Whilst one of our current investment rounds is to fund a FoodTech company in Brescia in Italy, the recent week was spent in the sunnier climes of Sicily. There was a sense (surprisingly so) that life is progressive in Sicily – buses and trains run on time more than they do in London – though at the same time the sense of tradition is never far away. This could be seen at the most local level through the Sicilian coffee culture.
 

Some 90% of coffee bars in Italy are independent, resulting in there being just 100 group or chain coffee brands across the country last year, in contrast to the chain/corporate culture we see in the UK and US. Italians are quite happy with this economic model, at least in terms of cultural preservation – and as Axial leads two clients through corporate buyouts this month it draws attention to the question of when is an industry more or less suited to group structures? 
 

The matter of coffee chains in Italy is as much a cultural issue as it is economic – and interestingly enough it’s driven in part by a 1911 government decree on espresso price caps, which brought about a deep-set belief by Italians that the brew should remain affordable – but for many clients looking at growth by acquisition the various means of value accretion should be evaluated independently and objectively to avoid being distracted by headline numbers. For example, buying revenues that are underpinned by sustainable contracts is not the same as buying revenues that rely heavily on a proficient and continually active sales team. The same can be said for attributing value based on an adjusted EBITDA as presented by a vendor, versus an impartial adjustment of that same EBITDA.
 

This month we have sourced investment and growth capital for businesses in the education sector and in the FinTech space, both for corporate roll-ups, and in each case value through these roll-ups was identified through varied and quite different channels. There is value today (such as through margin enhancement), and there’s value tomorrow (such as through increased enterprise value based on substantial and sustainable revenue amalgamation). The devil is in the detail of course, and would take up more space than this coffee-break piece will allow for!
 

•  The MedTech industry was a rapidly evolving sector even before the onset of this year’s pandemic, but now more than ever it’s creating value both for company founders and for end users – and it’s on this strong footing that we are advising a surrey based digital pharmacy on a small-cap public listing. With growth on the minds of most business owners, it’s great to see the public markets supporting UK talent at all levels.   
•  Food food food. It’s what the days of lockdown seemed to revolve around for many of us. Luckily we really enjoy food – plenty of it and easy access to it, and that’s why we’re taking an active position in two growing FoodTech companies to provide investment and board-level support. With UK & EU expansion plans, it’s an exciting Q4 for these companies as Axial provides the capital and board level governance to support continued growth in 2021. 

 Funding rounds continue with success across the market, with notable completions in September including:

• Point Pickup Tech raised USD30m for its final-mile logistics operations
• Leeds based Meatless Farm completed another multi-million funding round
• Axial Capital confirmed a debt/equity facility for a developer to complete a £3.3m housing scheme in Suffolk

The tone amongst many business owners at present is one of ‘head down, carry on’. In light of uncertainty around government positioning (and frequent repositioning), many investors and company founders have been reminded to focus on the long game – ultimately building a business should be seen as sustainable, it’s a long term labour of love.  With this in mind, we help clients everyday with developing and executing their investment proposition and you can contact us directly if you’d like us to do the same for you.