British Design Fund

About

What is The British Design Fund?

The British Design Fund is an early stage investment fund that specifically invests in, and provides support for, early stage UK product design and manufacturing companies. The Fund seeks to work with extraordinary entrepreneurs, with scalable products, who are ready to accelerate growth and build long term value and thriving stand-out businesses.

The UK has the second largest design sector in the world and the largest design industry in Europe. However, there is an astonishing lack of equity funding into early stage product design and hardware businesses. Funding for these early stage companies often comes from a combination of innovation grants and awards and product crowd funding platforms. As a result, we believe the British Design Fund has identified an equity funding gap and aims to provide capital and expertise for companies which seek to deliver outstanding product design and innovation.

The Investment Focus

The Fund seeks to invest between £25,000 and £150,000 in SEIS/ EIS qualifying businesses in return for 15% to 30% equity, across at least ten companies. Investments will be made across a range of product categories and price points, however companies will share the same core routes to market; through institutional buyers such as large retail chains and international distributors. This will spread the risk across different sectors, whilst playing to the team’s strengths of launching product brands into the global marketplace.

Every business we invest in will need to meet key criteria that our Investment Committee is looking for:

➢ Firstly, the products must offer clear value to the target market in the form of a differentiated offering. This must be backed up by a rigorous understanding of the marketplace and its competitors.
➢ The business must be able to validate the demand for their products. This could be in the form of a letter of intent to buy from a major retailer, or a purchase order from a well-established international distributor.
➢ The business will need to prove that they have protection from competition and new entrants in the form of registered IP such as a patent or registered design.
➢ Finally, all the businesses will agree to take on a mentor with market expertise in their specific product category. These mentors keep the businesses focussed on achieving those early sales and rapidly establishing the product in the marketplace.

The British Design Fund has close relationships with a number of product innovation programmes such as the Design Council’s Spark initiative and the Central Research Laboratory accelerator. Via such programmes the Fund has an opportunity to access a selection of investment opportunities in the product design and manufacturing sector.

The Team

The fund is being launched by product entrepreneur-turned-investor Damon Bonser, who has over 10 years’ experience building design and manufacturing businesses, launching over 400 products into the global retail market. Directors include John Mathers, ex CEO of the Design Council, which runs the successful Spark programme, where a number of the initial investee companies are expected to come from. Other Directors include David Kremer who has over 25 years’ experience running Seven Towns, a multi-million pound toy and game business, and co-founder of Rubik’s Brand Limited. Specialist SEIS and EIS investment managers Sapphire Capital, headed by Boyd Carson are responsible for the FCA regulated investment activities. The fund is further supported by Sam Davies, Investment Director, and David Motum, Finance Director, in analysing and monitoring the financials and commercials around each business.

In summary, our core team consists of:

Damon Bonser – CEO; Serial entrepreneur with over 10 years’ experience building and running product development and manufacturing businesses.

John Mathers – Design Director; Former CEO of the Design Council with over 40 years' experience in the brand and design industry, across retail, FMCG, and consultancy.

Sam Davies – Investment Director; Experienced advisor and investor from corporate finance sector, with positions at Clearwater International, Business Growth Fund, and Knight CF.

David Kremer – Director & Chair of Investment Committee; Over 25 years’ experience running Seven Towns, a multi-million toy and game business, and co-founder of Rubik’s Brand Limited.

David Motum – Finance Director; Over 30 years' experience within the financial publishing and media sector, namely; MSM International Ltd, and MSM Media.

Boyd Carson – Investment Manager; Partner at Sapphire Capital Partners LLP, authorised by the FCA to conduct investment business, and specialist Investment Manager for a number of SEIS and EIS funds.

Investment Structure

Funds raised via Seedrs will form a “co-investment fund” with funds raised from other sources. The non-Seedrs funds will be represented by the Investment Manager of the British Design Fund, while funds raised via Seedrs will be represented by the Seedrs Nominee.

Investors (via Seedrs) in this campaign will have their funds held in escrow by Seedrs until the businesses have been identified by the Investment Committee of the British Design Fund and have been approved by the Seedrs nominee for investment. Seedrs, acting as nominee, will then invest directly in each company in exchange for the equity, subject to the standard Seedrs legal due diligence. Seedrs will then hold your shares as nominee.

The Seedrs represented funds in the co-investment fund will invest alongside (and in proportion to) the funds represented by the Investment Manager. Seedrs investors’ funds are not being managed by the Investment Manager of the British Design Fund.

By investing in this campaign, investors will gain exposure to a portfolio of businesses reviewed by the British Design Fund Investment Committee.

Our Investment Committee

The British Design Fund Investment Committee will review potential investments to be made by the British Design Fund and introduce potential investee companies to the Seedrs.
Meetings of the Investment Committee will require a minimum of three members of the Investment Committee.
Outlined below is the process that will be followed for each potential investee company which the Investment Committee considers:
1. Review a one-page summary of the investment opportunity, and have a 15-minute discussion to decide whether the opportunity is worth pursuing further.
2. If the opportunity is deemed of sufficient interest, then a more detailed five-page summary will be prepared, to be discussed at the next meeting of the Investment Committee. This will cover pricing and commercial due diligence.
3. When reviewing the five-page summary, the Investment Committee will also invite the potential Investee Company to make a 15-minute presentation, to demonstrate the product(s) and make the case for why they make an attractive investment opportunity.
4. Potential investee companies will then be introduced to the Seedrs Nominee. Seedrs will perform its regular legal due diligence and, subject to Seedrs satisfaction with the due diligence process, the investment will be made by the Seedrs Nominee on behalf of investors.

The Investment Committee in particular are looking for potential Investee Companies which have the following key criteria:
➢ A defined pragmatic business model and proof of concept.
➢ Revenue flow and/or a qualified sales pipeline and supplier partnerships.
➢ Cash flow positive or a clear path to achieve such.
➢ Company-wide market competence; expert, passionate and pragmatic.
➢ Product or service with clear sustainable competitive difference and value to market demand.
➢ Ability to secure anchor customers and business partners.
➢ Defined commercialisation; use of capital, named customer sales plan, structured client support, clearly targeted social marketing and sales channels.
➢ Low overhead structure; balance of technical and commercial staff.
➢ Able to attract follow-on investment through to cash flow positive operations.
➢ Be required to validate the demand for their product before substantial funding is committed.
➢ Have protection from competition and new entrants in the form of registered IP, designs or an established brand.
➢ Have a clear and realistic roadmap for hitting identified milestones.
Before an Investment is made in any Investee Company by Seedrs, the Investee Company must do five things:
1. Obtain HMRC SEIS and / or EIS advance assurance;
2. Receive approval from the British Design Fund Investment Committee as a potential investment;
3. Enter into the mentoring agreement with the Company Mentor;
4. Satisfactorily pass the Seedrs due diligence process; and
5. Enter into investment documentation with the Seedrs Nominee.

EXIT STRATEGY
British Design Fund aims to select investee companies that can achieve some form of exit within 6 years. Investments are into private, non-liquid shares, so any disposal is dependent on an exit or liquidity event for the relevant Investee Company.

Post Investment Support

Product expertise and networks within retail, product design and manufacturing will be leveraged across each business we invest in to help drive growth potential.

Each Investee Company will be allocated an expert mentor with market expertise in the relevant product category. These mentors keep the businesses focussed on achieving those early sales and rapidly establishing the product in the marketplace.

In particular our mentors will look to support the businesses in such areas as:

1. Market entry; gaining those all important early sales and traction in the market, and making sure our companies avoid the pitfalls that new brands often fall into when launching products into the consumer marketplace.
2. Sales strategy and execution; ensuring a focussed approach centred around gaining profitable market share.
3. Product legals, IP, and due diligence; making sure the competitive positions our companies achieve are defendable from an IP point of view.
4. Manufacturing, product development, and margin control; critical to the success of the businesses we invest in, will be their ability to retain profit as they scale production capabilities.
5. Brand development; helping to establish presence in the market and also driving up equity value leading up to the point of exit.
6. Cashflow and stock control; As the businesses grow so will their financing needs, and the controls that need to be put in place to ensure the right balance between stocks and cash.

Our network of mentors include some of the most respected professionals from retail, design and manufacturing in the UK.

Fees

- On each investment, Seedrs will charge each Investee Entity a fee equal to 6% of the Seedrs Nominee Funds being invested, subject to a minimum fee of £3,000 per investment (excluding any applicable VAT);
- British Design Fund will charge each Investee Entity an annual charge equal to a total of 4% of the amounts invested by the Fund in the Investee Company (unless a lower charge is otherwise agreed with the Investee Company), commencing 12 months from the date of the investment;
- British Design Fund will also be entitled to charge the Investee Entity any legal expenses incurred in connection with arranging the investment up to a maximum of £1,500.

Seedrs' standard carry fee will apply.