Alex Marsh, Investment Manager at Maven, caught up with Boiler Plan Managing Director, Ian Henderson, to find out how the £2.15m investment from Maven’s VCTs and North East Development Capital Fund has helped the business accelerate the growth of its disruptive ‘digital first’ service for the sale and installation of boilers.
Boiler Plan has achieved impressive growth since launching two years ago demonstrating the demand from consumers for this type of platform. The business fits the mould of the dynamic and entrepreneurial businesses Maven seeks to support and was one of the first of a small number of new entrants to disrupt this market with a digital solution.
- Please can you tell us a little bit about yourself – what does your business does and what’s involved in your role?
I am the Founder and MD of Boiler Plan (UK) Ltd (boilerplanuk.com), and I have been involved in the domestic gas heating industry since I left school in 1993. After serving an apprenticeship as a gas service engineer, I worked for my father who was a sole trader working from home, and by around the turn of the Millennium we were doing well, and I wanted to expand. In 2002 I incorporated a company myself and started to build it, and I had a lot of success delivering social housing heating projects for government-based organisations, whilst also building a good local foothold in the private home owner sector. When the financial crash happened around 2008, the social housing sector imploded and about 75% of my business revenue disappeared, virtually overnight. It was at that point that I decided to attend Newcastle University Business School and study for an MBA to give me a better understanding of general business principals and strategies.
Following my time at Newcastle, I continued to build my local business, but quickly realised that the model was not scalable and in 2014 I came up with the idea for Boiler Plan. My intention was to simplify the process of buying a new boiler for a homeowner by embracing technology and make buying a boiler a cash neutral transaction. This is by offering a low rate finance plan which could be repaid on a repayment plan up to 10 years and would make monthly payments for a customer very low with no deposit. My logic was that “we buy a lot of other high value purchases via finance, so why not a boiler?” I also wanted to defy the low public opinion of “plumbers” and offer a first-class customer journey. This is demonstrated by our 5-star TrustPilot rating!
In my role I am looking at all aspects of the company and how we can make efficiencies and develop each department. I provide the vision for the business and I am responsible for guiding our ambitious growth plans. I am probably in “the weeds” a bit too much, but I like to be involved in every facet of the company!
- How did your search for funding lead you to Maven and what attracted you to Maven as a funding partner?
We raised some seed funding from JEREMIE 1, the first North East investment programme, via North Star and an Angel Investor. We used this to build our platform and start to scale the business, and in Q4 2017 it was evident that to continue our growth curve and hit the next level we would need to look at a Series A round. I instructed John Healey at UNW to act on behalf of Boiler Plan as our Corporate Finance advisors and following around 15 pitches we had three offers. I chose Maven as I liked Alex Marsh and the team – I think they understood the market and what we were trying to achieve.
I liked the flexibility of their funds and the fact that The North East Development Capital Fund, also managed by Maven, was investing alongside Maven’s Venture Capital Trusts. I appreciated that Maven was local (the other offers came from London based VCs) and my thought process was that ‘these guys are reasonable, and I think I can work with them’. I think it is very important for a business to have investors that they both get along with and work well with as you are going on a journey as a business following any investment, and you want to have a good travelling companion otherwise the journey might not be enjoyable.
- How did you find the process from applying for finance right up to receiving the investment?
If anyone goes into a finance raise thinking that it is going to be easy then think again! The pitch process is time consuming and can be very demoralising when you are getting a lot of ‘no’s’ but you need to believe in your idea and keep going. The due diligence process is also challenging and time consuming, but the completion party makes it all worthwhile!
- How has the investment impacted your business?
It has given us the capital we need to grow. We can make key hires we could not have afforded previously, we have been able to move into bigger, more suitable premises, and we have the breathing space to sit back and plan our growth strategy without the added pressure of working capital. Eight weeks in following our completion, we have already opened in new regions, hired new people, and we are planning a brand-new product launch for Q2 next year.
- Knowing what you know now – is there anything you would have done differently when you began your funding journey?
Yes, I would have made sure I knew my numbers better for our seed round, and I would have also hired a consultant to help me with the investment deck and done more analysis. I think it is of the utmost importance to have the answer to every possible question before you go into a pitch for funding and most importantly, know your numbers.
- What would you say to a business that is put off by taking on investment and would prefer to grow their business organically?
I would say ‘fair play to you’, but I would also challenge them on where they think they will be in three years without funding and where they could be if they take on some investment capital. For me it is all about growth – ‘how can I get where I want to be as soon as possible?’. Personally, I would rather have a smaller piece of a very big pie than all the pieces of a tiny little one! It is also important not to underestimate the doors that can open by being connected to a large investor, building a strong board and the change in attitude from other companies, banks, suppliers and creditors when you are well capitalised. Having a support network and a sounding board also comes from taking on investment, as business can be a lonely place if you are going it alone.
- What do you think are the main obstacles to accessing finance to grow that North East businesses face today?
Following the end of JEREMIE 1 and before the launch of the North East Fund (JEREMIE 2), the North East was a challenging place to raise finance, certainly for smaller tickets as there just didn’t seem to be very much in the way of available funds. The problem I found was that almost all of the money seemed to be in London and companies seeking investment that were based there but had weaker ideas than mine were raising huge sums. Newcastle is a small city compared to Leeds, Manchester, Birmingham and London, however it is credit to Maven that they have realised there is a strong market here, there are some great businesses in Newcastle and great people to hire.
The main obstacle companies in the North East face is that there are not that many VC’s here and, in my experience, the London based VC’s and PE Houses are reluctant to talk to North East based businesses. If you are not linked in to that network, then it is difficult to gather interest in your idea. I would encourage any company seeking to raise funds to hire a good corporate finance partner and seek advice and connections through them if you do not have those connections yourself.
- What are the long-term goals for your business, and how will the funding you secured through Maven help you to achieve them?
The long-term goal for Boiler Plan is to be in the “Top 5” heating businesses in the UK with a great reputation for customer service. I want our customers to enjoy the process of having a new boiler fitted and maintained, it really doesn’t need to be an arduous process! I want to build clear USP’s in the market place, and for our customer proposition to be stronger than our competition. I have extremely big (Boiler) Plans so watch this space.
NEDCF is part of the £120m North East investment programme is available to SMEs across Durham, Northumberland and Tyne and Wear. The Fund can invest up to £2 million to support established businesses via debt finance, mezzanine loans or equity investment to help fulfil their growth potential.