Organic Growth Masterclass: Inoapps, backed by BGF
Following its exit from Oracle specialist Inoapps earlier this year, GBI catches up with BGF investor Richard Pugh to discuss how the growth capital provider worked alongside management to grow the business and ultimately deliver a highly successful sale to a US private equity firm.
Inoapps, an Aberdeen-based Oracle specialist, received a £10m equity investment from BGF in 2013, with the investor taking a minority stake. In April 2022, BGF exited the business as part of an investment by US private equity house Abry Partners, generating a 4.5x return on its investment.
What attracted BGF to the business originally?
We saw the opportunity in Inoapps very early on, choosing to invest £10m back in 2013.
Inoapps caught our attention due to it being an early mover into cloud solutions, building on deep expertise in a range of industry verticals. BGF noticed that Inoapps was unique in offering bespoke support for businesses implementing Oracle both on-premises or via cloud solutions.
Ultimately, BGF saw the growth opportunity in this business model, believing in Inoapps’ vision and ability to scale and become the global industry leader that it is today.
What was the original growth plan and how did that evolve over time?
BGF’s patient capital funding was targeted at supporting Inoapps to dramatically increase its global presence, particularly in the US and Asia, and invest in developing expertise and technology in the Oracle stack.
With this investment, Inoapps successfully set out to build a market-leading position in support of its approach to the Oracle suite of products, leverage proprietary know-how, develop the Inoapps OneTeam methodology, and launch a global employee base that can now support clients 24/7.
One key challenge along the way included establishing Inoapps’ presence in the US market. It’s a competitive market and a tough nut to crack, so we always knew this would take time, effort and investment to achieve success. Being able to successfully pass the Inoapps investment into the safe hands of Abry Partners for further growth in the US, while receiving a 4.5x return on investment, were certainly the hallmarks of a job well done by all involved.
What non-financial support did BGF provide over the course of the investment?
BGF introduced Kevin Lyon as chair of Inoapps back in 2014, a role that he committed eight years to. He built a trusting relationship with Inoapps CEO Andy Bird and gave guidance to the board, bringing an incredible wealth of experience from his roles as chair at many other tech and energy companies.
What was your relationship with the management team like over the course of the investment?
BGF provided close support to Inoapps founder and CEO Andy Bird over eight positive years of collaboration, and our patient investment model helped the company develop the first-class management team and global presence that it enjoys today.
We believe our light-touch approach helped provide Inoapps with the flexibility to pursue its aggressive growth strategy and build on its organisational expertise. Our belief in the company’s proposition was there from the beginning, and we worked hard to maintain consistently strong relationships across the management team throughout the investment period.
How was the exit process approached - and, again, how did you involve management in this?
Following the company’s success in the US, the management team and then shareholders decided that funding from a US investor would be the best solution to continue and accelerate growth in the North American market.
The timings worked well from BGF’s perspective, and we agreed it was also of core importance to ensure that whoever invested genuinely shared Inoapps’ vision and ambition for investing in employee learning and development, as well as growing the global employee base.
The Inoapps shareholders appointed Alantra to support the exit due to its knowledge of the US technology market and investor base, with local support from CMS in Aberdeen and RSM in Edinburgh.
The most satisfying aspects of the exit process were that it validated the progress achieved with BGF support over the years, it ultimately delivered a great fit for the business in Abry Partners, and it also drove a 4.5x return for us. We are sure Inoapps has built the foundations to be a much larger business and will now go from success to success thanks to its Oracle-only strategy, substantial addressable US market and deep management expertise.