The waste management and recycling sector has been on a long-term upward trajectory over the past 20 years, despite the inevitable peaks and troughs of market dynamics. Regulatory targets and an increasingly environmentally-conscious public have provided a good source of opportunities for many firms operating in the space – particularly those that have been innovative and consistently worked to improve operational efficiencies.
And there are plenty more areas that remain unexploited.
Opportunities
Taking advantage of these opportunities often means hiring more staff, buying new machinery, making acquisitions or diversifying into new areas. But not all entrepreneurs can or want to self-fund their expansion plans, particularly if they require millions of pounds in upfront capital, at additional risk to their personal finances or assets. And – realising the importance of being adequately capitalised – not all entrepreneurs can or want to build their businesses on debt alone. With these factors combined, we are beginning to see a return to equity investing and partnerships.
Last year, BGF announced a £7.5m investment in Teesside-based J&B Recycling and became a long-term minority partner in the business. With the money, the company, under the leadership and management of its original founder, is building a new recycling plant and expanding its existing facilities.
Trend
This is just one example of the wider trend: in 2015, 984 non-listed companies collectively raised £2.3bn of equity capital. Compare this to 2011 when, the number amounted to £1.09bn.
This increase can be attributed in part to a greater supply of capital. But in equal measure it has been driven by a new understanding that equity partnerships can come in all shapes and sizes. BGF is a case in point. We were set up in 2011 with £2.5bn of growth capital to deploy, and with the purpose of providing growing companies with a different type of funding option, namely through providing long-term, patient capital in exchange for a minority stake.
Moreover, not all investors are solely focused on counting the pennies (or returns). Businesses need more than money to grow and one of the concerns we hear time and again from entrepreneurs relates to the lack of access to strategic support and business advice – ideally from someone who carries the battle scars of business and has come out the other side, with ambitions to help others succeed. The biggest barrier, they say, is in gaining access to these people. Through our connections to the UK’s most experienced business people, we’re working to address this challenge.
The funding market is, without question, evolving. And, with more capital and support available, the ability of entrepreneurs – across all sectors – to realise growth ambitions becomes all the more achievable. This can only be a good thing for the prospects of small and mid-sized companies.
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