News and Insights

Following their panel discussions at Real Deals’ Tech Innovation Conference 2023, we chat to Suzanne Pike, Partner and Head of Origination, and Ash Patel, Head of Cyber, to share their views on how tech and cyber are evolving in the world of private equity.

Suzanne, you joined the panel discussion on the role of technology in deal sourcing, execution and exit. How do you think incorporating AI/Machine learning is evolving in origination?

It’s something that’s really transforming the way that firms can originate. Our proprietary AI platform, Amplifind™, is the tech backbone of our origination processes, from sourcing to converting deal flow.
On the lead sourcing side, it is constantly retraining itself on our own Salesforce data, helping us to surface the right leads. Origination has a natural tension, where if you don’t look at smaller fast-growth businesses, you will not get early access to really exciting businesses. On the other hand, if you broaden out your range, it throws out a huge number of companies, which no human has the time to trawl through.

For us, Amplifind™ has solved for that conflict by automating prioritisation, serving up leads with the highest potential to become ECI deals. That has led to an eight-fold improvement in conversion from leads reviewed to opportunities.

The platform is key to us throughout the pipeline process. For any company in our universe, we’ve leveraged OpenAi to generate an automated profile with detailed financials and rich business descriptions. That has not only cut the time it takes for us to review leads, but it also helps inform deal team thinking, as they have a fantastic overview of any company at the tip of their fingers.
As all investors look to meet firms earlier, this is a very powerful way to compete.

How can firms make the most of this technology?

Firstly, the vision should be maximising automation to free up time for our greatest asset, our people. Tools like Amplifind™ are fantastic precisely because they free up humans to do the things that humans are good at. That means relationship building, deal judgement- the really important things that make a difference to a partnership.

Secondly, it’s important to remember the tools are incredibly powerful, but AI/ML is only of value if its pointed or trained on well managed data. You have to get the basics right as a springboard for the quick and powerful wins AI can offer.

And lastly, it is easy to get distracted by the newest technology, but it’s more important that what you’re doing is aligned to business strategy. To make a success of it, it should be truly embedded in every stage of proprietary processes.

Ash, you joined the panel on cybersecurity and how PE firms are protecting themselves and their portfolio against emerging cyber threats. At both, how do you think awareness of cyber risk has changed?

I think now, Boards are much more aware of the risk, it’s no longer just a focus of IT teams. The awareness of cyber as a risk to reputation and the bottom line has meant it’s now higher on the board agenda. No one wants to be reactive to a cyber event, so increasingly that means looking to put an information security program in place and having a good assessment of cyber resilience ahead of time.

How does that translate to helping portfolio companies?

We often have good insight in a company’s cyber resilience prior to investment, whether that’s as part of Tech DD, or at a high level we might use external tools like Security Score Card to get an idea of any potential weaknesses. When we’re invested, we see it as part of our duty and good governance to make sure we can help them to monitor cyber risk and provide real support for portfolio companies to fix any potential issues.

We benchmark ECI and our portfolio to ensure a certain level of compliance on an annual basis, and then I support them with a cyber gap analysis to help them identify areas which need to be mitigated. I think having that external sounding board is really helpful, and as we’ve helped other companies progress on certain frameworks, we can share those lessons that we’ve learned.

As the much-anticipated final season of HBO’s Succession approaches, our research has revealed that the lack of successful transition plans might not be limited to the hit TV series. In a survey of over 500 UK CEOs, ECI’s Growth Characteristics report found that only half of CEOs (51%) have a succession plan in place

Effective succession plans are a way of ensuring stability in a company while minimising disruption, therefore it’s wise for CEOs to start thinking about one well before they plan to leave a business.

Family interests

Just as Succession’s patriarch and media tycoon Logan Roy decides which of his children will succeed him as CEO, the ECI report also highlights that 15% of business leaders want to keep their company in the family, not far off the 20% that are looking to pass the position onto their leadership teams.

Tom Wrenn, Managing Partner at ECI Partners said:

“While the drama Succession is a parody of the realities of succession for most business owners, planning for the future should always be on the agenda for any CEO. Not only for their own teams but also investors are always keen to understand whether a CEO intends to be part of the business for the long term. If you are not looking to lead the next exit, flagging your succession plan to investors early on can instil confidence, acting as a great indicator that a roadmap is in place for employees and the leadership team.

The impact on culture can be very important, as the role of the CEO is often to preserve the company culture as the business grows. Choosing a successor is a key part of ensuring that the secret sauce for what made the business successful under one CEO is retained, and the company values are carried through under new ownership. We often support those looking for succession to transition to an advisory or Non-Exec role to ensure the continuity that is so key to business growth.

If nothing else, the chaos of the Roy family will hopefully highlight to those leadership teams who haven’t yet thought about succession planning, the importance of having a solid plan in place.”

Isa Maidan: Welcome to ECI's series on valuing digital platforms and marketplaces. Today, we'll be talking about the supply side and in particular homogenous versus heterogeneous supply. So, let's start with some definitions. Firstly, what is homogeneous supply? Homogenous supply is where each unit that is on your platform is more or less indistinguishable from the next. Think Uber, Lyft and Bolt, where your consumer is relatively agnostic to the driver and the car that turns up.

Secondly, let's define heterogeneous supply. That is where each unit that is on your platform is unique. Think Airbnb, where each apartment and each property looks different from the next.

So, what are the pros and cons? The pros of a homogenous supply model are very high conversion rates. The customer comes to a platform expecting a specific product or service, and you have that exact product or service.

That means there are very high conversion rates and customers typically turn from search into a value transaction. So, what are the challenges with the homogenous supply model? The most obvious one is that it's very difficult to differentiate versus your competitors, and that means you typically end up with copycat platforms. The taxi market again, is a good example here, whereby riders and drivers will typically run multiple platforms.

The challenge you've got here is consumers tend to focus on one thing, and that's price. Moving on to heterogeneous supply, the main benefit here is that you can differentiate versus your competitors, and you do that through the quality of your supply. Here, customers only need to go to one platform to look for different products or services. That means you typically get more customer loyalty, you get higher repeat rates and you get much less pressure on price.

The key challenge with a heterogeneous model is managing a wide range of diverse supply is inherently more complicated. Building up supply and maintaining standards on your platform becomes a lot harder.

Your supply model will impact a few KPIs, which are important in driving the valuation of your marketplace or platform. Unit economics, retention rates and competitive differentiation are typically better in a heterogeneous model versus your ability to scale and conversion rates, which are typically better in a homogenous model.

So how does this impact your valuation? If you have a heterogeneous supply model, an investor is likely to focus on your base to build and maintain the quality of supply, as well as increase conversion rates. If you have a homogenous model, customer and supplier loyalty is going to be key. At ECI, we've invested in businesses with both homogenous and heterogeneous supply models, both of which have been hugely successful.

If you have a digital platform or marketplace, we'd love to hear from you.

This International Women’s Day the theme is embrace equity, looking at how to better include and create a sense of belonging for women across the world. Embracing equity helps to drive success for all, and is the means by which we can create a more equal working environment. We ask the teams across our portfolio and ECI, how they think we can get there:

What do you think needs to change for the UK to have more female-led businesses in the future?

Claire Webster, HR Director, Avantia: Companies should prioritise long-term thinking. As well as setting short-term KPIs, businesses need to invest in initiatives that will facilitate long term change, as we can’t reverse history in a year. As a tech-led business working in a market where a disproportionate number of men still fulfil the roles, we find that applicants are predominantly male, even though we take steps to encourage diversity through our recruitment channels. Therefore, it’s important organisations actively seek out opportunities to encourage greater female participation in STEM subjects from an early age.

Secondly, research shows that women are often more reticent to put themselves forward for roles compared to similarly qualified male peers. So, ensure your managers are clear on the aspirations of all their team. And ensure that they work in partnership with each employee to look for opportunities to support their desired career progression. Lastly, ensure the workplace environment is one where women can thrive. For example, caring responsibilities often still fall primarily on women and hence we need to create supportive environments where these responsibilities can be performed alongside work, without them having to sacrifice career growth.

Julian Llewellyn, CFO, BCN: The narrative in the UK around gender splits tends to focus on public company Boards and the number of female CEO’s. This data is readily available and provides easy to digest statistics. But increasing female representation at Board level needs to be the result of increasing the number of women in middle and senior management roles. When we talk about ‘female-led businesses’ I think it’s important to focus on management levels outside of the main Board and remove the blockers for building female management talent. There is still a high level of subconscious male bias when it comes to progressive policies around recruitment, development opportunities and also offering much needed flexibility. Those attitudes need to change more quickly.

Joanna Swash, Group CEO, Moneypenny: We need to let go of bias and ego, and all the limitations put on recruitment briefs. Expand your pool to focus on attitude over aptitude. It is about hiring the right person for the role, not just based on skills but on attitude and characteristics, resilience, innovation, agility. And, most importantly on their fit with your business. Just because they excelled at Apple, does not mean that they will with you.

It's not just about if you've got a man or a woman in the seat. Have you got a broad range of experience, a broad range of backgrounds? Yes, if we have men and women and people of different ethnicity, that’s important. But there’s no point ticking those boxes if you don’t have diversity of thought. For me, that is what makes a truly great team. We all need to think in different ways, interview different kinds of people and make sure that a variety of people are invited to the table.


Suzanne Pike, Partner, ECI: To see more female led leadership teams, you need to foster inclusion, so that women feel they belong and want to be there. We also need to see more businesses intentionally building in objectivity into their performance review processes. That means actively asking where unconscious bias has played a role in forming a view of an individual or in making a promotion decision. And flexible working, something that is increasingly important to everyone, needs to be more widely accepted as simply working differently and not adding less value.

What role do investors have to play in this change in 2023 and beyond?

Julian Llewellyn, CFO, BCN: Investors have a unique position of influence where they can help set the strategy around gender equality. They also have visibility across numerous businesses, seeing innovative approaches and best practice in action. They can support the sharing of that across their investment portfolio. This can provide a highly effective way of enabling invested businesses to make progress, in line with their own people culture and at a pace that suits them. Bringing sustainable gender balance needs to come from managerial commitment within a business. It needs high levels of internal buy in to really make it work. It shouldn’t be seen as an initiative but embedded as part of standard practice.

What initiatives have you seen work to create more equitable organisations?

Faye Maughan, Investment Director, ECI: The best example that springs to mind is one of our own at ECI. We recently did unconscious bias training and what made it so powerful was the work that had been done internally ahead of the session. A broad range of employees were interviewed to understand scenarios in which they had seen or experienced bias. These scenarios were then amalgamated and anonymised to create case studies that were acted out and dissected on the day. I think this approach made the training a lot more “hard-hitting” than you may see ordinarily.

What role does inclusivity have in forging successful businesses?

Lesley Davies, Growth Specialist – People & Culture, ECI: Hopefully, it is already well accepted that inclusivity plays a vital role in successful businesses today. Those companies well-advanced in this, cite improved closeness with the customer base and a greater responsiveness to wider stakeholders as performance benefits. However, looking forward, it is hard to see any business being truly great without fully embracing and knitting inclusivity into every aspect of its DNA. By the end of this decade, over 30% of the workforce are predicted to be Gen Zs. Companies who do not fully represent the society and culture they live in, will end up as talent deserts.

Sarthak Sawlani, Investment Manager, ECI: Inclusivity is not only the right thing to do, but it is also economically beneficial for businesses. By creating an inclusive culture, companies can tap into a wider pool of talent and ideas. This leads to greater innovation, productivity, and profitability.

Research shows that diverse teams are more likely to outperform homogeneous teams in problem-solving and decision-making. A diverse team brings a wider range of perspectives, experiences, and knowledge, which can lead to more creative and effective solutions. Inclusivity also helps businesses create a more engaged and committed workforce. Employees who feel valued and included are more likely to be productive, loyal, and motivated. In turn, this can reduce turnover and save companies money on recruitment and training costs. By embracing inclusivity, businesses can create a more prosperous and equitable society, benefiting both the bottom line and society as a whole.

What advice would you give to other women when it comes to career development and advancement?

Claire Webster, HR Director, Avantia: As a part-time working mother, I understand it can be difficult to juggle all the various demands in life. But having a family doesn’t mean you can’t fulfil your career ambitions or must sacrifice family time to do so. Organisation is key, as is surrounding yourself with good people – both at home and at work. Working for an organisation with inclusive practices and supportive colleagues makes a huge difference. Finally, try to minimise the feelings of ‘mum-guilt’. There’s never going to be enough time to do everything to the extent that you may like. But recognise that you’re setting a fantastic example for your children through everything you achieve at work as well as home and be proud of these achievements!

Claire Williams, CPO, Ciphr: It’s important to network and build up a group of women in leadership roles or with experiences that you can learn from and that you can go to for advice and support. Most people enjoy reminiscing about their journey with others and will be excited to share their knowledge with you when they can. This in turn will help build confidence and this is key! Women are naturally more inclined to be cautious about being open and honest about their career aspirations and to champion themselves. Aim high, take control of your career, and have confidence in yourself.