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Drive: Deyrick Upton, the CEO of Bread Solutions, had an angel to back him
You may think the olive bread sitting unassumingly beside your lunch is just another piece of food.
However, for inventor and entrepreneur Deyrick Upton it is the result of nine years’ development, for angel investor Ross Mackenzie it’s a successful, and now complete, angel investment and for Coles supermarket, it’s a point of difference.
Hailing from New Zealand, Mackenzie came to Australia in 2006 looking for an opportunity to invest in an emerging company and lend both his skills and his cash to ensure a venture’s success.
With no network on the ground, Mackenzie kicked tyres for a few months before meeting Christine Kaine, who operates long-running angel investor business-matching service, Business Angels.
“I had a background in a whole series of businesses, including horticulture and consumer electronics and then in fast-moving consumer goods,” Mackenzie says. “But in Australia, I didn’t have the contacts to really understand what business I was looking at, or how much of a risk I was facing. What I did find was Christine, who offered me a number of different opportunities before finally Bread Solutions came along and I met Deyrek Upton.”
Upton was a manager at national franchise Bakers Delight. While there, he saw an opportunity in the realm of premade frozen dough, which could be freshly baked on premises with very little local preparation. This could enable bakeries to operate without fully qualified bakers – which, with the skills shortage, were proving hard to find.
“We were opening two stores per week for two years straight and skills were always the most limiting factor,” Upton says. “We’d have the franchisees train a series of apprentices but we were often left with an unskilled person performing a job that really needed a highly skilled and experienced person, so I started to look for ways to work smarter.”
Seeing his chance, Upton left Bakers Delight in 2003 and began working on the combination of ingredients and processes that would produce high-quality bread from frozen dough.
Working with a small team and sharing food preparation facilities with other emerging producers, Upton developed the technique to the point where it was ready to be produced en masse and had a handshake deal with Coles to rapidly ramp up production.
The problem was that the original investors had had enough and wanted out, so Upton had to find another investor to bring in the cash and business skills needed to take Bread Solutions from cottage industry to large-scale manufacturer.
Upton took his business to Kaine’s Business Angels service, through whom he met Mackenzie in early 2007.
“There are three factors which you need to take into account in a business opportunity to make this kind of investment work,” says Mackenzie. “The people, the business model and the terms – and in this case the business model – was really interesting. Derek had tenacity and a deep understanding of what he wanted to achieve and the terms were just right.”
In October 2007, the company was incorporated and just a month later, work began on a new Bread Solutions production facility.
One of the key factors behind Mackenzie’s decision to back Bread Solutions was that the company had a handshake agreement to become a supplier to Coles, which provided immediate demand for the company’s product. This instant customer base and rapidly expanding demand provided its own challenges, as the company’s output grew 600 per cent in the first 12 months. The second 12 months also saw a rapid expansion, with output increasing by 300 per cent, and it wasn’t until 2011 that the production facility was complete and the company could begin a period of consolidation.
“We had robust debates throughout the period about where to take the company and how to expand, and in retrospect we probably should have considered the exit from the time we first began working together,” Mackenzie says. “But what made the relationship work was that we had complementary skills. I had experience in rapidly expanding companies, so I could create new business systems while Derek had worked in big corporations and knew how to maintain all of the necessary compliance measures.”
One example was the appointment of a chief financial officer when the company was still in an early phase of growth. This seemed a little excessive to Mackenzie at the time but it ultimately paid off because of the strict reporting practices the CFO implemented early on.
With the business running successfully in 2011, Mackenzie and Upton began to discuss an exit strategy, which would enable Upton to continue to develop the business idea into which he’d thrown his heart and soul for nearly a decade, while allowing Mackenzie to turn his attention to new opportunities.
So it was that in December 2011, Upton and Mackenzie parted ways.
Bread Solutions has scaled its manufacturing plant to the point where it provides Coles supermarkets with a pre-prepared frozen dough that can be thawed to produce a freshly baked style bread on the premises.
“We can produce everything from olive ciabatta to a long-fermented sourdough bread,” says Upton. “It’s all very healthy and doesn’t have any of the nasties in terms of preservatives. At the same time, we’re contributing to the value proposition Coles offers its customers, which means we need to become more efficient in our production methods.”
Mackenzie, on the other hand, has had a very successful exit from Bread Solutions, and is now looking for new opportunities to invest cash and skills in rapidly growing companies.
He’s still involved with Business Angels, as well as a number of angel investment business networks, but is also happy to respond to entrepreneurs and potential business partners through the online networking service LinkedIn.