Boutique banking with an entrepreneurial itch
MOST people would laugh at someone in their mid-twenties with ambitions of launching their own investment bank. That was the reaction Manish Madhvani received. But with partner Hugh Campbell, the two bankers shrugged off scepticism and, in 1999, founded GP Bullhound, a boutique investment bank giving mergers and acquisition advice and raising capital for tech companies.
Madhvani always had the entrepreneurial itch. After earning his stripes in BarCap’s private equity arm, he wanted to “rip up the old-school investment banking culture”. He didn’t want the “politics, hierarchy, or red tape”. And now, after almost 14 years and over $1bn (£620m) in transactions, he is delighted that he took the plunge.
START-UP CHALLENGES
The age of the founders initially brought scepticism from potential clients. When companies are raising millions, they look for experience. If he had to do one thing differently, Madhvani jests that he would have made himself look older. “We should have dyed our hair grey”.
It forced the founders to raise their game and become more knowledgeable. “We had to be better than our competitors,” which is why he places such emphasis on quality research.
Timing was also against Madhvani. Just as he was getting settled, the dotcom bubble burst in early 2000. “The tech sector was a joke”. He recalls meeting former colleagues: “They use to pull out copper coins and say ‘let’s buy a tech company’.” It made him question whether he was doing the right thing.
But his unrelenting belief in the business kept him going. Madhvani was surrounded by tech start-ups, and believed in the internet’s enormous potential. He also took solace from the words of US venture capitalists that he was working with. “In the US, they say that all of the best companies are started in a downturn.”
CHAOS BRINGS OPPORTUNITY
Tech’s implosion allowed the company to access people who wouldn’t have normally been available. One recruitment technique GP Bullhound uses is to monitor who pips them to deals, and then hire them. “I look for people who are better than me. That is the way to grow,” Madhvani says.
But the company is particular about who it adds to its ranks. “We are not typical bankers, and we want to see an entrepreneurial streak,” he says.
COMBINING FORCES
GP Bullhound started in a pan-European incubator called Gorilla Park. The founders felt the experience was so rewarding that they originally called their company GP Capital (after the incubator). In 2005, it merged with Bullhound, bringing in new partners Christian Lagerling and Per Roman, as well as a presence in Silicon Valley.
The firm has been profitable every year since its inception. In 2011, revenue was north of £10m. It grew by 70 per cent in 2012, driven by a few large deals, including Avito’s $75m capital raising from Accel Partners. Nevertheless, its approach to winning business is still relationship-driven.
DEAL MAKER
Madhvani’s tenacity is one reason for GP Bullhound’s success. “I just don’t take no for an answer,” he says. “If good entrepreneurs can’t get in through the front door, they’ll get in through the window. And if they can’t get in through the window, they’ll get in through the chimney.”
Like all businesses, he admits that there have made mistakes along the way. “We hate losing, but we’re not bad losers,” he says. “You can learn more from losses than from wins”.
The support that they had from mentors – like George Coelho and current chairman Sir Martin Smith – helped to open doors. “Having mentors was invaluable, and saved us years,” he says.
WHAT THE FUTURE HOLDS
GP Bullhound has had overtures from potential buyers. But they were rebuffed. “I would be working for someone else, and that could kill our culture. And why would we sell anyway? We’re having too much fun”.
He advises budding entrepreneurs to pursue their ambitions. He did, even though many of his closest family and friends were initially sceptical. “There are so many miserable people working in City jobs, and many would be happier doing their own thing”.
CV MANISH MADHVANI
Company: GP Bullhound
Founded: 1999
Job title: Managing partner
Turnover: £10m
Number of staff: 45
Age: 37
Born: London
Lives: Hampstead, London
Studied: Law and Marketing, University of Southampton
Drinking: Gin and tonic
Favourite business book: Bounce: the myth of talent and the power of practice
Talents: Mobilising talent
Motto: “Never say die”
First ambition: To play for Spurs
Awards: Lots, but now GP Bullhound gives them out (the Investor AllStars awards)
Heroes: My parents, who came to the UK without any qualifications, and founded their own businesses