As a graduate working at Coopers & Lybrand, Jonnie Goodwin was asked to compile two reports. One was on a “fascinating” proposed deal in the media sector, the other involved researching car component manufacturers, reports The Telegraph. He says he’d prefer castration to car parts: “Every deal I’ve worked on has been in and around the media sector since then.”
There have been a fair few of them: he claims he’s worked on 100 transactions worth a combined £20bn, a few of which helped Elisabeth Murdoch build Shine. He also worked with Kelvin MacKenzie, helping the former Sun editor create the radio business The Wireless Group.
“Overpaid public school t—-r” was MacKenzie’s term of endearment for Goodwin. Working on the deals for small and medium-sized companies he now specialises in, Goodwin has been struck by how many entrepreneurs have similar backgrounds to his own (although he keeps his views on their characters to himself). “It’s surprising how many successful entrepreneurs have been to public school and a good university and it’s all a bit London centric.”
Along with posh dot-commers, Brent Hoberman and Martha Lane Fox, he has established a scheme to tackle the “elitist” media and tech sectors, to get young people from a broader range of backgrounds working in fast-growing businesses.
Their Founders Forum Foundation will facilitate internships and scholarships to school leavers from across the UK to “bring down the barriers” which Mr Goodwin says result in the majority of media and tech companies being run by entrepreneurs from privileged backgrounds.
The organisation is being chaired by Lane Fox, the Government’s “digital champion”.
“We’re looking at all sorts of ways of doing it,” Goodwin says. “It could be a marketplace to provide work experience, internships, and awareness to school leavers around the country to make it less elitist and bring down some barriers.
“We want to get to the point where we’re offering scholarships and internships to school leavers from trickier areas. It doesn’t mean we’re saying we’ll encourage every school leaver to become an entrepreneur. It’s more about raising awareness that working for start-ups and fast-growing companies is exciting and Britain is very good at it.”
Goodwin says the foundation is in talks over a partnership with David Ross, the Carphone Warehouse co-founder who has sponsored a number of schools to become academies. The foundation is part of the Founders Forum, the eight-year-old, invite-only global networking event started by Mr Goodwin and Mr Hoberman, where the most tech-savvy mingle with media stars and captains of industry.
Mr Goodwin, who runs the finance house Lepe Partners, says he is also aiming to connect some of the business leaders who come to its events – such as Autonomy founder Mike Lynch, LinkedIn’s Reid Hoffman and ITV’s Archie Norman – with charities.
“A lot of good can come from mixing them – in terms of generating ideas, technically being able to add value and giving them know-how. The Mormons have given up door knocking and have turned to Facebook to recruit followers. That’s one extreme but digital companies can make charities more efficient, too, from fund-raising to data collection.”
While Facebook is a past sponsor of his event, Mr Goodwin criticised tech giants including the social network, and Google, for “doing very little” to engage with communities they operate in.
“These phenomenal success stories are cuckoos in the nest in Britain and do very little. They don’t pay [much] tax, employ fewer people [than businesses in other sectors] and in many cases have bastardised the revenues of other industries. In that sense they’ve caused unemployment. Yes, Google has invested in [the tech scene in] Shoreditch, but that’s in their own backyard.
“We should be leaning on them harder to put more back into the country. I’m not talking about complicated tax structures – we need to be forward, in the way the Americans are, and encourage them to put more back into the cities they’re a part of. We’re sometimes so afraid of our own shadow that they’ll go somewhere else, but where are they going to go? If you want a [European] headquarters, London is the best place to be.”
Mr Goodwin left the US investment bank Jefferies – which had bought his corporate finance boutique Longacre Partners – last year to set up Lepe, which he calls an “old fashioned merchant bank”.
“We’re independent, and we’re relationship and sector driven,” he says. “And we invest with minority stakes in a merchant bank-type way – we want to go on journeys with clients over many years.”
Lepe is building a fund worth about £40m to invest alongside clients in about half of the deals it advises on, which have included DMGT’s acquisition of the property search site Zoopla.
Mr Goodwin and Mr Hoberman also run venture capital firm PROfounders Capital, which invests in technology start-ups such as TweetDeck, the online service acquired by Twitter last year.
There’s plenty of capital around for British digital media companies, Goodwin insists, but our ability to grow big businesses here is being hampered by the lack of flotations – and, he admits, firms growing big enough in the UK to think about floating in the first place.
“People are being wooed by more liquid public markets in America but I question how sustainable that’s going to be. Those IPOs have not been successful. I’m not sure investors have done very well out of fast-growing digital companies.”
He agrees with some of the consensus views of the causes: a lack of independence among investment banks and their focus on the “top 10 or 20 public market investors” means that flotation prices are too high and “the after market isn’t looked after”.
Entrepreneurs and venture capitalists have to shoulder the blame too, though: “The shareholders think of the IPO as an exit rather than a platform for further growth. [And] it’s tough when the pre-IPO investments have been done at such high valuations. Everyone needs a dose of a longer term outlook.”
However, he believes markets in Europe, including London, will eventually evolve into “more credible long-term markets – they have to. We’ll learn from this and investors will become smarter and realise there are exciting companies in Europe”.