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- £10,000Min. Investment
- SEIS / EISFund Type
- 30.06.21Tranche Close
Funding for UK product design and manufacturing companies often comes from a combination of innovation grants and awards, friends and family, bank facilities and product crowd funding platforms. As a result, the Fund has identified a funding gap and provides capital for companies which seek to deliver outstanding product design innovation and manufacturing.
The Fund is driven by a team with strong retail and product experience, and this team (headed by Damon Bonser and John Mathers) maintains several close partnerships and relationships with design institutions and accelerators such as the Royal College of Art, the Design Council and the Central Research Laboratory. Through these initiatives, as well the Fund’s wider network and ongoing marketing activities, the Fund has access to a selection of investment opportunities in the product design and manufacturing sector for the Fund to potentially invest in.
- Invests in the UK product design and manufacturing sectors
- Expertise from a team of experienced design professionals and entrepreneurs
- Investors will hold at least five portfolio companies
- Choice of EIS and/or SEIS investments
- Target return of £3 per £1 invested (not guaranteed)
The focus of the Fund is to invest in UK based early-stage companies that seek to lead the market in provision of innovative product design and manufacturing. The Fund seeks to invest at least £100,000 in each Investee Company in return for circa 10% to 20% equity, across at least five companies.
Due to lack of investment options available to companies in the innovative product design and manufacturing sector, the Fund will seek to select the most attractive opportunities and pre-money valuations. The Fund will gain access to unique deal flow and will seek to de-risk investments by validating that there is demand for the product.
The Investment Manager and the Company Mentor believe that product businesses are attractive to investors due to:
➢ Global potential;
➢ Validated sales distribution and licensing channels;
➢ Product/brand extension opportunities; and
➢ Tangible metrics that allow clear performance evaluation.
The Investment Manager (with the research assistance of the Company Mentor) will seek to identify potential Investee Companies, which it believes will have the following key criteria:
➢ A defined pragmatic business plan with sales, profit and loss, and cash flow forecasts;
➢ A well-designed product that solves a clearly defined problem or meets a clearly defined need;
➢ A working prototype and indication of interest from key target client(s);
➢ Defensible intellectual property;
➢ Revenue flow or a qualified sales pipeline;
➢ Winning chemistry within the founding team; and
➢ Deep understanding of the relevant marketplace and a clear competitive difference.
Former CEO of the Design Council with forty years’ experience in the brand and design industry, across retail, FMCG, and consultancy.
Damon is a serial entrepreneur with over 15 years’ experience of building and running product design and manufacturing businesses. Damon knows how to bootstrap start-up product businesses and how to launch brands into global marketplaces.
Track Record; Launched 400+ products across consumer electronics, health and beauty and numerous private label for leading retail brands. Built and exited multi-million product design and manufacturing business.
David has over 25 years ‘experience running Seven Towns, a multi-million toy and game business, and is the co-founder of Rubik’s Brand Limited. David knows how to scale a product business whether through the licencing model or manufacturing and wholesaler model.
Track Record; David built Seven Towns to £8m t/o, sold a 15% stake in Rubiks Brand Ltd for $40m, led an MBO of Toybrokers & John Adams at a £3m valuation and built to £30m t/o.
The duration of each investment will be managed by focusing on companies where the Company Mentor can affect the rate of business development and the resulting cash flow growth. This aims to ensure best use of capital to enable growth and prepare each Investee Company for acquisition or a potential listing.
The expected holding period of most investments will be between the minimum three years for tax conditions and a targeted maximum of six years. However, it is noted that Investee Companies may be held for longer or shorter periods.
Initial Charge (charged to Investee Company)
5% of the amount invested into each investee company.
Annual Management Fee (charged to the Investee Company)
4% of the amount invested into each investee company.
Performance Fees (charged to the Investor, paid from investment proceeds)
20% performance fee in order to align interests between the Company Mentor, the Investment Manager and investors. No performance incentive is payable on any investment until investors receive cash proceeds equal to £1.05 for every £1.00 invested in each Investee Company.
This performance incentive may be payable as a fee by the Investment Manager on behalf of the investors out of cash proceeds in the Fund on behalf of investors, or by way of proceeds from equity in an Investee Company by the Company Mentor or related parties. Different investments may require different structures but will be to equivalent economic effect.
To the extent that the performance fee is not paid by the Investee Companies, investors shall be liable for their share of such fee and the custodian may be instructed by the Investment Manager to transfer cash in an investor’s portfolio to the Investment Manager and Company Mentor to satisfy any outstanding performance fee.
The attention of investors is drawn to the information set out in Risk Factors section of this document which sets out the principal risk factors associated with an investment in the Fund. The tax treatment referred to in this document depends on the individual circumstances of each investor and may be subject to change in future. In addition, the availability of any tax reliefs depends on the Investee Companies maintaining their qualifying status.
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The content above has been provided by British Design Fund, an Investment Adviser to Sapphire Capital Partners LLP who are authorised and regulated by the Financial Conduct Authority under firm registration number 565716.