COO Profile: BGF’s Matthew Reed
Having been part of BGF since its inception COO Matthew Reed talks to The Drawdown about the particular challenges he faces in such a unique organisation.
The Drawdown (TDD): How has your role evolved since joining?
Matthew Reed (MR): I joined BGF at its inception in 2011, initially as a consultant to our CEO Stephen, to help navigate the compliance and regulations of establishing a new business. Back then, BGF was essentially a start-up, so it was a leap of faith from all of us, both staff and shareholders. It was about creating solutions and starting from scratch.
Over the years the role has morphed from being a start-up, where the focus was implementing processes, to moving into a strategic, large business-management role, with the focus now on managing all of the infrastructure.
It’s as challenging now as it was on day one, if not more.
TDD: How is your role perceived within the business?
MR: My role is perceived in two ways. First, it’s about looking after the shareholders, which are perhaps the most regulated entities in the UK. Because of that, a lot of my focus is on how their regulatory requirements affect our day to day business.
Second, I have to be seen as a valuable support service for the investment team. We aim to deflect as much as we can from the investment team so they can focus on investing and the portfolio.
TDD: How do you work with the other functions in the business and ensure you’re communicating effectively?
MR: Effectiveness is a function of how much you hear back from the team. If I’m doing really well, then interaction with the rest of the company can be low, which means they are focusing on their roles. We have established compliance and other operating procedures in a way which means their adoption is automatic, even culturally ingrained.
It’s also about being a trusted source; providing advice on business matters, on our investment criteria; what we can and can’t do. I aim to turn those around very quickly – I don’t want to be the roadblock in a potential investment.
My position allows me to see every investment, every transfer. I can see the whole investment cycle in a complete way. As a volume investor – completing around 50 to 60 investments each year, with a portfolio of 200 companies – few people have that complete view of the operational part of the business.
TDD: How do you uphold the entrepreneurial spirit required as an investment firm, alongside compliance and formal processes?
MR: From day one we’ve ensured great communication between all staff.
We have instilled a culture of adherence to our mission and how the FCA and our shareholders need us to conduct ourselves. And that has meant we haven’t had any problems in terms of people pushing the boundaries.
This is reinforced by periodic updates and meetings. Also, if there’s something relevant in the press, that will be discussed to reinforce the cultural piece. I don’t want to strike fear, but real life examples are a good way of learning.
TDD: How do you ensure the entire organisation is behaving in a compliant manner?
MR: The Investment Committee is well-versed in these requirements, so they act as a front line of defence, which is further to the cultural piece.
I receive around one phone call every day from an investor asking whether or not an opportunity is okay, which reflects our cultural position. We don’t want to take risks with the shareholders’ capital.
We also hold company off-sites: two each year for the whole company and a further two for the investment team. Beyond those events, we have lots of great forums for messages to be reminded and relayed. Furthermore, we connect the whole company – all nine offices – together through the AV system once a month.
Finally, for new starters the induction is a big process. New joiners meet seven people, face-to-face, from key departments including IT, legal, finance, health and safety. It is extensive and about instilling culture from day one.
TDD: How important is keeping up to date with new technologies?
MR: We are very positive about technology. From day one our CEO, together with many of our team members, has embraced tech. That is maybe because of the entrepreneurial spirit of the business. We were one of the first companies to roll out Surface Pros to all staff, which is an amazing piece of kit – very portable and powerful. And we’re doing similar things in terms of software.
But we’re also at something of an inflection point. We’re ahead of the problem in terms of size and complexity of the portfolio. But, if for example we sell a portfolio company to a foreign buyer, our system isn’t capable of reporting in foreign currency.
We’re currently in the process of updating the portfolio reporting and pipeline, which will lead to us having a market leading capability. At the moment we have outstanding CRM capability, which allows for information to be pulled out on the road, and can tell you the last conversations that have taken place with that business as well as financial information. This is very important as the team is meeting so many companies.
We’re also starting to substitute paper reporting through the CRM system. We no longer need to print out reams of reports because we can access all of the information at a push of a button in real time.
When it comes to regulation and compliance, because we started in 2011, every interaction we’ve had has been stored on the CRM system. We’ve recorded things perhaps we don’t need to but if new rules are put in place we are prepared. It’s a constant development. We started from a great place and culturally we believe it is important to record everything that can improve our investment process.