The Carbon plan for scaling upThe founders of Carbon started with law because that was their background – but the ambition is for the business to offer a range of professional services. “The plan right from the beginning was to build a platform that can do two things. Firstly, it can add other professions, and secondly, it could be capable of working in other countries,” said Burne. “We can be here, in Cardiff, and we can grow business anywhere in the world – we just need to (metaphorically) open new umbrellas from our platform. We don’t need to rebuild the platform every time we open somewhere new, or add another service.” The business is taking things one step at a time, however, and making sure it only scales up once firm foundations have been laid. Carbon was undergoing rigorous testing from 2010 to 2012, and has been live in its present form since May 2014. “Now, we’re slowly but surely allowing our business to become visible because we’re confident that it works.” Recently, the business hired a new head of talent with a host of blue chip experience, and in April, Carbon created a joint venture with an accountancy firm.
The cost of scaling upLast year, realising the business was doing well, the founders decided they wanted to give it a shot in the arm to boost the scale-up process. “We started looking at funding sources. We did the traditional things like looking at borrowing money from the bank and we looked at one or two external investors but ultimately we got frustrated that these processes were taking too long.” In addition, Burne and his co-founder were hesitant to give up equity so early in the business. Eventually, the idea of pension-led funding arose. “My co-founder and I have got an advantage here, because Owain comes from a banking background and I came from a financial services background. We both have a good understanding of pensions and the rules surrounding them. “I don’t like the phrase ‘no-brainer’ because everything needs thought, but it became pretty clear to us that we could take our own money from our pensions and put it in to our business without giving up any control to any investors.”
The pitfalls of pension-led fundingBurne and his co-founder believed it was possible to make a better return on their money investing their pensions into the business rather than leaving them where they were. They had already invested money in the business and could see that it was taking off – it did not seem like a high-risk venture. However, there are of course pitfalls to pension-led funding. If you invest part of your pension pot in a business that tanks, you’ve lost part of your pension and have less to fall back on. The process of acquiring pension-led funding includes presenting your figures and business plan to professional advisors, the pension scheme’s trustees and fund managers, who will advise on whether they think it is a good investment. Approval is also required from HMRC – a loss-making business would not qualify, so there is some level of protection for the uninitiated. Despite these protections, it is advisable for any business seeking pension-led funding to do as much research as possible to assess the risk involved. “If you were going to take your pension and put it into a broken business to try and prop it up, that would be high-risk,” explained Burne. “Only you know if your business is going to grow and make money.”
Share this story