The story of a UK startup (making things), worth several millions but not yet cash positive, nor profitable. Is this the UK’s future?
This great story has three critical points:
- its boss, well-known to what was effectively an angel syndicate for his recent work in an ailing company, attracts some 20 investors, each putting in around £10k – funding him with some £140k for development work on a project for an important tool in an emerging technology (3D printing), whose market he has carefully researched, in which he has considerable technical expertise, but no definitive solutions;
- after being turned down once for a SMART award from the Technology Strategy Board for creating a prototype, he commissions PERA to write a second application – and wins a grant – of £100k. With incidental help from an inventive colleague, he develops a solution to the most expensive and difficult component; he takes out a patent and brands his solution; and completes the prototype;
- armed with these, he puts up a bid on the US-based website Kickstarter, offering to deliver the product months hence at a given price (£600) in exchange for orders now. He deals successfully with incisive questioning, and within hours he has four orders; within days he has fifty, and by the end of the Kickstarter campaign he has almost 150 – from 25 countries, to which he is later able to add another 50 orders; and he raises almost £100k.
Some ten months later, he is about to start deliveries – it is being manufactured for him in batches. As a result of the Kickstarter campaign, he now has a good picture of the market in a number of countries and introductions to resellers (he has had calls from potential resellers all over the world, including from the CIA’s venture capital arm in the US!) He sees neither selling nor manufacturing as the key parts of the business: design is his unique asset. And he is looking to scale up the enterprise as rapidly as possible and to design different versions of his product. He is writing a business plan in order to raise £1mn for 10% of the equity, hopefully from at least one person who will help him with the development of the business.
(He was one of a group of people who spent several months meeting together periodically, learning from each other’s experience, in a networking group based on the concept of action learning – led by me.)
Copyright John Whatmore February 2014
The Centre for Leadership in Creativity