The language of success; Online translator Lingo24 is turning to private equity to fund its £100m expansion.

The language of success

Online translator Lingo24 is turning to private equity to fund its £100m expansion.

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We did something awful but we got customers.” That’s how Christian Arno, the founder of online translation company Lingo24, knew he was on to something when he launched a rudimentary translation website while still at university.

By Philip Smith

7:00AM BST 28 Jul 2013

We did something awful but we got customers.” That’s how Christian Arno, the founder of online translation company Lingo24, knew he was on to something when he launched a rudimentary translation website while still at university. His idea was to use the web to entice corporate customers looking for low-cost translation – because he had access to “cheap” language students to do the work. “It was the dotcom boom and I looked at what was happening in the translation space, and the answer was not very much.” His first website, by his own admission, was “shocking”. “It was in Motherwell FC colours, claret and amber. I’ve nothing against Motherwell but they are not my team,” he says. However, the gaudy site didn’t deter customers, and he quickly won clients, including the Liverpool Tourist Board. “I was amazed,” he says.After completing his degree in languages at Oxford, he launched an improved version of the website in 2002. His first major customer was worth £200,000 a year, which meant the company could progress without the need for outside funding.

Taking “logical steps, little by little”, the business has increased sales to £7m a year, has 200 staff and operates around the world.

But Arno is about to throw out the cautious, self-funded approach in order to transform his “dotcom for translation” into something much more ambitious.

He is about to embark on a massive expansion programme – backed by equity funding – that Arno, 34, hopes will see his Edinburgh-based business hit a £100m valuation.

As part of the rapid growth plan, Arno wants to entice small, would-be exporters to use his services by offering a low-level free introductory access to “test and learn”.

It will allow an online retailer in the UK to test, say, the German market before committing.

Despite the opportunities to stimulate growth, many small businesses are fearful of dipping their toe into overseas markets due to language factors, he believes.

“Language is not the only barrier to companies exporting, but it’s the biggest,” he said. “The majority of our work comes from businesses who are looking to export.”

He says he’s not competing with the likes of Google, which already offers a free online translation tool. Instead, Lingo24 wants to showcase a new platform, Coach, which Arno believes could turn the company into an “eBay for translators”.

The try-before-you-buy approach for small companies is partly to help to market Coach, which will take the company from simply being an online translation service to being a scalable, semi-automated language platform that translators and companies from around the world can access.

Coach is a machine translation tool that goes further than Google Translate and the other “low-level” offerings, Arno says.

It allows Lingo24 to break down translation jobs into smaller component parts, allowing the high-level, high- cost work to be sectioned off, leaving the bulk of the routine work for less skilled (and so less expensive) translators.

Complex and technical or industry-specific terms and phrases are lodged in the cloud-based system, which can then be accessed by translators.

“If you take a piece of straightforward text which had specific industry terminology, you need someone with years of expertise in the sector who would command a premium fee,” Arno said.

Once those words have been correctly identified and checked, you don’t need that level of skill and cost to do the remainder of the translation – the less skilled part.”

It’s a way of tapping into newly qualified linguists, giving them critical industry experience while allowing Lingo24 to gain access to their skills at a lower cost than those with more translation miles on the clock.

“It means we can bring on student translators and present them with progressively more sophisticated tasks,” he says. But all translators will benefit: “Using the Coach platform, any linguist will perform better in terms of quality control and speed.”

The idea is greater profitability for Lingo24, lower- cost translation for clients, and more work and hence a greater income for translators.

“It’s a win-win situation,” Arno says.

But building and marketing the platform won’t come cheaply.

Reluctantly, Arno, who currently owns all of the business, is considering doing what less than 5pc of British businesses have done: selling an equity stake.

“I’ve been nervous and kept costs low at every turn to avoid the need for funds,” he says. “But now it’s a pace thing.”

Arno has some reservations about getting into bed with venture capitalists. “Someone I know had a very bad experience with outside investors. You hear horror stories of people losing control and losing the value they’ve built up.

“But with the level of ambition we have and the dynamic of the marketplace at the moment, we need those funds.”

He also believes that the right partner could transform the business.

“There are some funds with a particular expertise and focus that would be useful to us, ones with a longer-term ethos.

“We have a long way to go. We need to get ahead quickly and it would be cheating myself and my staff not to push harder,” he adds.

The Telegraph Festival of Business in London on November 12 is free for ambitious companies with annual sales of more than £5m. Speakers include Willie Walsh, Luke Johnson and Jim O’Neill. Secure your place at Telegraph.co.uk/festivalofbusiness

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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