"We spotted the opportunity, built an app, and quickly deployed it on the App Store. Apple also took notice and promoted us."

Greg Le Tocq

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Invitation Digital Limited – founded by Scott Davidson and Greg Le Tocq - owned the Vouchercloud brand, the second largest voucher site in the UK. It also had growing operations around the rest of the world including Giftcloud, the digital disruptor to the gift card industry which offered innovative solutions to a £3.5bn market place.

In 2011, Vodafone made a strategic investment in Invitation Digital Limited, which quickly evolved into a staged acquisition due to conclude in 2017. Vouchercloud was to become a core part of Vodafone’s strategy to own the ‘digital wallet’. However, when Vodafone changed direction in 2015 and decided to once again focus on core telephony, a sale process took place which ended up with Scott and Greg buying the business back from the telecoms giant.

In a complex deal involving several stages, many shareholders and numerous tax hurdles, Shaw & Co assisted the Invitation Digital management team in navigating various challenges to secure a significant debt facility which, along with investment from the management team, enabled them to fund the transaction which was completed in 2017.

In January 2018, we then helped Scott and Greg to sell their business to Groupon, the global e-commerce marketplace. The sale not only placed the business with a supportive long-term partner whose ambitions were aligned with the founders, it also provided a powerful platform for growth. Groupon invested in the Bristol-based Invitation Digital team to develop it as a European centre of excellence, providing an exciting prospect for employees and those interested in building a career in technology and media. Greg remained with the business and led the team, while Scott took the opportunity to retire.

We caught up with Greg to see how it all came together and what happened next…

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Tell us a bit about the buyback and sale of your business.

When it started, Vouchercloud was one of the first mobile voucher apps in Europe (we also had a paper version). We built the first version of the app on Nokia and Samsung phones but there were complications. However, things really took off when Apple launched the iPhone with its one-touch installation of apps and inclusive data. We spotted the opportunity, built an app, and quickly deployed it on the App Store. Apple also took notice and promoted us.

I remember sitting down and estimating how many downloads the app would have in our first year. I think the highest any of us guessed was just a just over 100,000 which we actually thought was hugely optimistic (the lowest was 10,000!). In fact, we did a million in our first eight or nine months, which was absolutely phenomenal!

Vodafone then took interest as they were pivoting their business towards mobile payments and acquired shares in our business - they saw the opportunity to use mobile vouchers and digital gift cards to help with consumer adoption of mobile payments. Unfortunately, they were being superseded by Apple, Google etc so started to turn back towards their core phone business. We then started a buyback before swiftly selling the business to Groupon.

"Always make sure you have an exit plan and believe in your business – never waver."

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What did you learn as a business person / entrepreneur from both a buyback and sell perspective?

I think the biggest thing is how the corporate world works. As an entrepreneur, you're used to being very nimble. But when you are within a corporate organisation, you are suddenly a very small fish in a very large pond, things move very slowly but can also change very quickly. I remember one day going into Paddington (where Vodafone had its global HQ) and everyone knew who we were, yet another time we went in and we were unknown - it was very strange. But there were also some really exciting times that came from this - I remember seeing our brand on a F1 car and on huge billboards in Cape Town, this is something we never could have dreamed of without a global brand like Vodafone behind us.

I think the biggest lesson was to always make sure you have an exit plan and believe in your business – never waver. Our business was doing very well and it ended up going better than we could have ever hoped for because we were confident it had real value. It was also quite fascinating how both Vodafone and Groupon moved quickly to do what were very complex deals.

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How did Vodafone and Groupon differ in terms of how they approached the respective deals?

Both wanted to acquire the business and keep the management team happy. The deals were very professionally done and to have Shaw & Co acting as something of a ‘middleman’ worked fantastically. They were able to represent the management and shareholders and talk to Vodafone and Groupon while taking some of the emotion out of the process. This meant that negotiations were completed in a very professional way.

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"Always make sure that you have complete certainty in terms of your pricing expectations."

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What could SMEs learn from the approaches of Vodafone and Groupon?

I think the best thing that SMEs could learn is when you are looking at a sales process – especially if you have earnout – is to always make sure that you have complete certainty in terms of your pricing expectations. In our case, we had a clear minimum amount that we would accept, and so as long as we achieved that, any extra was a bonus. Also, as well as having good corporate finance advisers, make sure you have a good legal team and that everyone internally is aligned.

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"You must plan for all eventualities."

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What advice would you give to other business owners looking to undertake a buyback?

I think it’s important to remember that, to an extent, you are starting again. We found ourselves once again having to take responsibility for the staff and the shareholders so we had to work out the worst case scenario and plan back from there. We thought we would be on a three year journey to build the business up after buying it back and we had to consider things such as what would happen if organic Google traffic - which we were heavily reliant on – fell off a cliff. You must plan for all eventualities. You could look for a quick exit, you could simply run the business for 18 months on the back of a new technology or you could be back in the seat for four or five years without knowing your exit strategy.

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"It's very important as a founder to understand whether you are staying on with the business or not."

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What advice would you give to other business owners looking to undertake a sale?

I think an alignment of founders and management is always very, very important. So, if you're running a sale process, make sure you're aligned in terms of what you will or won't accept by way of a deal. I also think it's very important as a founder to understand whether you are staying on with the business or not. In our case, when we sold to vote to Groupon, myself and Scott Davidson were in complete agreement when it came to him exiting the business and me staying on. This meant that there was an opportunity for me to also negotiate additional consideration or additional incentives in the sale process.

It’s also important to make sure that there is good cultural fit with the company acquiring your business as well as a strategic fit. As an entrepreneur, when you start a business, it's your baby. It's a little bit like having kids; they eventually grow up and leave home which is exactly what happens when you sell your business. Therefore, you need to be prepared mentally and emotionally as, if you are sticking around post-sale, you need to accept that people will do things to your business, sometimes for the positive and other times for the negative.

But I think the main thing is ensuring you've got good advisors, making sure you're aligned on what you're looking for from an exit perspective, and making sure you negotiate your incentives moving forward, especially if you’re staying on.

Tell us about the sort of businesses you’re working with now. What sector particularly excites you?

When I finally left the business, I was conscious that I had met some really great people along the way. I wanted to keep connecting with similar people and help other entrepreneurs which is why angel investing has been a great move for me and now I’m looking to build something new and exciting in the European venture capital space.

What intrigued me about venture is that there’s a significant statistic that only 7% of venture capitalists have ever run their own business. I found it fascinating when I started sitting down with a lot of venture capitalists to see the different approach they take to investing in business as compared to entrepreneurs and because of this, I saw an opportunity. I am able to add a lot of value from an entrepreneurial perspective in terms of marketing, technological advice etc, as well as opening up my network to help them. I’ve predominantly been investing in consumer start-ups with a recent focus on sustainability. I’ve invested in everything from a brand called Laylo, which creates beautiful sustainable wine boxes, to Wild, which is a natural deodorant brand, to Suri, which is the world’s slimmest and most sustainable electric toothbrush !

"I do miss aspects of really being consumed by growing a business."

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How have you found the transition from business owner to investor/advisor? Which do you prefer?

Initially, the biggest thing that drove me as an individual was exiting my business and being mortgage free and putting my children through private education. Unfortunately, it is your business so it is very hard to switch off and have a holiday as everything is your responsibility. Now, I am able to switch off but I do miss aspects of really being consumed by growing a business. Nevertheless, helping businesses to grow without that huge emotional involvement is great!

You have always been an innovator. How has the tech landscape changed? What’s the next big thing?

We were always very far ahead of the game, turning paper vouchers into mobile vouchers and plastic gift cards into digital gift cards and now everything is digital in terms of payments etc.  In terms of trends then ECG and sustainability are obviously at the forefront of everything, climatetech, healthtech etc are so important to a better future for ourselves and our kids and what tech does, is it enables change at a rapid pace. I find it amazing that, when we started Vouchercloud, we always talked about NFC and mobile payments and now I leave the house without my wallet and make all payments using my mobile phone!

How has your personal life improved/changed following the deals we helped you with?

Selling the business felt like a weight off my shoulder because my number one goal was security for my family and opportunity for my kids. I can now do things at my own pace and pick and choose how I spend my time and this is the biggest luxury that life can offer I think. There are of course other luxuries this brings, such as being able to travel more, invest and help other entrepreneurs and over the last two years, we have built our own house which, whilst it’s had its ups and downs, the end result is something we have always dreamed of.

"I can now do things at my own pace and pick and choose how I spend my time."

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How important was Shaw & Co’s advice?

We couldn’t have done it without them. It was so important to have that middleman to negotiate on our behalf but who could also help us think outside the box regarding the buyback and the sales process. The way that Jim and his team go about business and how they genuinely care about their clients is brilliant and I would strongly recommend them to anyone.

What does the future hold? Where do you think you’ll be in 5 years’ time?

Having taken a break for the last couple of years and assessing a variety of opportunities, I’m now ready to build something exciting again……. so watch this space!