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11 September, 2015 - 14:06 By Tony Quested

Fitzgerald breathing new life into building design

Shaun Fitzgerald of Breathing Buildings

American comedy actor Steve Martin tells a joke about the benefit of standing in another man’s shoes. “Before you criticise a man, walk a mile in his shoes. That way, when you do criticise him you’ll be a mile away AND have his shoes.”

Shaun Fitzgerald, who to my knowledge has never been on his uppers, urges a similar approach when business founders are approaching investors for cash – but without the cynicism. His rationale is that by metaphorically standing in the potential funder’s shoes you can ask why they should lend you money and on what terms.

Fitzgerald’s company – natural ventilation specialist Breathing Buildings – is doing well in the UK and internationally and having been supported in its infancy by energy giant BP and preserving close ties with Cambridge University – its alma mater – is in a position where it does not need to go round with a begging bowl.

But Fitzgerald acknowledges that banks are generally not lending enough to SMEs, which he feels is holding back progress for many young companies, and that enterprises need to be realistic about their investment options. He says: “The main improvement I would like to see to make the UK environment more fertile for new businesses is increased bank lending for SMEs. It is a continuing issue. I see lots of other businesses who have struggled with inadequate support from their banks.

“My other main advice to budding entrepreneurs is that when considering whether what you are asking from an investor is sensible or not, simply swap your shoes.

“Ask yourself, “If I was an investor, what would I demand?’ If what is being asked of you now is no more than you would ask if you were an investor, the deal is good to go.”

Breathing Buildings was formed as a spin-out company from the University of Cambridge in 2006, following the discovery and development of a proprietary low energy e-stack mixing ventilation system as part of a major research programme at the BP Institute, through the Cambridge-MIT Institute, with funding from BP plc.

The technology was filed for patent by the University of Cambridge and Breathing Buildings was granted exclusive rights to the IP to develop and commercialise this low energy ventilation system.

Shaun founded the business with Professor Andy Woods, who was the CTO. During 2006-07 prototypes of the system were developed and tested in the Breathing Buildings laboratories, with a team of highly qualified ventilation experts.

Since the e-stack system was commercially introduced in 2007, the success of the product and associated consultancy has been recognised by industry via an increasing number of awards.

E-stack systems are now operating in hundreds of buildings across the UK, ranging from retail projects to local primary schools and there is a substantial pipeline of new projects for which Breathing Buildings is actively engaged in supplying e-stack systems.

Shaun first took an interest in business when doing his PhD in geothermal reservoirs at Cambridge University before moving to Stanford University in California. He later spent five years at Bain and Company.

He returned to Cambridge carrying out research into natural ventilation at the BP Institute before turning his hand to energy reduction using his expertise in natural ventilation to found Breathing Buildings.

“I remember going to conferences which had both academics presenting as well as those from industry. Seeing the challenge between application and theoretical modelling was inspiring. So few people seemed able to truly feel comfortable in both camps –  certainly there were very few people who were able to lead activities in both arenas.

“In 2005 I decided to form the business. I was 38 at the time. I had been frustrated with building contractors changing designs of buildings I had developed. They were using the argument that there were no companies able to provide the equipment I suggested. It seemed that the only way to get the building industry to adopt my ideas was to set up a company and offer equipment ourselves.”

While the primary focus of the business was to develop and commercialise natural ventilation systems derived from a patent it had filed at the university, the company also had a secondary revenue stream from design consulting; however, the main focus was to get the equipment manufacturing side established.

Ex-colleagues from Bain & Company encouraged Shaun to go ahead with the venture and the stress factor was kept low by the tremendous support from BP. Shaun recalls: “BP contributed the funds to set up the business in the first place and ensure that we had cash resources to support ourselves for two years.

“We faced opposition from incumbent natural ventilation companies who were offering systems which did not meet the design requirements. However, we overcame these by working closely with government to educate those who compile building regulations, and in key sectors these have now been changed to support the industry.”

Dr Fitzgerald concedes that building the company thus far has not been without its problems.

“The most stressful times have been when staff members have not developed at the same pace as the business. As a business grows, it needs different skills and managing this transition has been hard at times.

“We have gone through some tough times but the business is now doing well. I have been fortunate in having family for support as well as key shareholders. It is a simple thing but if you volunteer to make personal sacrifices for the good of the business, this helps a lot in garnering support.”

Given a time machine, Shaun says he would change at least one element of his methodology. “I would be really clear with the shareholder structure to ensure that all those in direct day to day management of the business have a good slice of the equity. This needs to be applied even at later stages of the company so a good option pool is crucial. The concept of vesting needs to be used and applied.”

Having scaled Breathing Building successfully, Dr Fitzgerald is aware that many more local businesses could be spurred to greater success given the rub of the green in crucial areas. He says: “The potential scale of a business may be limited not by ambition, but by the access to finance and the market you are currently in. The ultimate impact of one start-up business may be maximised by being sold to an established trade-buyer rather than going solo.

“The name of the startup may be lost in the process. A different business may need to stay solo with various rounds of investment in order to maximise its potential.

“The nature of the market, and crucially routes to customers, will determine the optimal business model for maximum potential.”

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