Organic Growth Masterclass: Zuto, backed by Scottish Equity Partners

Founded in 2006 by entrepreneurs Jim Wilkinson and Ryan Dignan, Zuto (formerly Car Loan 4U) provides an online service for car finance, aiming to connect customers with the best lender for their circumstances in seconds. “Zuto was born out of wanting to change the way people buy cars,” says Wilkinson. “The car finance industry has, historically, suffered from an image problem. Sometimes seen as being plagued by bad practice and unfair lending rates, we wanted to change this and bring trust and transparency to the market and change it for the better. We want to eliminate any confusion surrounding whether a customer is actually approved for finance, what APR they will be offered, how much they can borrow, or which selection of lenders customers will be offered.”

By 2014, the company had a turnover of £11m and employed 150 people, having been self-funded to date. “We had been growing quickly and we knew we wanted to partner with a PE investor to really help us accelerate our growth. There were a few big things we wanted to do that would require investment and support – including building out software engineering & product teams to enhance our fintech capabilities, opening a new office to support this growth, and also rebranding the business.”

Finding the right partner

Zuto was looking for an investor that had tech experience to help along the journey of building out the team and the product at a quicker rate, Wilkinson says. The business also wanted to rebrand and was looking for support through this process, as the team knew this could cause some short-term challenges.

Following a process advised by corporate finance firm GP Bullhound, technology-focused growth investor Scottish Equity Partners (SEP) invested £8m in the company. “We were flattered by the level of interest and decided to go with SEP as they aligned so well with our values and culture,” Wilkinson explains. “We wanted to work with someone who was humble with no ego, and this is exactly what we got. We get on really well, and a good relationship and positive conversations definitely help generate strong results. They helped us build out a tech team from the ground up, and we got advice from them and other companies in their portfolio along the way. SEP also helped get to the high-performing, world-class leadership team we have today.”

Following the investment, Zuto underwent a rebrand from its original Car Loan 4U name, invested in its technology platform and enhanced its customer experience through online automation. The company also recruited in earnest, expanding itse technology team and adding customer experience roles at its Macclesfield contact centre. SEP also introduced Chris Slater to the board as non-executive director.

By mid-2019, Zuto had grown to employing 300 staff and generating a £22m turnover. SEP took part in an additional £7m round of funding for the business to fuel additional growth, invest further in its technology and enhance the customer experience. Growth loan provider Columbia Lake Partners also invested alongside SEP.

“Over the last 12-18 months we’ve seen a strong period of exceptional growth, and we’re currently achieving over 50% revenue growth year-on-year whilst being super profitable,” Wilkinson says. The company posted revenues of £27.9m in 2021, with a £12.1m gross profit, and now employs in excess of 400 people. The CEO also notes that support from its backers was equally important at the more difficult stages of the journey: “It hasn’t always been plain sailing over the years, so SEP have been there to support us through the challenging times, as well as celebrating the growth and successes with us.”

On a mission

But growth is only half the story, Wilkinson says: “Using Zuto to make a difference is just as important and we believe that people want to feel like a valued member of a winning team on an inspiring mission, and being a force for good makes our mission even more meaningful.“ Zuto was awarded B Corp status in March this year, joining a group of companies that are using business to generate positive social impact. The process of becoming B Corp certified is conducted via the B Impact assessment – which involves a series of stringent evaluations of every aspect of a business’ social and environmental performance – from renewable energy sources to diversity & inclusion (D&I).

“Becoming a B Corp is the single proudest thing that has happened at Zuto. We were pleased with the initial results that took us through to certification, and identified a lot of opportunity for further improvement,” Wilkinson says. Among the key achievements is the fact that 43% of Zuto’s management team identify as women – more than double the average number of female executives at other fintech firms (19%), according to Wilkinson. The company is also committed to giving back to its local community, and in 2021 launched the Zuto Make A Difference Fund with Forever Manchester – supporting grassroots community groups across Greater Manchester.

“Many boards would challenge a business when considering embarking on the B Corp journey, due to the impact it can have on decision making and the requirement to balance profit with other factors such as the local community and the wider impact on the planet. SEP are really supportive of ESG and this is a key focus for them, so they were really happy to support us on the B Corp journey and have been inspiring to work with.”