Scaleup North East
The spirit of the Caribbean arrived in Newcastle last week as Scaleup North East was launched at the Crowne Plaza in Newcastle.
Speakers included Irene Graham, CEO of the Scaleup Institute and Jason Leggett, Project Director of Scale up North East. The audience of around 300 then heard from Levi Roots about his Scaleup journey.
Levi is famous for being one of the most successful people to have come through Dragons’ Den, and his pitch for Reggae Reggae Sauce complete with his signature song is still one of the most memorable appearances in the Den.
The importance of people and passion
The point of the song, his appearance and his whole pitch was that Levi realised the importance of people and passion to attracting an investor to his business. His product needed to be good to raise some money, but he realised that any investor was going to be backing him to scaleup his business and he therefore needed to get them to buy into him.
He also explained that he found giving away equity “easy”. This is something that many founders struggle with; the concept of giving up some control in return for funding. The truth is that any funding comes with an element of constraint, be it bank covenants for some debt funding all the way through to input into strategic decision making for equity funding. Levi was able to get comfortable with giving up 40% in equity because he had already mentally made that step before looking for finance – he had stepped back to think about his long term plan and realised that in order to grow, he needed skills and support – not just cash.
Long term plan
Levi had been making and selling his sauce for about 10 years when he appeared on Dragons’ Den. There wasn’t really a business at that point. There was a product being made in the family kitchen in batches of 67 bottles to take and sell at the Notting Hill Carnival and from table tops around the country.
After the show, Levi went through the due diligence process and got £50,000 plus two Dragons in return for 40% of his business. He had the money, but now he had to deliver on his promises and scale his business.
Levi went on to say that a week after the show was broadcast, Peter Jones took him to see the Chief Executive of Sainsbury’s about an order. He had seen Dragons’ Den and quickly agreed to a deal. They planned to start small to test the waters; just an order of 250,000 units. The product was still being made in batches of 67.
That was a key moment in this scaleup story – the realisation that in order to grow his business, it would have to change from what it was. A deal was agreed very quickly with a specialist food manufacturing business to outsource production to be able to meet the demands of retailers. Flexibility and a willingness to adapt is critical to scaling your business. Levi’s business changed from a product producer to a brand and licencing business.
Having a mentor
The final thing that Levi explained had been crucial to his story was Peter Jones, his mentor. Having someone involved who “knows more than I do” was a critical part of the success of Reggae Reggae Sauce. Levi talked a lot about feeling he needed to improve himself as well as his business and he found having support from Peter made this journey not only easier, but more enjoyable.
If you are looking to scale your business then please get in touch with Chris McCourt at Tait Walker to see how we can help. Also check out https://www.scaleupnortheast.co.uk to see if your business can get involved in the programme.