THE onset of a new year is a time for looking forward and identifying new goals. Perhaps now is the time to pursue that long-held ambition of starting your own food and drink venture or moving your existing business to the next level?
It can appear a daunting prospect, but through a combination of careful planning, determination and knowledge about how to seek out the right investment, anything is possible.
Firstly, ask yourself some fundamental questions to be clear about what you want or need. Do you actually require investment? If you’re sure you do then, what do you want out of it and is there an exit plan? Is your plan or business ready and would you be happy with working with, or answering to, investors? Is your business idea right? Does it have something that makes it unique to investors? And then there is timing – don’t leave it too late. Think about succession planning. Could or should you self-finance? Is investment the best or only option?
The advice of Rhodri Jones, of Crwst Bakery, for those wishing to follow in the footsteps of the award-winning Ceredigion-based business, is to establish ‘a firm grasp’ on cash flow from the outset.
“Understanding your financial position in real time allows informed decisions about when to invest and how to manage resources effectively,” he says. “This insight is essential for sustainable growth, helping you assess affordability, manage risks, and seize opportunities with confidence. Financial discipline is the foundation for strategic expansion.”
This is sound advice and will enable informed decisions on the best way forward when the time comes to consider funding options.
“I want to see the investment coming from within my family.” (Rosie Oretti, Grounds For Good).
Whilst many businesses will ultimately conclude that they need commercial financial assistance, it’s not necessarily the right path for everyone, especially when starting out. Organic or self-investment can be used to set up a business from, say, a kitchen or a farm. Alternately, someone with an expertise may elect to strike out on their own. Their expertise allows them to raise money through borrowings they will be personally liable for. Family and friends may provide a loan.
The support you need may not require financing at all thanks to organisations such as Cywain, a Welsh Government funded business-led programme aimed at developing new and existing micro businesses, and the Welsh Government’s Cluster, Scale Up and Investor Ready programmes. Business Wales, the government’s flagship business support programme, offers advice and guidance on how to set up and grow.
Rosie Oretti experienced her ‘lightbulb’ moment while working in a cafe. “I noticed the vast amount of coffee grounds being generated,” she recalls. “All bound for landfill.”
The upshot was the setting-up of Grounds For Good, a social enterprise start-up business embracing the beneficial powers of re-used coffee grounds or their powerhouse extracts, to produce a collection of personal care or lifestyle products. All profits go to The Wallich, a national homeless charity.
“I want to see the investment coming from within my family,” explains Rosie. “I’m fortunate in that I’ve invested wisely and have no mortgage.”
And she acknowledges the support of Cywain. “Phenomenal,” she says. “I wouldn’t be able to function without them. “Their training programmes detail how to sell products, write a business plan, how to sell on Tik Tok and training on marketing. Plus, I have a mentor.
“In addition to providing support for the brand development when we started, Cywain have also organised visits to trade shows such as the Royal Welsh Show, Northern Restaurant and Bar Show in Manchester and provided me the opportunity to exhibit at the Blas Cymru / Taste Wales exhibition in Newport as one of Cywain’s ‘Rising Stars’.
“We’re spoilt having such a supportive organisation. My English business partners are green with envy!”
Rosie’s natural resilience suggests she is in for the long haul. “I know all the hard work will pay off,” she says. “The past four years have taught me the race can be won differently.
“I used to be a hare, now I’m far happier being a tortoise.”
For a more established business looking to move to the next level, or a start-up where rapid growth is envisaged, BIC Innovation, who manage the Food & Drink Wales Scale Up and Investor Ready Programmes, should be the first port of call. They can set businesses on the right path and help them grow and thrive.
The former takes a wider view, looking beyond investment, at the challenges facing businesses as they scale-up. By focussing on capacity, skills and competencies it’s often possible to scale up without major investment.
The latter helps prepare businesses for investment, whether that’s introducing them to fund providers, helping to write business plans, preparing financial forecasts and management accounts, recruiting an in-house accountant or implementing new financial systems.
“We’ve had great support from the Scale-Up and Investor Ready programmes,” says Matt Newell, of Hive Mind Mead. “This has assisted us with becoming more financially confident, having the confidence to take calculated risks, getting our numbers in order and being an excellent and open sounding board for all things investment, finance and scaling up.”
So, having addressed the question of whether raising investment is the way forward and secured support, what are the main options?
“Welsh Government continues to provide help, ranging from Business Wales’ Accelerated Growth Programme to grant funding, mentoring and skills development.” (Radnor Hills MD Simon Knight).
State Funding and Grants are usually directed at capital investment and have eligibility requirements that the applicant needs to satisfy such as the size of the business or match-funding and can sometimes only be used to support certain activities. Grants are usually drawn down retrospectively and may take some time to be processed, so applicants still need to consider their working capital requirements and decide whether the project is affordable within a retrospective claim regime.
A combination of grants and state help have enabled Radnor Hills, the family-owned business whose renowned spring water and flavoured waters have become a household name, to continually invest in the company.
MD Simon Knight says recent projects include a new canning box packing machine, the installation of a new Tetra Pak line and a new storage warehouse.
“One of our business priorities was to find an expansion opportunity in Wales that mirrors our manufacturing base in Knighton, so in September 2023 we acquired Highland Spring Group’s Welsh production site,” he says.
“The deal protects jobs in Swansea and supports our ongoing strategic growth. The acquisition also included a 40-acre water source in the heart of Bannau Brycheiniog National Park, which complements the supply we already have at our source at Heartsease.
“The opportunity for us to continue to safeguard jobs in Wales and offer more local employment is extremely important to us. We have invested millions to expand our facilities in Knighton.”
And the Welsh Government has been a great supporter since the business was launched from the Watkins family farm in 1990.
“Our CEO William Watkins founded Radnor Hills with the help of a Welsh Government match-funding grant for farm diversification and a £20,000 family investment,” says Simon.
And with climate change such a hot topic it comes as no surprise that Radnor Hills and many other businesses are increasingly looking at raising finance to fund green projects.
“We installed a £1.8 million solar farm to power our manufacturing site,” says Simon. “This now produces enough power to provide 25 per cent of our factory’s energy requirement.”
Similarly, having already funded a three-year £14.4m expansion plan partly through a £5m grant from the Welsh Government Rural Development Programme, South Caernarfon Creameries have recently embarked on “Project Evolve”, a £2 million investment, successfully delivering a brand-new high-speed portioning line. Additionally, several key improvements and site infrastructure projects were completed, enabling the site to increase prepack production volumes by 50%. The move follows “Project Dragon”, a £25 million investment programme that included a new whey processing facility, additional cheese production lines and a new cleaning facility along with increasing its utility services and helped the company achieve thetop ‘level 5’ Green Dragon environmental standard.
There is a raft of green finance available which help businesses make these investments. Development Bank of Wales (DBW) offers the Green Business Loan Scheme (https://developmentbank.wales/business-need/green-business-loan-scheme)
“The Development Bank of Wales terms were better than our business bank.” (Halen Môn MD Alison Lea-Wilson).
Filling the gap between commercial providers and state support is the DBW. Owned by Welsh Government it offers finance that can be more attractive and better suited for businesses where the commercial banks may not be such a good fit.
DBW provide a range of debt and equity finance, including micro loans and larger loans, and loans aimed directly at sustainability improvements.
They manage a number of different funds, including the Wales Flexible Investment Fund, Micro Loan Fund and the Green Business Loan Scheme. Angels Invest Wales is also part of DBW, and since 2018, have been connecting with entrepreneurs across the country.
Halen Môn – Anglesey Sea Salt Company recently secured a loan for a new smokery and warehouse. “The terms were better than our business bank and we can repay early with no penalties,” explains Halen Môn MD Alison Lea-Wilson.
“We have a business plan and clear financial strategy to repay the loan. We have never defaulted on a payment and have always successfully concluded each project. We have a proven market so financial partners are happy to back us.”
Halen Môn aim to grow sustainably and ‘build a strong management team so that the business will continue into the next generation of our family’.
“We’ve had so much help from Welsh Government,” says Alison. “Advice, mentoring, practical help setting up systems, introductions to new partners and customers. We are members of the food and drink Clusters and attend conferences, training and workshops.”
She emphasises the need to have all your ducks in a row prior to key investment decisions.
“Set your systems up from the start, including monthly management accounts and meetings to follow up on successes or areas of weakness,” she says. “Build in quality systems such as SALSA or, in our case, BRGS. Manage your staff fairly and share your business plans with them.
“Find a gap in the market – either produce something better than is already there, or something that is not already there. Don’t compete on price, but on quality, customer service etc. Build your brand on real values – and live those values.”
Crwst Bakery, of Cardigan, opened in 2018 with the aim of ‘establishing a place for foodies like ourselves!’ They now produce an array of artisan cakes and breads.
Sales and production manager Rhodri Jones says they recognised the need for investment to support growth early on. “DBW provided us with our first loan; pivotal in helping us scale the business effectively,” he remembers.
“Their support went beyond just financial assistance; we’ve built a strong, ongoing relationship making them our go-to partner whenever we require additional investment.
“Our focus on delivering exceptional customer experiences, combined with sustainable business practices and community involvement, makes Crwst an attractive prospect for those looking to invest in a dynamic, purpose-driven company with a proven track record.”
Crwst’s upward trajectory illustrates the importance of homing in on grants options which is where Cywain or Business Wales are essential.
Pitchfork and Provision previously received funding under a now closed scheme, the Food Business Investment Scheme (FBIS), to finance a new production unit. Fellow beneficiaries are Carmarthen Ham, whose ARFOR grant along with support from Transforming Towns via Carmarthenshire Council will fund a new deli, butchery and processing unit.
Another company to benefit from a grant, albeit a different one, is Llanfairpwll Distillery, of Anglesey, whose founder, Rob Laming, says they have quadrupled their capacity. Having secured finance from DBW they also received an ARFOR Fund grant set up by Anglesey Council, an Enterprising Communities grant and some personal funds.
“We’re proud of our Welsh roots, and this has helped us develop,” says Rob. “It’s important to get timelines in place from any funders to make the project run smoother and avoid issues with, say, increased costs.”
“Nail your business model and then execute it with a well-funded plan in place.” (Huw Thomas, Puffin Produce CEO).
Commercial banks, venture capital or business angels can be the way forward for an already established business in the form of an overdraft, loan or equity. An angel investor can leverage their position to allow a bank to match the equity investment with debt or a mixture of debt and equity that offers some security.
Huw Thomas, CEO for Puffin Produce, always felt there was scope for a Welsh diary to supply Welsh milk to the Welsh shopper. “There’s amazing grass on our doorstep, yet we were seeing milk loaded onto lorries and taken across to England to be bottled, to be then brought back to Wales,” he says. “Our aim is to bring back the full economic footprint to Wales.”
The opening of Pembrokeshire Creamery in Haverfordwest means Welsh milk can again be produced, bottled and consumed without crossing Offa’s Dyke. “Provenance is key,” stresses Huw. “The Welsh consumer is very loyal to Welsh produce and by substituting the Union Jack with the Red Dragon on our products we’ve consistently increased sales across major retailers.”
Pembrokeshire Creamery is backed by Puffin Produce, the country’s largest supplier of potatoes, PGI Welsh Leeks and Daffodils. The company invested around £14 million, raised through bank loans and equity injections. A further £6 million came from Welsh Government. Huw says investors took Puffin’s track record into account. “We used existing skill sets and links to the major retailers to show proven capability and understanding of the food and drink sector.”
Huw adds launching Blas Y Tir milk was logical. “What is crucial is collating aspects customers can relate to. Plus, a well-tuned business model securely funded in order for major retailers to respond to. Nail your business model and then execute it with a well-funded plan in place.”
Pembrokeshire Creamery is completing phase two expansion and will operate at a new production capacity of two million litres a week by spring, with further capex investment bringing the total amount up to £25 million. The dairy has a workforce of about 65 and a turnover of £40 million.
Another benefit of this type of funding can be found when financing a management buyout, as David Stockley, who led a management buy-out of Brecon Carreg in 2019, explains: “When financing and raising investment for a buyout, several key factors come into play, including the valuation of the business, the structure of the deal, and the availability of financing options. Lenders and investors specialising in management buyouts often have a keen understanding of these dynamics and can provide tailored support.”
“We want an investor with whom we can work, chat freely and be totally open with, and appreciates that we are a small, but growing business.” (Matt Newell, Hive Mind Mead).
Partnering or selling a share is sometimes done by a company or companies who believe collectively they can either reduce a risk through a joint venture (JV) or access a market at scale through the partnership approach, sharing contacts, expertise or facilities. Where the cost of entry into new markets is prohibitive a JV might be the only way, preceding a deeper collaboration leading to a merger or acquisition.
Based in Caldicot, using honey from the Wye Valley, Hive Mind Mead are considering investment after launching their Honeyade natural soft drink range.
“We are keeping our options open,” explains Matt Newell, who co-founded the company with his brother, Kit. “We want an investor with whom we can work, chat freely and be totally open with and someone who appreciates that we are a small, but a growing business.
“We know the limit of our ability and investment would add a fresh and new mind and resources and possibly someone who has faced the challenges we are currently addressing.
“Something we now know is to learn about the mechanics of business finance and get into the habit of budgeting and following cash flow forecasts,” says Matt. “It’s not just a case of making a great product. Getting the numbers right is key.”
“We’ve been very lucky to have had great support from BIC Innovation through the Welsh Government and their excellent Scale Up programme.”
“Don’t be greedy, you may miss a great opportunity!” (Russ Honeyman, Monty’s Brewery).
When it comes to loan vs equity, currently unsecured capital can cost upwards of 15 per cent plus, but equity is often more expensive due to risk premiums. The equity investor is taking, not just a risk on the lack of security, but on the people, their expertise and the marketplace being predictable. They need to know that the exit from the position is possible so that someone else will be prepared to take on and buy the investment.
Based near Montgomery, Monty’s Brewery – founded in 2008 by Russ and Pam Honeyman – have just had a major investment from Ubunto Business Holdings who acquired 51 per cent of the business ahead of expansion plans.
Finding an investor has paid off. “It’s early days, but we are looking at purchasing a new canning line and have had a total rebrand,” explains Russ.
“Some of the larger companies want to purchase from us, but they don’t pay for 90 days. As much as we can produce the beer, we didn’t have the cash flow for that time frame. What we have now is the ability to tender for those sorts of contracts, which will then grow the business.
“We didn’t want a company from London or elsewhere to buy us and end up just brewing beer for another brand. We wanted to be able to go down the local pub and still enjoy a pint of Monty’s!
“A customer had just sold 50 per cent of his Gin company to entrepreneur Mike Harris, owner of The New Saints football club,” recounts Russ. “I mentioned we were looking to sell, and he told Mike. From that point on we met and negotiated a deal that we were happy with.
“The brewery’s new owners have several pubs, a hotel and football stadium, and so as we launch our new branding, our beers will be seen there and further afield.
“In the early days Welsh Government helped us with the trade missions and our export journey and although we do not export as much now, it really helped. There have been trade shows too and more recently we had a grant for some equipment to monitor the beers remotely. That was only about £5,000 but has made a huge difference already.
“A business is only worth what someone’s prepared to pay for it. We were valued by an independent company, which we now believe was a very over-inflated price. If someone makes an offer, think long and hard. Will you be happier with a business partner that may have a different skill set, contacts and visions?
“Will they take some of the money pressures off you? Will you be happier knowing there is backing? And don’t be greedy, you may miss a great opportunity!”
“We were keen to see Wrexham Lager, which went into administration over 20 years ago, again enjoyed around the globe.” (James Wright, Wrexham Lager).
Inward investment could best be described as ‘foreign’ capital, such as a larger business from outside Wales who buy/take a stake in a business they feel has potential. Alternatively, the inward investor may decide to establish its operations in the region as it offers advantages.
Wrexham Lager is a long-established business now enjoying a revival, thanks in no small part to their Tinseltown connection. CEO James Wright says contact with Hollywood stars Rob McElhenney and Ryan Reynolds resulted through the company’s sponsorship of Wrexham AFC.
“The brand has great heritage,” he says. “Not only is it the oldest lager brand in the UK, it was also once enjoyed in many international markets – we have newspaper clippings from Australia in 1884 showing Wrexham Lager being sold.
“The Roberts family and I were keen to see Wrexham Lager, a business that went into administration just over 20 years ago, once again enjoyed around the globe. However, the existing infrastructure wasn’t equipped for expansion internationally.
“So, we opened the dialogue with Rob and Ryan’s teams at More Better and Maximum Effort, while also exploring and securing new international routes to market ourselves. There was immediate alignment on the potential for Wrexham Lager Beer Co to follow in the footsteps of Wrexham AFC and create more opportunities locally and globally for the town and individual businesses.”
James explains that a major impact has been the establishment of Red Dragon Ventures, which both Wrexham AFC and Wrexham Lager Beer Co now sit under.
“This has given us fresh ideas, energy and passion,” he enthuses. “The investment is allowing us to capitalise on brand ‘Wrexham’ and also increase awareness for brand ‘Wales’, which the Welsh Government are collaborating with us on. The most refreshing thing has been to work with investors who don’t just see the business as a quick buck but buy into every part of your story. If they invest with hearts and minds, then it sets a really strong foundation for future success.”
“Always be prepared to pivot when faced with unexpected challenges.” (David Stockley, Brecon Carreg MD)
Related to, but different from a straightforward bank loan is asset finance, a popular way of securing lower costs money given it is ‘secured’ as opposed to ‘unsecured’ working capital. Invoice discounting/finance can be considered asset finance and helped Brecon Carreg post-Covid when a deal with independent lenders Ultimate Finance enabled immediate cash flow.
“When Covid hit we applied for a term loan that proved crucial in helping us survive that first year,” recounts MD David Stockley, who says it allowed the company to fulfil many essential commitments including the payment of wages. “Securing the involvement of Ultimate Finance in 2019 was a strategic move to ensure we had the financial stability and flexibility needed to drive growth. Their expertise and commitment to our vision made them the ideal partner.
“Taking over Brecon Carreg just as Covid hit was an immense challenge. Our resilience and ability to adapt quickly were crucial in navigating uncertainties. We focused on maintaining supply chain integrity along with managing costs within our power.
“We have received invaluable support from the Welsh Government and agencies like Mentera. Their advice and resources have helped us navigate challenges and develop our business and our team. I would advise anyone looking to set up or take over a business to focus on building a strong, adaptable team, prioritise financial stability, and remain open to constant incremental improvements. Seek advice from mentors and industry experts and always be prepared to pivot when faced with unexpected challenges.”
Of course, no business will prosper without the right workforce which is why many businesses may also be looking for external finance to invest in skills and training such as automation and new equipment.
Simon Knight, of Radnor Hills, explains that Welsh Government have continued to provide support for training, ranging from Business Wales’ Accelerated Growth Programme to grant funding, mentoring and skills development support through Mentera.
“We’ve also been helped with canning seamer training, CIPS, HR and CID training plus a marketing mini-MBA,” he says. This programme can also be used to fund finance and accounts training, a vulnerability that many smaller businesses tend to have.
So, ultimately, while the challenges of business may appear formidable, and raising investment daunting, the network of support available effectively acts as a giant safety net – and the rewards are worth it.
“Having experienced the restriction of working for the NHS for thirty years, I felt like a kid in a sweet shop!” says Rosie Oretti.
Useful contacts
www.businesswales.gov.wales/foodanddrink/growing-your-business
www.rhaglenni.mentera.cymru/cywain/en/home
www.bic-innovation.com
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