On October 29th 2015, two Innovate fund investments were named winners of the World’s Largest Business Idea Competition, “43North“, in which $5mm is awarded to 11 businesses as $250K-$1M investments along with business support. The business support ranges from mentoring advice from seasoned professionals in related fields, free incubator space in Buffalo for a year, as well as access to programs like the Start-Up NY program of tax-free zones. As an extra boost for the area, the contest gets 5% ownership in the companies, and they have to remain in Buffalo for the year of the contest. This means that even if the companies leave after their year of residency, the area will benefit. The competition operates through the support of the New York Power Authority is part of Governor Cuomo’s Buffalo Bill initiative and drew 11,000 applications from 117 countries and all 50 states.
The winning companies both belong to Z80 technology incubator lab, an Innovate fund investment. Based in Buffalo New York, the lab provides entrepreneurs the ability to build new and innovative tech companies in Buffalo. Two of the labs start-ups emerged as winners from the 43 North competition. CoachMePlus, a sports training data tracker, walked away with $250K while ACV Auctions, an app that allows car dealers to sell vehicles in 20-minute online auctions, took top prize of $1M.
On Monday November 9th, The Gym Group, a portfolio company of Bridges Ventures Sustainable Growth Fund II (Bridges II), made an initial public offering of its stock on the London Stock Exchange, at a valuation of £250million. The Gym’s shares rose to 204¼p on its first day of trading, or 5% above the 195p issuance price.
Bridges Ventures is a long-time member of CDVCA, and the CDVCA Central Fund was an early investor in Bridges II. All told, Bridges II has committed £17.5 million to The Gym Group, across multiple financing rounds. As part of this public offering, Bridges II sold about a third of its stake, retaining a 14% shareholding in the company. Based on Monday’s offer price, the fund’s investment in The Gym is currently valued at 5.8x cost.
The Gym Group – which was co-founded by Bridges alongside CEO John Treharne in 2007 – pioneered the low-cost gym concept in the UK. Offering flexible, affordable gym memberships, with two-thirds of its sites in economically challenged areas, it provides accessible exercise facilities (and jobs) to an under-served demographic. After opening its first location in Hounslow in 2008, it added 20 new locations within its first three years of operation; today it has 66 locations and over 363,000 members, a third of whom have never been members of a gym before.Between 2012 and 2014, the company’s revenue increased from £22.3m to £45.5m – a compound annual growth rate of 43% – while adjusted EBITDA more than doubled to £16.7m.
The Gym has raised £90m from the float: it plans to use £75m to pay down debt and the remainder to fund expansion. The company, which is now the only fitness chain listed on the London Stock Exchange, plans to open between 15 and 20 gyms per year in the future.
Says Bridges co-founder and managing partner Philip Newborough: “The Gym is a great illustration of Bridges’ core thesis: that positive social impact really can drive commercial success, and vice versa.”
On Tuesday October 6th, Pacific Community Ventures sent out an introductory letter from their new CEO. Mary Jo Cook joins Pacific Joint Ventures from Fair Trade USA. A Mission driven leader with 25 years of experience in strategy development for the non-profit sector, Ms Cook has a track record of enabling organizational change, and driving growth. In her letter, Ms Cook expressed her commitment to empowering small businesses.
DC Community Ventures (DCCV), a member CDVC fund based in Washington DC, announced that it has provided $400,000 in revenue-based financing to support the growth of JRINK. JRINK is a leading cold pressed drink company offering a wide selection of healthy drinks to the nation’s capital region. JRINK will use the capital for additional locations, technology investment and better sourcing.
“DC Community Ventures is committed to supporting JRINK’s continued growth,” stated Candler Young, co-Managing Partner for DC Community Ventures. “We were attracted to JRINK’s impressive management, current financial performance, product offering and commitment to provide jobs and management opportunities for women.” 87% of JRINK’s current employees are females, the vast majority of whom come from minority backgrounds.
“We’re excited for the future of health & wellness; we believe that the food we consume should be natural and simple,” said Jennifer Ngai, co-founder of JRINK. “With the support of DC Community Ventures and our dynamic team, we believe JRINK is well-positioned to become a major player in the industry. We are thrilled that DC Community Ventures shares our mission for better living.”
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Member CDVC fund Bridges Ventures has been awarded the highest rating of A+ for its overall approach to responsible investment and its ESG practices in private equity. The PRI’s annual assessment process plays an important role in promoting best practice and transparency around ESG issues.
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Three early UK social impact bonds have been successful in paying back investors ahead of schedule. Two of the three SIBs, Career Connect and Teens & Toddlers, were backed by member CDVC fund Bridges Ventures and have been recommissioned for a second round.
Andrew Levitt, investment director at Bridges Ventures and a board member for the UK-based Career Connect SIB, said: “The Career Connect story provides demonstrable proof that the excitement around social impact bonds isn’t just a case of hype over substance. The structure of the funding allowed Career Connect to experiment with new approaches, while the clear feedback loops inherent to the SIB model helped them to identify the most effective and focus their programme to reflect that. With a standard contract, none of this could have happened.”
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CDVCA member fund Bridges Ventures has released a few short films of four of their portfolio companies:
- The Gym Group (Sustainable Growth Fund II)
- WholeBake (Sustainable Growth Fund III)
- Edmund Street (Bridges Sustainable Property Fund)
- The Old Vinyl Factory (Bridges Property Alternatives Fund III)
Bridges Ventures, which manages several community development venture capital funds that are members of CDVCA, has closed on a real estate investment fund, Bridges Property Alternatives Fund III, with equity commitments of £212m – ahead of its original £200m target. The fund will focus on investments in low-income communities in the UK. This is the largest fund the firm has raised for any investment strategy to date.
The Fund invests in direct property and property-backed businesses, focusing on regeneration areas, buildings showing environmental leadership, and niche sectors being affected by changing demographics and consumer needs – including healthcare, education, SME business space and affordable residential accommodation. Since its first close on more than £120m of equity commitments in April 2014, the Fund has successfully completed six deals in less than a year. Following these deals, about 40% of the Fund’s capital has already been invested and committed.
SJF Ventures has announced its investment in California-based Raise.me, a company that empowers students to earn “micro-scholarships” throughout high school for their individual achievements. For higher-education professionals in admissions, financial aid or enrollment, Raise.me is a new way to get the word out about their schools and scholarships. It also allows them to connect with and attract a more diverse range of prospective students, including from populations that are underrepresented on their campuses.
CDVCA member fund Bridges Ventures recently announced its first investment in the United States with Springboard Education, a provider of affordable before- and after-school educational programming to 6,000 children at 52 public and charter schools. In addition to the financial investment, Bridges Ventures will also bring in experienced educators to the board of directors, help recruit additional team members, create opportunities for new school partnerships, and increase scholarships for disadvantaged students. Overall, the investment in Springboard Education will help increase accessibility to its programs, allowing tens of thousands of children cross the U.S. to be served.
This first investment by Bridges’ U.S. office builds on over a decade long’s focus on education-sector investment by Bridges Ventures’ principles in the U.S. and the U.K.