InvestorsM&A

At first glance they could be mistaken for an ageing boy band brought back together for a global reunion tour.

Sitting slightly uncomfortably on a settee as they stare at the camera, the five-strong Arete are making music – but it’s in the world of investment rather than on stage.

It was back in December 2020 that four financial services professionals in Mike Fletcher, Simon Lord, Matt Cheetham and David Moore joined forces with tech entrepreneur Ben Hatton to launch Liverpool-based Arete Capital Partners.

Their mission was to find ambitious entrepreneurs and companies seeking investment and their first 12 months has been little short of stunning with a mix of 10 investments.

Lord, former managing director of GCA Altium, turned 50 last year and is clearly savouring his new role.

“Entrepreneurs create capital value for themselves but there are very few outlets in the UK for them to invest in other entrepreneurial businesses,” he explains to TechBlast.

“We basically set the business up, cornerstoned by a small number of family offices, to provide private capital with access to investment opportunities.”

Target markets

Arete break down opportunities into three pillars.

The first is early stage, which could include EIS investments. The second is scaleups and would typically be established tech businesses that are generating revenue.

The third pillar is ‘platform investments’ and would be more mature businesses that would normally go down the route of private equity investment but that hasn’t happened for whatever reason.

Vivify, Uncrowd and Travel Scene are among the startups that Arete have invested in and Lord says a strong management team is crucial.

 

Vivify was founded by Russell Teale, Alaine Swis and Andy Mellor and is chaired by ex-Total Fitness CEO Richard Millman.

Lord says: “40% of UK leisure facilities are behind school gates. It’s about leveraging these leisure facilities for the benefit of the community and also for the benefit of the school.

“Vivify will market these leisure facilities to the wider benefit of the community. We will take a small clip of the revenue. The vast majority of the revenue will go back to the school.”

Arete put £1.6m into Travel Seen, which was launched by the former chief executive of ITC Travel Group Jen Atkinson.

“We felt that coming out of COVID was a good time to be starting a travel firm rather than coming out of COVID with lots of legacy systems,” adds Lord. “We put some capital behind Jen and her team to adopt an influencer-style model.”

Managing business growth

Arete also led a £3m investment in Uncrowd despite having no prior relationship with the business.

“They chose us,” says Lord. “Uncrowd help retailers use existing data to understand when and why customers choose them instead of rivals. Our background in AI helped us win the Uncrowd mandate.”

Arete have also invested in established tech companies like Sorted and Peak but Lord says they’re not restricted to tech, evidenced by leading a £15m investment into Leonard Curtis.

“I suspect that would be one deal that people wouldn’t necessarily associate with Arete but the relationship with the chief executive Daniel Booth was very strong,” explains Lord.

One company that has been grabbing a lot of headlines is Warrington-based Tactus, which Arete has invested £10m into.

“When I first became aware of Tactus it was supplying laptops into entry level retail and the Department of Education,” says Lord

“The money that we injected moved Tactus into the PC gaming space. Gaming has exploded. What Tactus is focused on is providing all types of quality hardware for all types of gamers and we don’t think there is anyone else who has particularly consolidated that space.

“What you’ve got in Tactus is an outstanding chief executive in Scott Brenchley, who is the sort of guy you want to put money behind.

“Now we’ve built a portfolio the focus will be on creating value on the portfolio while keeping an eye out for new transactions.”

More than money

All five founders have invested some of their own money into Arete.

“We’d like to be known as a good investor to work with,” says Lord. “What I mean by that is we generate really good returns for our investors but the management teams we work with will get much more than just the capital.

“We talk about ‘beyond capital’. We spend a lot of time and money with our investee companies and because we are investing private capital it means each investment becomes more personal for us.”

Lord admits the move from Altium was a big one but he has no regrets.

“It’s difficult to appreciate how big a leap it is without having done it,” he admits. “I’ve got so much admiration for people like Grant Berry at NorthEdge and Gary Tipper at Palatine.”