Alex Turner meets ELFED THOMAS, speed-obsessed chief executive of fast-growing i3 Group

AMONG the marketing activity of infrastructure firm i3 Group is the sponsorship of a young racing driver.

Its founder and chief executive, Elfed Thomas, has been interested in motor sport since he was 11, but there is little sentimentality behind the decision to back Ash Davies in the Formula Palmer Audi Championship.

“Speed is important to us,” said Mr Thomas. “It fitted with our marketing plan and it has really helped us this year in terms of getting the brand out there.

“There’s a clear reason why we are doing it – getting some exposure for the brand, as well as supporting someone who could go forward.”

Going forward at high speed is, if not the company’s slogan – choosing the more prosaic “using the past to connect the future” – then certainly it is the ethos.

The Newton-le-Willows-based company was founded in 2002 and turnover this year is forecast to be nearly £40m. But that is pedestrian compared with Thomas’s plans for the next five years – to hit £1bn in annual contracted revenue.

His journey started from a stationary position, stuck in a traffic jam caused by roadworks. Thomas, a trained engineer, took this problem and turned it into a multi-million-pound opportunity.

“The road-digging situation is archaic, it’s bloody ludicrous. Why haven’t we got another method of doing this?,” said Thomas. His idea was to deploy fibre optic cables through the sewers to create a network – a very simple idea with complex logistical issues.

He said: “The sewer system has stood the test of time. It is local to Britain and is in all towns and cities.

“The challenge was to see why it hadn’t been done and to see how it could be done.”

Any obstacles about how to do it were pushed on to a back-burner once Thomas worked out the potential his idea had.

“I knew it would be difficult to do,” said Thomas. “But I realised the commercial model that could be achieved by putting a cable in a sewer. I knew the commercial revenues could be huge and it was worth pursuing.”

It took another three years before he took the leap, time he spent “narrowing the risk”. Thomas said: “Everyone advised me it wouldn’t work, so you are fighting quite a negative position in terms of moving it forward.

“The water companies are very difficult to deal with. They are a heavily-regulated industry and they are very big companies. For me as a start-up to negotiate with these companies was a huge challenge.

“At the time we were nothing so we had to be very careful in projecting ourselves that we were bigger than we were.”

The new company also had to ensure its technology was covered with patents and trademarks and get funding in place.

He added: “I didn’t want to give equity away, because I didn’t want to get to the point where I was a minority shareholder. A lot of issues surrounded those negotiations – it would have been easy to accept a lot of money in return for a large part of equity.

“That challenge of keeping control was quite a hard situation and caused a lot of sleepless nights about not releasing equity.”

After choosing to move forward negotiations with private equity firm Enterprise Ventures, five months of intense negotiations followed.

But at the 11th hour it hit serious problems.

“On the night before the signature, they wanted a clause that reduced my exit plan for the company and I came to the conclusion that I would walk away,” said Thomas.

“I remember having a coffee with my financial director in Manchester in the morning and I said I wouldn’t sign it.

“I stood my ground and we won the point. It was important to demonstrate that that was the relationship we were going to have.

“We signed the document. It was a euphoric moment because we had got someone to invest £500,000 – and we hadn’t done any invoice sales. It was quite a coup.”

And while he is complimentary about the role Enterprise Ventures played, their relationship was clearly afflicted by growing pains.

“I pushed as fast as I could and as quick as I could, much to the annoyance of the VC,” he said. “They thought I was going too fast and were cautious of not burning too much cash.

“We are an infrastructure company, not a telecommunications company, so we used a lot of cash. But we didn’t want to be in a position where we needed to raise more money.

“There was a massive amount of issues. There was quite a fraught time – the VC was accommodating, but they were very nervous, but I wouldn’t slow down.”

That growth has seen the group realise plans to double its staff in recent months, to 126, with firm plans to employ 200 people in three months’ time and 250 three months after, that as it ensures it has the staff to keep pace with its fast strategy.

“We could have gone a very safe route and just concentrated on one water company area and slowly developed the company,” said Thomas. “But I wanted the whole of the UK, and international markets.”

That has seen i3 Group expand into Australia, South Africa, Abu Dhabi and Ireland, and it will add Netherlands and the US shortly.

He added: “The board was very supportive. I was moving quite fast in terms of where we needed to get through, we needed to get into other markets, we moved into the international markets very quickly. It’s brought us additional revenue quickly and not rely on borrowings to fund the company.”

Thomas, though, has no intention of applying the brake any time soon.

“People say to me how big we can become and how fast we are growing,” he said. “But people always under-estimate how big we could be.

“I always had the view that it could be huge.”

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