ECI is a growth focused investor, looking to back high quality management teams in businesses that are well positioned in growth markets with resilient business models. This combination of growth and resilience is often found in tech-enabled services businesses. Furthermore, they could be platform businesses that sell and service a product using their technology, or businesses that use technology to effectively leverage and scale their proposition. The ability to deliver highly scalable growth, service a large customer base efficiently, continually innovate and generally charge on a recurring or subscription based revenue model is what makes these companies attractive to ECI. Here are just a few successful case studies we’ve seen as a tech-enabled services investor:
An excellent example from our past tech-enabled services companies list is CarTrawler. CarTawler connects car rental suppliers to consumers. Its award-winning booking engine connects with consumers directly and via third-party websites. Consumers can access real-time prices and availability in 30 languages, across 30,000 locations in 174 countries from more than 800 suppliers. This technology benefits CarTrawler’s distribution partners, which include online travel agents and airlines. It enables them to drive ancillary revenues and improve customer conversion. The car rental suppliers also benefit from the global distribution model and incremental volumes. ECI recently exited Cartrawler, earning 6x money to investors.
More recently, Encore Tickets – the leading multi-channel ticket aggregator focussed on the West End market. With similar dynamics to CarTrawler, a big attraction of this business to ECI was the potential for further growth via its technology platform. The business operates both B2B and B2C distribution models, leveraging its platform to do so. ECI is supporting Encore to continue to develop its technology during our investment.
Conversely, at the other end of the tech-enabled spectrum, there are business services companies that have developed or are developing proprietary technology. These companies leverage their technology to accelerate their growth rate and increase their profitability. In 2014, ECI delivered a 3x return to investors on the exit of XLN, a fully tech-enabled services business. XLN provides high-quality, low-cost telecom services to SMEs via its own proprietary technology platform. It was its technological capabilities, along with a strong management team, that attracted ECI to this business when we invested in 2010.
Technology platforms enable these businesses to offer more cost-effective services. This gives them both a competitive advantage on pricing and higher margins. Tech-enabled businesses are highly scalable and their customer base can become increasingly broad as the company scales up. They can also sell in additional products and services to their existing customer base. Furthermore, they can lock in more contracted and recurring revenue through subscription models, improving their resilience.
ECI is interested in and invests in businesses at all stages of the tech-enablement journey. We have experience in supporting our portfolio companies to become more tech-enabled during our partnership as investor. In 2012, we invested in Citation, a provider of health and safety and employment law services to SMEs. Citation delivers its services via its online platform and 64 legally trained operators. ECI recognised the potential to develop the existing platform further. Following our investment, we introduced a specialist from our network who has since become their first CTO.
Looking for a tech-enabled services business investor?
Wherever your business may be on this spectrum and however far along the tech-enablement journey you are, ECI recognises the many advantages of tech-enabled business models. Furthermore, we have vast experience of being an investor and supporting tech-enabled services businesses. We are interested in finding more tech-enabled businesses to partner with in the future.