What are the details of the investor?
Breed Reply is an active operational investor that funds and supports the development of early-stage companies in the Internet of Things (IoT) primarily in the UK and Europe. Breed Reply has a portfolio of 20 companies with plans to increase this substantially. It was founded in 2014 and is based in London, with offices in Germany and Italy. Breed Reply is part of the Reply network, a consultancy and systems integrator focussed on the digital world. With more than 100 companies serving Europe’s leading businesses, it is quoted on the Italian Stock Exchange.
Breed Reply’s CEO is Emanuele Angelidis who co-founded the business after a long, successful career in the telecoms industry. Emanuele started at Italtel Telecomunicazioni, and in 1994 took part in the start-up and development of Omnitel, latterly Vodafone Italy. In 1999, he co-founded Fastweb, one of Italy’s largest telecoms companies, and was CEO.
Emanuele and the team share a collective view that the IoT market is facilitating significant economic growth and whose impact will be more profound than the introduction of personal computers, mobile and the internet. They like to work with businesses that plan to support, scale and deliver positive growth within the IoT space.
Breed Reply’s focus is across the whole range of IoT verticals and horizontal supporting capabilities. So far investment has been in sectors including health and wellbeing, smart cities and buildings, industrial IoT, platform infrastructure and cyber security.
What are the critical considerations of a scale-up when seeking investment?
There are many industry patterns that a scale-up should understand. For example, what stage is the market at and at what speed is customer adoption likely to happen. In a new industry like IoT, this is critical to ensure that your cash can last through to the point of customer adoption. Breed Reply not only knows the market, but through the Reply Organisation, knows what the customer wants, what they are currently demanding and as a result how to help their investees deliver against that.
Our criteria for investment are demanding. Over the last three years, we have seen nearly 1,500 companies and, so far, have only chosen to work with 20 management teams. Success in IoT depends on two clear areas:
The quality of the people is more important than the product. The most common reason start-ups fail is not their product, it’s their management. Breed Reply is looking to take companies from seed stage to Series A readiness and beyond. That is a big jump in execution ability, and Breed Reply works closely to help them prepare.
The technology must solve a real-world problem. If you look at all the businesses we invest in, they are addressing a real need. For example, Senseye helps manufacturers prevent machine downtime through predictive analytics, FoodMarble has produced a smart device that can help people with digestive problems and Connecterra has developed a wearable device for cows that improves the productivity of the herd. These are age-old problems that are found across the globe. The emergence of IoT is creating practical solutions, so the opportunities for this technology are widespread and growing exponentially.
The solutions that IoT companies produce must be sustainable, have a long-term demand and a defensible position in a highly competitive market.
What high-profile fundraises have the company orchestrated?
Breed Reply supports entrepreneurs by quickly bringing new ideas to the market and helping accelerate the development of their business, both from a product and market entry perspective. As well as providing funding, achieving a successful Series A investment round is a key outcome. Last year, one third of the portfolio raised more than $50 million in Series A funding with funds coming from notable investors including Accel, Aviva Ventures, Finance Wales, Intu and MunichRE. More companies in their growing portfolio are expected to be ready for Series A investment in 2018.
Breed Reply offers three fundamental services: significant funding at early-stage level; active operational involvement with significant know how transfer of business, managerial and technological expertise; and go-to-market support through the extensive Reply network.
The Breed Reply team has lots of experience in scaling up early-stage businesses, in-depth understanding of different markets, proven track record in sales channel development and strong technological DNA.
What is the standout transaction for the firm in recent months?
Over the past 12 months our investments have witnessed significant growth, with almost a third of the portfolio achieving Series A funding – Callsign, Cocoon, enModus, Senseye, WePredict, and Zeetta Networks.
Our active support model has been a major contributor to this growth. Our bespoke approach to value creation is aligned to the needs of each company. Actual examples of support that we have provided to these and other companies are: assisting management with product development, resolving complex manufacturing issues and finalising contracts which saves time to market and de-risk product launch; and providing hands-on expertise with the development of innovative new commercial and pricing strategies for product launches across B2B and B2C markets. Selecting and provide support for the hiring of key positions within the organisations have been instrumental to the success of some of our companies.
We focus on helping companies validate their products and services via proof of concepts and introduction to early adopter customers. We then help commercialise and scale products through partnering with the Reply network of companies, corporate customers and strategic partners.
What are the key pieces of advice you would give to an ambitious, scale-up entrepreneur who seeks investment?
The key piece of advice is before you seek investment, ask yourself are you ready to scale up and what do you need to do to be ready? Don’t fool yourself, have a true understanding of your strengths and weaknesses and most importantly what stage your business is really at. Get someone who you trust to be honest and understands business to critique you, your pitch and your business.
If your aim is to scale up for Series A investment, then you need to know what they want. Investors want to see the fast and faultless execution of sales and product development, proper corporate governance and attention to detail in areas like financial planning and sales strategy.
Technical founders who are visionaries may need to complement themselves with seasoned co-founders, who can pitch to senior executives of a FTSE100 firm or develop a supply chain.
At Breed Reply, we want to work with people who understand their strengths and weaknesses and can build strong management teams, so they have a full range of expertise. We can help with that but only if founders can take an honest look at themselves and their team. Fixing flaws in a product is more straightforward than resolving problems in management capability and culture. You can have fantastic ideas, but if the team can’t execute it correctly, then it will fail. Proper management can overcome lots of other problems. It is not always the very best ideas that succeed.