in their radar screen, very unlikely to be.
There are some that want to have a majority stake and some that are happy to have a minority stake.
Most want to take a majority stake rather than a minority stake. And of course the big issue for many people is that you lose control, they are dependent on very much on the goodwill and the integrity of the people that you’re working with and that is something that concerns some people.
So, Benula, we’re very happy to work below the 2 million profit line. So our investment sizes range from the highest being so far is 1.5 million, down to a lowest which is about £250,000.
So, significant stakes but minority stakes in existing companies, and that’s the approach we take.
You’ve got to know the person you’re going to have invest in your business, the extent to which they know the industry and therefore they can add some value. So that’s my suggestion there.
Benula is a level below private equity. It is professionally organized and therefore there’s a structure to how we work. The intention is very much to fill that gap of those below the £2M profit and below.
Steve: Which is where idibu of course fits in because we do dovetail with your model.