Hot on the heels of announcing that digital technology specialist Incremental Group had successfully secured £500,000 of Regional Selective Assistance (RSA) support from Scottish Enterprise, which will help to facilitate expansion of the business through the creation of 48 new jobs over the next 12 months, we grabbed some time with CEO Neil Logan to chat through the meteoric rise of the company.
When Neil graduated from the University of Strathclyde with an honours degree in Computing Science all he wanted to be was the best programmer he could be.
He started with Real Time Engineering in Glasgow which eventually changed ownership first to SWORD, the French multinational, before becoming Amor Group where he eventually became Chief Technology Officer with a seat on the board.
After moving into more commercial roles Neil led Amor’s Energy Process Solutions division followed by heading up their Public Services Scotland business.
In 2013 when the company was turning over in the region of £60m it was acquired by Lockheed Martin and it was at this stage Neil returned to his technical roots by becoming Director of Engineering and Technology of UK and Europe for Lockheed’s IT business where he led a team of 600 engineers.
But the move to a more corporate structure didn’t sit well with Neil so on the announcement that Lockheed Martin was about to sell its 17,000 person IT business, he decided it was finally time to move on and pursue his dream of building his own company.
Incremental Group was founded in 2016 with business partners Stuart Kerr and Craig Donnelly and almost immediately purchased Inverurie based First eBusiness Solutions.
Did you set out to build a company through acquisition?
My co-founders and I created Incremental Group at the start 2016 and whilst it was clear that a start-up approach was a good option – and one that potential investors were prepared to support us with – acquiring a business would really help turbo-charge our plans.
That said, it was never lost on us that finding the right business would be a difficult job but it was still harder than we imagined. Once we had formulated our vision for the business we wanted to build, we developed an approach that allowed us to analyse potential acquisition targets and effectively score them in relation to how well they could support our vision.
The challenge when acquiring a business at this early stage in our life is that the business must provide a platform for future growth. As such it has got to be doing a lot of things right but also must have some areas for improvement where you think you can really drive the business forward.
With First eBusiness it was clear that the technical capability was there as was the reputation amongst the customer base. What it lacked was the expertise to substantially grow the business.
That fitted our needs perfectly.
Do you plan to drive the First eBusiness brand or look for other opportunities to buy companies that can work in synergy with First eBusiness?
We have brought together the expertise Incremental Group has with that of First eBusiness and unified under the Incremental name in February,
Our strategy is simple: secure and grow. We will be continuing to invest in the core capability that the business already has in Microsoft AX, Dynamics 365 and Infrastructure services. Speaking to our existing customers it’s clear they like what we do and we are absolutely committed to retaining and growing those existing customer accounts. We cannot and will not forget our core capabilities.
From that solid base we will look to add additional service offerings and target new markets and geographies.
In terms of further acquisitions I think, that whilst I would never rule it out, right now our focus is on developing the business we have. We see significant organic growth potential within the business and I believe that it is a more consistent way to achieve the business growth we want. I will always be keeping an eye out though!
You mentioned potential investors. Can you tell us how the First eBusiness deal was structured and what part investors played at this early stage and what part they will play in the future?
Maven Capital Partners and the Scottish Investment Bank co-invested in Incremental Group allowing us to acquire 100% of First eBusiness. Both organisations bring a huge amount of expertise in helping SMEs like us to grow. Maven helped a huge amount throughout the acquisition process, guiding our thinking on due diligence and helping us improve our early plans.
Moving forward both Maven and SIB have a place on our Board and work as part of the Incremental team making sure that we remain focussed on our mission. Both also bring access to a network of businesses – many of whom we can help to digitally transform their organisations.
It is obviously early days in our relationship but I am really pleased that we have two investors who believe in our business and our plans.
For most growth companies, the idea of approaching and dealing with investors can be quite daunting. How did you approach this?
I think it’s probably worth saying that from the outset we were clear that for Incremental to achieve our objectives we always knew we would need to bring investors on board. As a team, my co-founders (Stuart and Craig) and I all had experience in dealing with investors to varying degrees throughout our earlier careers but it was still a daunting prospect.
Stuart, Incremental’s CFO, brought a huge amount of experience having previously worked as part of the M&A team at PWC. Before we even spoke to anyone though we had to make sure that we could clearly articulate to potential investors what our business vision was. To support that we created a vision document that explained who we were, what Incremental was and what our plans were. We covered everything from which markets we were targeting to what services were going to provide. We were also very clear about what we expected from investors. We worked with Alasdair Currie of XY&Z Creative to make sure the document looked the part too.
Next, we used our networks to connect with potential investors both here in Scotland and down in London and started talking to them. Our reputation from our time at Amor helped open a lot of doors and we were fortunate that a lot of people were interested in speaking to us. Some investors liked the sound of our vision and some didn’t, but there was sufficient number who showed an interest that I was confident that we could get the support we wanted.
As we got closer to completing the acquisition we appointed Neil McGill of BDO and his team as our advisors. This was crucial as whilst we had some experience of dealing with investors, we understood the limit of our knowledge and Neil was a huge help to us throughout the process.
Is Scotland a good place to launch a tech startup?
I think it is yes. Firstly, I think we benefit from truly world class academic institutions so the quality of people we have entering our industry is fantastic. Secondly, I think the amount of support available to new companies of any type is excellent.
Things could always be improved, for example I’d love to see the number of science (particularly Computing Science) graduates increase and it would be nice to see initiatives like Tontine and Codebase extended to other town and cities.
Does it have the right infrastructure?
I think good quality, affordable office space is still a challenge for technology companies. Broadband internet access is excellent in the major cities but increasing the coverage across all of Scotland is something that we need to see.
Which organisations have you found useful?
Almost too many to mention!
Scottish Enterprise has been a huge help. We knew the team at SE well from our time at Amor so we knew that if we connected early with the folk there that would serve us well and it has.
Glasgow City Council and the team that operate the Tontine have been tremendous.
Our advisors BDO and lawyers Burness Paull have been tremendous from the minute we engaged them both. Neil McGill (BDO) and Alistair Freeman (Burness Paull) in particular have been superb and have provided the team and I with some sage advice when we’ve needed it.
Finally, I couldn’t forget Maven, Scottish Investment Bank and Clydesdale. When you are putting funding together it’s important that the organisations you select bring more than just finance and I’m delighted that this is especially true in our case.
What challenges have you faced?
Definitely too many to mention!
Getting the right funders in place was a challenge; finding the right business to acquire was much more difficult than I thought at the outset; and remaining focussed on our vision sometimes proved difficult especially when people would suggest it wasn’t the right vision. Ultimately though we got there.
What one piece of advice would you give to someone thinking about a tech startup?
Seriously though, if you are starting a business of any kind you are going to face a lot of challenges and you have got to have a real desire to do it. Consequently if you are reading this interview and you are put off by my advice not to do it, I think that’s probably a good thing.
I have learned more about myself, my strengths and my weakness, in the last year than in the previous 20 and it was a huge challenge. For me it was a journey that I just had to go on, one that if hadn’t done I know I would have regretted it my whole life. I think if you don’t have something like that driving you forward then I simply wouldn’t do it.