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Updated 15 Oct 2019


Levergy founders tell you how to scale quickly – And intelligently

Founders Clint Paterson and Struan Campbell explain how they’ve managed to take on strong competition, build a solid business, and even attract the attention of major international firm M&C Saatchi.


GG van Rooyen, Entrepreneur, 28 December 2017  Share  0 comments  Print


All the answers to your unique business lifestage questions

Vital stats

  • Company: Levergy
  • Players: Clint Paterson, Kieren Jacobsen and Struan Campbell
  • Founded: 2012
  • Turnover: R60 million
  • Visit: www.levergy.co.za

Background

Major international firm M&C Saatchi acquired a majority stake in Levergy in June 2017. Levergy now operates under M&C Saatchi Sport & Entertainment. The company also won the Agency of the Year award at the prestigious 2017 Discovery Sport Industry Awards.

Levergy’s growth has been quite amazing. The company was founded in 2012 by Clint Paterson and Struan Campbell. Although they managed to raise a modest amount of money from a handful of backers, this was not an operation that could afford to burn through funds at a rapid pace. And although the company did enjoy some early successes, the money wasn’t exactly pouring in. Revenue in its first year of operation was under R500 000.

Today, Levergy boasts a majority stakeholder in the form of M&C Saatchi, a list of impressive clients (including Audi, SuperSport, DStv, BBC Africa and New Balance), and an annual turnover of more than R60 million. How did the founders manage this sort of growth and success? Here’s their advice for not only scaling quickly, but intelligently as well.

Related: How to think about building ‘one culture’ in an investment holding company

Sometimes, launching in a bad economy is an advantage

When we launched Levergy in 2012, the economy wasn’t looking great. Now, it might seem like a bad idea to launch a start-up in a shaky economy, and there are certainly some young businesses that can’t survive a depressed economy, but we viewed it as an advantage.

The fact of the matter is that launching in a bad economy forces you to be careful with your money, and, if you can survive those difficult early years, the business rests on a strong foundation. When things are booming, you can get a warped view of reality, and you can find business suddenly drying up.

A bad economy also often means that there’s less competition and companies are spending less on things like marketing. That’s good news for a start-up that can’t spend a fortune on marketing.

Don’t throw money at every problem

Levergy -Founders

Although we managed to raise some early funds, we didn’t have much of a runway. So, right from the beginning, we focused on being cash flow-positive. We managed to break even in our first year of operation. Even though there’s more money now, we’ve tried to maintain the same approach that we had early on. We don’t spend money just because it’s there. Growth isn’t just about making more money, it’s also about restricting spending. Young companies often spend too much too early on things like fancy offices. Take pressure off yourself by saving money.

Some things are worth spending on

We were always careful with our money, but we believed that some things were worth spending on. For instance, we didn’t spend a lot of money on fancy offices and furniture early on, but we did spend on staff. We believed that finding and attracting the right people was important, so we invested in this area of the business.

We also attended some major international conferences, and even went to the 2012 Olympics just after we had launched. Travelling overseas might have seemed like an unnecessary expense, but we believed that it was worth it, since it would allow us to see what the best companies in the world were doing. It’s important to spend money on the things that you think will really boost your business, and save on those that won’t.

Related: 5 Top lessons from LAWTrust to prepare for super-charged growth

Be willing to take ad hoc work

Retained clients are fantastic, since they give you room and confidence to grow. With a retained client, you’re guaranteed a certain amount of income. However, don’t expect it to be easy to sign clients. It takes time and patience. One of the best ways to secure long-term clients is to start off with ad hoc work.

Don’t push for a retainer right out of the gate. Instead, take on a few small projects and show what you can do. First build up a track record.

Selling a majority stake in your business is never easy

You need to think very carefully about what you hope to achieve. If it’s just about the money, the experience can be painful and frustrating. The last thing you want is to work in a company you no longer truly own, just because of some earn-out deal. For us, it was never just about the money.

We liked the access to international best practices and overseas clients that an operation like M&C Saatchi Sport & Entertainment could offer, but we still wanted Levergy to feel like ‘our’ company. We didn’t want to take the money and run. We wanted freedom and autonomy, which M&C Saatchi was happy to give us.

You need to have this conversation early on in any negotiation. Everyone needs to be on the same page. If your goals and expectations aren’t aligned, it won’t work. We only sold once we felt confident that we could have a great working relationship with the folks at M&C Saatchi.


TAKE NOTE

You need to invest in growth, from knowing where to focus your time, to approaching the right clients, to spending on the best assets.

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GG van Rooyen, Entrepreneur


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