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SPOKE

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At SPOKE, we’ve built a new breed of menswear brand: 100s of sizes, finished to order for a flawless fit

312%
 - 
Funded 5 Apr 2022
£1,500,003 target
£4,714,569 from 1,579 investors
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Business overview

Location London, United Kingdom
Social media
Website spoke-london.com
Sectors Clothing & Accessories Digital B2C
Company number 08265501
Incorporation date 23 Oct 2012
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Investment summary

Type Equity
Valuation (pre-money) £57.5M
Equity offered 7.55%
Share price £9.42
Tax relief

EIS

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Business highlights

  • Annual Gross revenues over £18m (last 12 months)*
  • 75% year-on-year growth (last 12 months)*
  • Over 200,000 customers to date
  • 20% of new customer orders repeat within 30 days, 50% in 6 months
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Key features

  • Secondary Market
  • Nominee investment min. £18.84 +
  • Idea
  • Key Information
  • Investor Perks
  • Team
  • Updates
  • Investors 1,579
  • Discussion
  • Documents

Idea

Introduction

We’re building the world’s most personal menswear brand.

We believe that for most men, fit comes first. And yet, many traditional brands and retailers struggle to deliver. When you spread your stock thin across lots of shops and stockrooms, something has to give - and one of the first things to give is sizing.

Most of us fall between the gaps.

There was a time when all clothes were made to order. It was slow and expensive - but at least they fit. In the age of mass production we traded that fit for choice, trend and novelty - and we never got it back. ‘Ready to wear’ usually isn’t. And today, the rarefied craft of bespoke tailoring doesn’t make much sense, outside the expensive suiting category.

That’s the opportunity.

With a centralised e-commerce model, a digital shopfront and 21st century supply chain, it’s possible to carve out a sweet spot, somewhere between ready to wear and bespoke.

By finishing to order, we can run to more than 400 size options where traditional brands offer 30 or 40. We’ve developed our own proprietary fit-finder tool, helping customers match to their perfect size, in 60 seconds.

We offer a flawless, personalised fit, without the hassle or expense of bespoke.

And today we ship more than 20,000 products a month to the UK, USA, the EU and beyond - growing at 75% year on year*.

Substantial accomplishments to date

2014:
• Ben launched SPOKE, cutting the first 300 pairs of chinos at a workshop in East London, and managing the business from his kitchen table
• With promising immediate sales, we raised £600,000 in investment from Forward Partners and angel investors

2015:
• Introduced our signature Heroes chino - initially in 150 size options
• ...And moved to a real office

2016:
• Printed & distributed our first catalogues to acquire new customers
• Launched our flagship Sharps style - an immediate bestseller
• Cut our first pair of shorts – now selling more than 15,000 in summer 2021

2017:
• Expanded our Summer range to include linens and lightweight trousers
• Sent more than 1m catalogues in the UK as our direct mail business took off

2018:
• Launched a pilot of our US website – and cracked $100k in our first month of operation*

2019:
• Piloted our first pair of jeans selling through 90% of stock in 5 hours
• Launched our first foray into tops – with Pique Polo shirts, cut in 42 sizes
• Acquired our 100,000th customer
• Launched first outdoor campaign on the London Underground
• Aired first TV campaign on SKY

2020:
• Launched German and EU websites
• Launched swimwear and shirts for the first time
• Extended our size range to 400 options on flagship Sharps product

2021:
• Launched a curated selection of the SPOKE range on John Lewis online
• Secured media-for-equity investment, being one of the first investments for ITV Adventures
• Aired first TV campaign on ITV targeting sports audiences
• Began planning for B Corp certification
• Launched digital ‘Tune Ups’ – on-demand customer fit video calls to help customers fine tune their perfect fit

2022 (planned for the year ahead):
• Open new EU finishing and distribution centre
• Launch Golf range
• Submit B-Corp Certification for approval
• Build on the success of John Lewis with new distribution partnerships in the UK and abroad
• Establish a dedicated US team

*based on unaudited management accounts.

Monetisation strategy

We generate revenue when customers purchase SPOKE products on spoke-london.com, our 3 localised websites for the USA, Germany and the EU, and additionally from SPOKE products listed on johnlewis.com.

We manufacture our products at factories across Europe, the Near East, and Asia - and we finish them to order at our workshop in Yorkshire. We operate at an average intake margin of 71%; that's the margin we make on the selling price of products vs the cost to us of producing them with our suppliers.

We invest in marketing media online and offline, to acquire new customers. 20% of new customer orders repeat within just 30 days, 50% repeat within 6 months. Customer lifetime value (cumulative profit) exceeds £180 – and we continue to see robust purchasing from cohorts acquired 5 years ago, and more.

Our LTV:CAC ratio is over 3x. Our repeat purchase P&L (the revenues from repeat orders less associated costs to service them) absorbs around 80% of our company overheads - and is now profitable* (at an EBITDA level).

*based on unaudited management accounts.

Use of proceeds

We’ve created an extraordinary range, a custom finishing supply chain, a passionate customer base, and a foothold in exciting new markets.

Working from this stable, scalable platform your investment will fuel our growth across 4 key areas:

• Acquisition Marketing - While our repeat business is now cash generating, we plan to keep investing in acquisition ahead of this, to maintain our fast growth momentum, especially in the US.

• USA Dedicated Resource - We plan to hire a dedicated team responsible for the US for the first time - including a GM (London based) to own the P&L.

• Digital Services - We’ll invest in the ongoing process of digitising personal services, expanding on video-based Fit Tune Ups and a next generation Fit Finder.

• Brand Investments - Brand investments are expected to include US & EU localisation and a refresh of TV creative.

Key Information

Valuation:

The pre-money valuation for Spoke has been calculated on a fully diluted basis, including existing rights to equity that may convert and dilute investors in the future. In this case, the valuation on the campaign reflects (i) issued shares (ii) options (iii) the principal amounts of the Future Fund and ITV Convertible Loans (as detailed below).

Please note that the pre-money valuation of the business when taking into account only issued share capital, is £56M.

Share Classes:

The Company currently has 5 classes of shares, A Ordinary, B Ordinary, C Ordinary, D1 Ordinary and D2 Ordinary. Seedrs investors in this round will be receiving B Ordinary shares. Existing shareholders who are following on in this round and certain incoming institutional investors will receive new D3 or D4 Ordinary shares which have preferential rights.

All share classes have full voting and dividend rights. The rights attached to the share classes on a liquidation or exit are as follows, listed in the order of preference:

1. D Ordinary shares (D1, D2, D3 or D4): 1x non-participating preference equal ranking.
2. C Ordinary shares: 1x non-participating preference, ranked behind the D Ordinary shares preference.
3. A Ordinary shares: a participating preference limited to £30,500 to be distributed pro rata among the holders of A Ordinary shares, ranked behind the D and C Ordinary share preference. There are currently 40,666 A Ordinary shares in issue.
4. B Ordinary shares and C Ordinary: no preference.

Material Debt:

The company has the following outstanding loans:

1. £2,000,000 revenue based financing facility from Wayflyer, with a Transaction Percentage of 3.8% (5.7% APR). The loan is to be repaid by October 2022. The outstanding balance of the loan as the start of this campaign is £769,850.

2. £1,000,000 revenue based financing facility from Outfund at an interest rate of 4% over the entire term (4.8% APR). The loan is to be repaid by January 2023.

The funds raised from this investment round will not be used to repay these loans.

Convertible Loans:

The company has the following outstanding convertible loans, which will convert to equity on completion of this round. The details of the convertible loans are below:

1. £1,200,000 loan from Future Fund and Individuals, with the following key terms:
- Discount: 20%
- Interest rate: 8%
- Valuation Cap: £36,811,938.90
- Share class: The most senior class of shares being issued in the Qualified Financing Round (a raise of £1.2m or more).
- Maturity date: 03/08/2023

2. £1,200,000 media for equity loan from ITV AdVentures, with the following key terms:
- Discount: 30%
- Interest rate: 5%
- Valuation Cap: £80,000,000
- Share class: The most senior class of shares being issued in the Qualified Financing Round (a raise of £1m or more).
- Maturity date: 31/12/2023

Please note that the principal amounts of these loans have been factored into the pre-money calculation for the campaign. The amount accrued under interest has not been factored in, as this will depend on when exactly the conversion occurs. This will cause some further dilution to the round.

The Company also has an additional £800,000 media for equity loan agreement with ITV AdVentures. Notes under this loan have not yet been issued and therefore have not been factored into the pre-money calculation for the campaign.

Investor Perks

Please note that any discounts, rewards and/or offers listed by a company in its campaign are subject to the terms and conditions applied by that company. It is the company’s responsibility to honour such discounts, rewards and/or offers and Seedrs does not take any responsibility for them.

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If you successfully purchase a share lot of this business, you will be granted access.

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Only shareholders can access this page

If you successfully purchase a share lot of this business, you will be granted access.

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Investing involves risks, including loss of capital, illiquidity, lack of dividends and dilution, and should be done only as part of a diversified portfolio. Please read the Risk Warnings before investing. Investments should only be made by investors who understand these risks. Tax treatment depends on individual circumstances and is subject to change in future.

This campaign for SPOKE has been approved by Seedrs Limited (trading as Republic Europe) ("Republic Europe", "us" or "we"), as of 18 March 2022 as a financial promotion. Republic Europe is authorised and regulated by the Financial Conduct Authority with firm reference number 550317. In approving this campaign, Republic Europe has concluded that the information, taken as a whole, is "fair, clear and not misleading." This means that for factual statements we have reviewed evidence of their accuracy, and that for aspirational statements we believe they are phrased appropriately in light of their speculative nature. You should note that in the case of factual statements, the evidence we review is provided by the business, and we do not audit it, which means that we may not be able to identify forged or altered evidence. You should further note that in the case of aspirational statements, the nature of the type of businesses presented on the Republic Europe platform is such that they are likely to have high ambitions, and we may approve statements that convey those ambitions even where we do not believe, or we do not have a view on whether it is likely, that they will be fully realised. The pre-money valuation and investment sought in the campaign are those set by the business: they are not reviewed or established by us, and the valuation is not an independent view of what the business is worth. Given the nature and type of businesses presented on the Republic Europe platform, it is possible that the business has very little cash remaining prior to receiving this investment, and the investment sought may be necessary for the business's on-going existence.

Republic Europe does not make investment recommendations to you. No communications from Republic Europe, through this website or any other medium, should be construed as an investment recommendation. Further, nothing on this website shall be considered an offer to sell, or a solicitation of an offer to buy, any security to any person in any jurisdiction to whom or in which such offer, solicitation or sale is unlawful. Republic Europe does not provide legal, financial or tax advice of any kind. If you have any questions with respect to legal, financial or tax matters relevant to your interactions with Republic Europe, you should consult a professional adviser.

Tax Relief (SEIS)

This business is eligible for SEIS relief - providing qualifying investors with income tax relief of 50% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

Tax Relief (EIS)

This business is eligible for EIS relief - providing qualifying investors with income tax relief of 30% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

Valuation (pre-money)

Valuation rounded from £57,460,380

This is the fully-diluted pre-money valuation of the business (i.e. before the new investment comes in and including issued options and other equity interests). In contrast, the post-money valuation is based on inclusion of the new investment in the value.

It is calculated as the pre-money valuation plus the amount of new investment. e.g. If Company A is ascribed a pre-money valuation of £1,200,000 by prospective investors investing £300,000, its post-money valuation is £1,500,000.

The investee business is responsible for setting its own valuation, it has not been prescribed by Seedrs.

Pitch type

Investing in a regular equity campaign is the simplest and most common way to invest in a startup. You decide which business you want to invest in, and if the campaign hits its funding target then you will become one of their shareholders. As the company becomes more valuable, so do your shares; allowing you the opportunity to share in the future success of the business.

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Equity Offered

The equity offered is the percentage of the company’s shares being issued in return for the amount of investment raised.

When the amount raised is less than 100%, the equity offered is based on the target raise. Once the company has raised over 100% it is based on the total raised.

In some scenarios, entrepreneurs may accept additional direct investment after closing their Seedrs campaign. Provided this is within 6 months of the closing and on the same terms, we do not typically offer pre-emption rights on that extra investment (where you have the opportunity to invest again to maintain your percentage shareholding).

Learn more about investing and pre-emption rights.

Nominee investment

This shows if you are able to choose, when making an investment, that you be represented by, and your shareholding be managed by, the Nominee investment.

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Custodian

If you invest in this Campaign, Seedrs will act as Custodian rather than provide our standard nominee service. This is due to the fact that the business is not directly involved in the share sale and Seedrs will not benefit from any rights under a shareholder agreement. As a result, Seedrs will handle administrative tasks as we do normally, but you will not have information or voting rights, updates from the business, preemption on future fundraising, or ongoing support about business trading activity.

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Secondary market

This shows if the business has opted-in or opted-out of allowing its shares to be bought and sold on the secondary market.

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Direct investment

This is an option to invest and hold shares 'directly' in the company (rather than via the Nominee investment). This option is only available to those investing over the threshold amount, which is determined by the fundraising company.

If you choose to hold your shares directly, you will be responsible for any contractual or administrative arrangements with the company you are investing in.

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Payment options

We are not able to accept card payments for investments into this sector. You can pay for your investment by creating a bank transfer, using funds in your investment account or create a Pay by Bank payment. Your investment will only be completed once the funds have reached our account.

Business Involvement

This Campaign offers shares for sale in business that is not directly involved in this Campaign or the sale. As a result, the Campaign and post-investment experience, including investor rights, will differ from a business-led campaign on Seedrs. Most notably, the business will not engage with investors in the discussion forums both during and after the sale or provide any updates to investors.

Learn more here

Payment options

We are not able to accept Pay by Bank payments for investments into this sector. You can pay for your investment with a card payment, by creating a bank transfer or by using funds in your investment account. Your investment will only be completed once the funds have reached our account.

Drawdowns

This campaign offers the ability to pay for an investment by drawdowns.

Security Token

A security token is a digital asset that represents ownership or other rights. It is a digital form of traditional investments. In the future, you may be able to trade your investment through compatible exchanges.

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