This new EIS and SEIS fund are looking for entrepreneurs who are looking to solve a ‘down to earth’ problem through their product design or manufacturing businesses. Previous examples of backed companies include a firm that claims to reduce leaks in pipes and another that aims to solve the problem of bunions in women’s feet through special heels.
Tell me the details of the company. When was it founded and what is its vision?
The British Design Fund launched in 2017 with the aim of fuelling enterprise and innovation in the UK by investing in UK product design and manufacturing companies. We aim to work with extraordinary entrepreneurs who have scalable products and who are ready to accelerate growth into the retail space and build long term value and thriving, stand-out businesses. The fund, managed by Sapphire Capital Partners, provides not only cash, but much-needed expertise and mentoring to these businesses.
What do scale up companies need to consider before they can secure investment from you?
We assess applications based on several criteria, but most importantly we look at how integral good design is to the business. This does not mean simply the product design, form and aesthetics, but more importantly whether the user has been put at the centre of the business. In other words, what is the problem that is being solved, how does that benefit the user, and why are the founding team passionate about solving this problem?
If the product that has been developed to solve a particular problem can be protected through IP registration, can be scaled quickly, and also has a clear roadmap to market, then we will be interested to meet the team.
It’s also important that the founders consider what they need from an investor beyond just the cash investment. Can the investor help open up markets, introduce new clients, assist with testing or manufacturing, or help shape a marketing strategy for example? These are just a few of the ways that we often assist companies we invest in.
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What high-profile fundraisers have you orchestrated and how did you apply your expertise to secure a successful deal?
The investment raised for the first British Design Fund came from over 140 individual investors, most of whom were looking to diversify their portfolio of investments. The Fund offered them an opportunity to access a unique collection of early stage product companies. This has meant that we haven’t pulled together any fundraisers just yet.
In terms of our expertise in securing a good deal for our investors, we adhere to a robust selection process backed up by a very experienced investment committee, with particular expertise in IP, finance, design, branding, licencing, sales and manufacturing. Only deals that pass through this rigorous process are considered for investment.
What market trends do entrepreneurs need to be aware of when seeking investment? How do you rate the UK entrepreneurial market at the moment?
We are less concerned about trends and more concerned with founders that have developed products that will last the test of time. Essentially, products that the world needs, as opposed to products that are exploiting a current trend. Of course, technology trends and developments play a big part in many of the businesses we see.
It’s important that the tech is being led by a desire to solve an important problem, and not the other way around with the tech trying to find a problem to solve.
What key pieces of advice would you give to an ambitious, scale-up entrepreneur who is seeking investment in the business and may not be familiar with your services.
Know your user, be clear on your routes to market and make assumptions on the differing margins you will need to give away for each channel.
You also have to understand your competitors and what they have done well, as well as any shortcomings they may have.
Be realistic about how you will position yourself against your competitors and how you will ultimately take market share from them.
Build a sales plan upon realistic and measurable KPIs, do not build a sales plan based on year-on-year sales percentage growth.
And finally, validate your product when it is sensible to do so, this means talking to potential customers and distribution partners, and will give you and your investors confidence that this business is worth the effort and cash to launch it into market.
Find out more: British Design Fund