ENTREPRENEUR Mike Welch has made his first private business investments since selling Blackcircles to tyre giant Michelin for £50 million.
Mr Welch, who continues to run the Peebles based online tyre retailer he founded, has put money into online fashion company Atterley and upmarket designer homeware business Houseology.
He is following long time mentor and adviser Sir Terry Leahy, the former Tesco chief executive, in getting involved in both businesses.
As well as being an investor Mr Welch is becoming a strategic adviser at English firm Atterley and will sit on the board of Glasgow-based Houseology, formerly known as Occa Home, as a non-executive director.
Mr Welch said: “It is looking at businesses where I can add some value based on my experience which is probably quite narrow in terms of managing the metrics in an online business, avoiding capital expenditure, key performance indicator management, customer acquisition, conversion and all that stuff.
“It seems like a bit of fit with some online businesses in the early stage where they could use some advice. I wouldn’t be investing in anything where I didn’t think I could bring some of that value.
“In both those investments they are cash generative, niche players, [with] high quality products, customer loyalty, good margins and demonstrable repeat business.”
Houseology has also recently launched a £1m crowdfunding drive.
On Atterley, which sells its own branded women’s clothing, Mr Welch said he had been particularly taken by the management team which includes a number of former ASOS staff.
He said: “It is a people thing. The team is massively impressive and they as a group have asked me which is nice.”
Turning to Houseology Mr Welch said: “We have been talking to for the last few months and it is a fabulous business.
“It is high-end. Where John Lewis ends in terms of premium they begin. It has come out of an interior design business. It is kind of like an interiors services but it is product led.”
Mr Welch said both companies fit his philosophy of where he believes online retail is heading.
He said: “The future for me is about owning a niche rather than a category. The days of an Amazon like business raising billions and not making money for 10 years straight is a bit behind us. I can’t see in the immediate future anyone going on that kind of crusade.
“For me the winners will be the guys who own niches and customers segments who have high loyalty and really know their customers.
“You can then see these guys in the future perhaps being part of consolidation from a bigger player that wants to own a segment.”
Mr Welch said his involvement in other businesses should not be taken as a signal of a waning interest at Blackcircles.
While he admitted to feeling “weird” when he sold the business the Liverpool born businessman remains focused on delivering the plan he agreed with Michelin.
He said: “We laid down a plan they invested in and had faith in and we have got to deliver that.
“I have got a moral obligation to at the very least see through the plan we laid down and give them a valuable return on their investment.
“For me success would be us getting to a place where the investment they put into the business looks like a bargain.”
Mr Welch said Blackcircles, which he started in 2001, is on course for a year of record revenue.
It had posted turnover of £27.8m in 2014.
He said: “When I say it is our biggest year we will be probably twice the size within a 24 month period in a market which is down about two or three per cent.”
The business allows users to select tyres online and then get them fitted at one of 1,500 local partner garages across the UK.
Plans to take the model outside the UK are also progressing.
Mr Welch added: “We are working on it. We will be doing something but the challenge is we have finite resource to deliver the plan. We are working out how to do that without compromising the core business.”
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