“It’s offered a mirror to check how we’re doing,” Caspian Films on Investment Readiness and giving female auteurs a voice
//
Back in 2016 the founders of Northcoders saw a tech skills gap in the north and realised that they could fill it with a coding bootcamp. Since then, investment from Creative UK has played a part in the business’s evolution from a company with space in one shared Manchester office to one with offices across the country.
Northcoders obtained a loan through Creative UK partnership fund, iAMDigital in 2017 and has since expanded into Birmingham, Leeds and Newcastle, been listed on the public stock exchange and received £1.5 million of further funding from Creative Growth Finance and the North of Tyne Investment Fund. With such a big story to tell, we wanted to hear it from the man behind the scenes so caught up with Chris Hill, the CEO of Northcoders to learn about his experience of scaling a creative business.
The Northcoders team
Creative UK (CUK)
How did Northcoders get started?
Chris Hill (CH)
Northcoders got started in 2016 by two people who spotted that in the north of England there was a requirement for another way to create technologists, as opposed to the standard university route. We saw that coding bootcamps were getting quite a bit of traction in the States and in London, but no one had opened a bootcamp up here.
We set up a ten-person classroom on the outskirts of Manchester with a simple proposition – come along, learn to code and we’re going to charge you a fee if you succeed. Nine out of ten people did.
CUK
What were your biggest challenges as a business in your early days of operation?
CH
Initially the biggest challenge was actually finding office space. We did look at different cities, but in Manchester, we landed on the Sharp Project, a co-working space which was much rarer in the north of England. Everyone else wanted huge lease commitments that we just couldn’t meet at that time.
Another challenge was awareness and educating the region on what a coding bootcamp was, what a coding graduate can do for you and why you should look at us and take us seriously.
CUK
From where did you get your first finance?
CH
Initially, we had a small friends and family seed round. That first pot of money was to take the business from concept to inception and then my co-founder and his brother invested to get us operational and able to hire staff.
CUK
How did you first come to hear of Creative England, as we were then?
CH
We first met Creative England when we applied for their iAMDigital loan back in 2016.
CUK
What did the iAMDigital loan enable Northcoders to do?
CH
That was to move into our first own brand leased premises in the centre of Manchester, so for the first time we were all actually in the same room. It also enabled us to invest more in marketing and sales and to fill the in-person space which was very quickly oversubscribed.
CUK
You later extended that loan by another £100,000 when you opened up new premises in Leeds. Can you tell us about that move?
CH
By that point we were also supported by a significant other corporate contact who wanted us to do the course delivery in our own premises for them in Leeds. That loan of £100,000 meant we were able to launch our new location. At that point we were able to support around 30 students in Manchester and 12 in Leeds, so it was still quite a small operation.
CUK
In 2020 you were one of our first Creative Growth Finance (CGF) loan applications. What kind of growth and challenges was the business experiencing at that time?
CH
At that time we’d experienced massive growth with around 600 graduates and full facilities in both Leeds and Manchester. We had just moved premises again to a much bigger location in Manchester; however this time we’d used our own reserves. We’ve always been a cash generative and profitable company but that was our first serious move, to big premises of 10,000 square feet near Piccadilly Station.
The £500,000 CGF loan was to support the significant expansion of the company, including the adoption of our apprenticeship offer for which purpose we acquired an apprenticeship company. So, as well as doing private bootcamps and corporate work we were going to a different market and that required more capital. What we couldn’t have predicted was that the investment would become a bit of a Cbils (Coronavirus Business Interruption Loan Scheme) loan because it was 2020 and then suddenly it was covid.
CUK
What was your experience of working with the Creative Growth Finance team during covid?
CH
We had great support through covid from Creative Growth Finance and it comes back to that relationship building element of it. Sticking with one lender where we always had a great relationship with our Investment Manager, Matt [Browning, Head of Investment] meant that, though navigating covid was obviously very difficult for us – and we did have a serious reduction in income – we knew we had the support we needed from our investors.
Our high street bank backed us with a Cbils loan and Creative Growth Finance were very understanding of that and allowing another charge against the company. You don’t always get that kind of treatment from lenders, it’s computer says no at a lot of organisations, but with Creative UK you can talk to someone who understands what’s actually happening on the ground.
CUK
Did you have any regrets about having taken on debt investment at this time?
CH
In the very early stages of a business people think it’s a really bad idea to take on debt, but if you’re confident in your model there’s no reason it should be a negative. Ultimately the lender’s only going to lend the money if they’re confident in your model because they need to make their investment back. Working with Creative UK from the early stages of the business meant that we got used to running our business that way and, actually holding onto as much equity as possible can be really beneficial.
CUK
Last year you expanded your offering into the Northeast with joint investment from Creative Growth Finance and Creative UK’s North of Tyne fund. Can you tell us about the move there?
CH
The northeast is an incredibly exciting region. For example, Newcastle is a really beautiful city – I’m actually at our Newcastle office this week – and it’s great to see the levelling up happening. There’s now so much going on in many of the northern regions. We’ve seen Manchester on that trajectory and it’s now one of the biggest tech cities in Europe, so I’m sure we’ll see the same from cities such as Newcastle and other northern towns.
CUK
What kind of support have you received from the Creative Growth Finance team?
CH
Working with Matt [Browning, Head of Investment] it’s been a long-term relationship. You’re not in an organization which is of a size where you’re passed from pillar to post. For example, in a high street bank they might say you’re not in the sub £100,000 revenue category now, you’re in the £5 million plus category so we’re going to pass you onto Corporate. It’s not like that; you know, Matt’s been there from the person we spoke to about borrowing £50,000 to the person who worked us through taking a million. That’s obviously rare and great to see and I think that it just goes to show what a great organizational culture you must have.
Introductions to clients have been made by Matt and the reporting feels human. If you’re not sure about something, you know you’re going to be able to speak to someone and that’s one of the great advantages. I would also say that because we have borrowed from a major high street bank, we know the differences from a mainstream lender and the relationship is very different.
CUK
What are your proudest achievements as a business?
CH
We are now a PLC, so we pulled an IPO out of the hat coming off the back of what was not a great trading time with covid and, actually a lot of people could have said you should wait a year. But everyone massively believed in our story and we managed to float on the stock exchange at a very small £12 million market cap which we have now doubled.
And I suppose every small story is amazing for us. We’re here to be real changemakers. We are closing the skills gap for companies, but in a way that creates life-changing opportunities for individuals from all walks of life.
CUK
What do you think are the main challenges faced by early-stage creative businesses today?
CH
Interest rates are going to be a challenge. What a lot of small businesses don’t know is that interest rates affect everything. People think well, if interest’s high I shouldn’t go and get debt, I should go and get equity finance but actually, most of the time equity finance is just a loan which is compounding interest on your balance sheet. But you don’t think about that, you just think about taking the money. And I think the investment landscape is getting more difficult to navigate because there are firms that literally exist to make money.
I suppose the challenges are about making sure that you really are offering amazing value and that people want to work with you. You’ve just got to keep your head above water and believe in your proposition. Taking the long-term view can be difficult because you’re probably looking at cashflow (we used to do cashflow every day). But I think that sometimes you just have to extract yourself away from the here and now to the where are we going with this and what is the right thing to do to get us to the large milestones?
CUK
What’s next for Northcoders?
CH
We’ve just acquired a company called Tech Returners who over the years have built up an amazing brand and are recognized as the place to go to get experienced engineers who have returned to the tech industry. We have recently launched our business solutions division and later this year we will be venturing into the world of cyber security. We’re also excited to work with some more companies in the young career space. So, it’s really just opening up what we do to more people and expanding our support even further.