It’s a common complaint among those supporting British entrepreneurs that too much talent gets sucked into the big banks. Andrew Dixon, founder of ARC InterCapital, didn’t just find a way out but has gone on to support UK entrepreneurs and wider society beyond in ways that can’t be easily measured on a balance sheet.
Before founding ARC InterCapital in 2001, Andrew Dixon was at Goldman Sachs and before that Société Générale. He was always driven to work with entrepreneurs because of his admiration for their creativity and vision, and the booming tech scene of the 1990s convinced him there was an opportunity.
Dixon got his first taste for investing at Société Générale. “I made my first investment in American Metals Recovery (AMR). It was an exceptionally naïve investment and eventually failed, but I thoroughly enjoyed the process and, most importantly, I learned a great deal. There is no shame in failing so long as you can use the experience to build upwards. After AMR, I invested in IDM Limited, which was a success, selling out near the peak of the Internet’s early popularity.”
More than two decades later, he has invested more than £30 million in over 40 homegrown British companies. He has a diverse portfolio, including Infinitesima, the developer of the Rapid Probe Microscope for the semiconductor industry, and LIVE IT, a ticketing platform.
“My focus has principally been in the tech and software space whilst tending to avoid retail. I always look for businesses that are doing something different in an expanding market,” he says. “But, ultimately, I invest in people, not just ideas.”
He looks for entrepreneurs who take a different approach and an unorthodox solution to the problem, as well as those with deep reserves of tenacity, energy and empathy, and with the vision to predict the ever-changing needs of consumers and the wider market. He also looks for strong communicators and the ability to prioritize what will actually move the dial of the business.
When it comes to the business “it’s very important that the company has a pathway to build a strong, robust economic moat” says Dixon. “I am looking for businesses that have a way to maintain their competitive advantages over time. We do not want to see a competitor simply replicate the business. Warren Buffett said it best, claiming he was always on the look-out to invest in businesses with wide and long-lasting moats around them, protecting a terrific economic castle with an honest lord in charge.”
Dixon is concerned about some moats though – specifically the dominance of global tech giants such as Google, Amazon, and Apple. “Growth is good, but they have become untouchable, and something needs to be done about it at a global level,” he says.
“Sourcing the right talent is also a huge challenge,” says Dixon. ”As the tech industry grows, the supply of skilled engineers and programmers cannot keep up. We’re not investing enough in education to prepare this generation and the next for the jobs of the future, and it’s holding back businesses and, indeed, wider society.”
Dixon would also like to see greater clarity on the UK’s long-term economic strategy, as well as better economic relations with our closest trading partners. “I am all for free trade, but new trade deals with countries on the other side of the world will not be the saviour of our economic woes. And clearly, access to our nearest and largest market, the EU, has been made much more bureaucratic.”
Outside of entrepreneurship, Dixon founded the Woodhaven Trust and is passionate about prison reform. It supports prisoner rehabilitation non-profits such as Code 4000, which teaches programming skills to offenders, and Prosper 4 Group, which provides employment opportunities to ex-offenders. “These are hard-working and innovative charities on the front line, helping prisoners prepare for life beyond their sentences. It might not be in vogue to support the rehabilitation of offenders, but the evidence suggests it is by far the most pragmatic approach to reducing reoffending rates,” he says.
In 2020 Dixon established Fairer Share because he believes we have been plagued by an unfair and irrational property tax system for decades in the UK. While government after government recognizes change is needed, they’ve all kicked the can down the road for fear of upsetting voters.
According to Dixon: “On the one hand, Council Tax is still based on 1991 property values, so it leaves poorer regions, particularly in the North and Midlands, paying a much higher rate than London and the South East, where house values have risen much quicker. On the other hand, due to the band structure – in which all properties in a specific band pay the same amount – homes at the bottom of each band pay proportionately more than those at the top of each band. On top of this, we have Stamp Duty which taxes property transactions, making it expensive for young people to move up the property ladder or older couples to downsize. Transaction taxes of this nature have always seemed peculiar to me.”
“The result is increasing regional and intergenerational inequality”, hse adds. “The UK now has greater levels of regional inequality than 28 other developed countries, including the US, France, and Germany, according to analysis by the University of Sheffield. It’s a scourge on our society.”
While many entrepreneurs and investors shy away from it, Dixon is more than happy to get stuck into the nitty gritty of politics and policy. It should act as an inspiration. After all, the UK and the world at large needs more of this civic mindedness.