Sugru is a mouldable glue designed to fix almost anything. Named by Time Magazine as one of the 50 best inventions in the world the year it launched and dubbed “21st Century Duct Tape” by Forbes, the patented product is now used by more than 1 million people in 160 countries and has just launched into the US with Lowe’s and Target. The Company behind Sugru is on a mission to make fixing easy and fun for everyone.
Sugru is mouldable glue that makes fixing and making easy and fun for everyone. Stick it, shape it and it turns into a strong, durable rubber overnight – so you can fix almost anything. Like duct tape, superglue and post-it notes, it’s an innovation so simple and universal that we believe it will become a household brand trusted in homes all over the world. One day people everywhere might wonder what they did without it!
Sugru is the first consumer product of FormFormForm Limited, the Company set up by Founders Jane ni Dhulchaointigh and Roger Ashby to develop and commercialise Sugru and it’s underlying technologies, and is the Company in which you’ll get shares when you invest.
Why it’s exciting and why people buy it
Sugru is a unique material. One of our customers described it best when they said If Superglue and Play dough had a baby that would be Sugru. The ‘adhesives & tapes’ category is mature and ripe for innovation and distruption.
Unlike other adhesives, it arguably offers much better value for money as it has so many uses. 6 in 1: Fix, Bond, Cushion, Replace, Create, Seal. 10 colours allow people to make their fixes blend in, or stand out – so their fixes can look good. Fixing with Sugru should be empowering and make you feel awesome.
How we make money
Our business model is as old as the hills – we make Sugru and we sell Sugru.
- Direct to consumer & Amazon / 3rd party e-commerce – Sugru is very well suited to e-commerce because of the nature of the product (new, product education, need-based purchases based on search)
- Supply to Retail (Currently predominantly UK and USA)
- Supply to Distributors (Currently Scandinavia)
Having established our consumer product business, we are in the process of starting a new business unit to exploit the commercial and industrial potential of our materials. Business models on this side are likely to be various including licensing, co-branding and direct supply.
We’ve achieved a lot, and we’re at a crucial tipping point
- Developed this unique technology
- Granted patents in Europe and China, Pending in USA and India
- Awesome community of users driving word of mouth
- Built a smart, passionate and experienced team in London and now beginning in the USA
- Incorporated USA subsidiary company – trading domestically with major US retail
- Manufacturing capacity in place and further scale will be in place by July
- Produced more than 5 million mini-packs to date
- Scale is happening – now 1 million Sugru users
- Global market – users in 160 countries through sugru.com
- Engaged user community drives insight and product innovation
- Exciting R&D will unlock new markets
- Growing evidence of commercial and industrial market potential
- Now at a tipping point for the product’s distribution and fame, huge traction in retail roll out particularly in North America
- Demand for expansion of distribution to markets around the globe
- Created 50 jobs, a team of > 20 nationalities
- Post-money valuation of £25m, last round 2014 £20m
Why we’re fundraising
We’re building Sugru into a home essential and a household brand. We know that trial unlocks regular usage, and understanding drives trial. Now we’re focused on market penetration and driving trial – getting Sugru into as many hands as possible.
We are now achieving huge traction in our retail distribution and are rolling out at a rapid pace in retail in North America. This time last year Sugru was in around 500 stores, it is now in 5000 and by the end of the year it will be in 10,000.
We need to catch this wave and invest behind supporting our distribution with great marketing at a new scale – to drive fame and thus share of mind and product understanding and trial in-store. This will include hard-working drivers such sampling, point of sale displays and merchandising, staff education as well as scaling our successful targeted digital marketing. We are also in the process of building out our team on the ground in the US and further scaling our manufacturing to meet demand.
To date we have built the Company through a combination of sales and equity investment from a group of visionary investors from around the globe, including private individuals and several funds – Lacomp EIS Fund, Medra Capital, Investling and The Accelerator Group (TAG).
Our customers are always asking us if they can invest in what we’re doing, and as equity crowdfunding has become established, we’ve been watching closely. As a brand with a loyal and vocal user and fan base, we are so excited by the potential to reward them further, and to continue to scale the business with individuals and funds who are excited by our mission to inspire and empower a world of fixers and makers, and ultimately to share in the Company’s success with us.
A product for and of our time
Macro consumer trends for less waste (recycling growth from 12% to 45% of UK household waste since 2000) and more creativity (Maker movement, Ebay, Etsy, customisation trend), are opening up a demand for products, brands and entertainment that enable a more hands-on lifestyle, such as home-improvement, fixing things, family projects and hands-on hobbies.
A big, global market
Using the TGI Database, World Values Survey and behavioral science insights, we identified, sized and profiled these consumer groups. There are 150m people in our early adopter and core target consumer group in the UK, USA and EU alone. Ultimately we believe that Sugru will be used occasionally by anyone who does any DIY activity – currently approximately 78% of all consumers expect to do DIY, and when that number is extrapolated, totaling around 325m people in the UK, USA and EU.
The market for Sugru is global. Already there are more than 1 million homes in 160 countries using Sugru. Things need to be fixed and homes need to be improved all over the world. When we achieve 20% penetration of our early adopters & core target customer group in the UK, USA and EU buying one pack per year, annual revenues could be £50m. This does not yet include other global markets including Latin America and Asia.
In the past year, we have carried out indepth consumer research to develop our marketing strategy for our next phase of growth. This has included quantitative and qualitative research with our current and future customer groups, highlighting their needs and motivations and in relation to their homes and Sugru and all its various touchpoints and communications.
We know and love our customers
Our customers are the do-ers of the world. With increasing digital work and social lives, we are craving hands-on activities to express our creativity, individuality and to feel in control of our life choices. Whether it’s cooking, parenting or home-improvement, we are ‘DIY in everyway’, we love learning and we feel like we can learn how to do pretty much anything.
With so much data and insight, and a great marketing strategy, we are now poised to build on solid foundations and accelerate our growth with confidence.
Jane ni Dhulchaointigh
Jane is our Inventor & CEO. She leads the Company’s vision and is passionate about the potential of the brand to inspire and empower. She’s regularly invited to speak at events around the world most recently at Google Zeitgeist where she delivered a warm up talk before Professor Stephen Hawking! When she’s out and about traveling, she’s developing the market for Sugru, and when she’s back at base she’s supporting the board and the management team to build the Sugru brand to achieve its potential.
Roger is our Executive Chairman. He chairs the board and has led the financing of the Company’s growth to date including raising more than £4m and the building of our family of shareholders around the world. As co-founder, together with Jane he has built the Company into what it is today, nurturing it patiently through the development of its technology and early stages in the market. As co-founder, together with Jane he has built the Company into what it is today, nurturing it patiently through the development of its technology and early stages in the market. He is a seasoned and experienced Serial Entrepreneur.
Páraic is our General Manager and COO. An early investor in our company he joined us last year to support Jane in achieving our vision. 25 years of leadership and managerial experience spanning manufacturing, product development, global supply chain management and R&D.
James Carrigan, Co-founder & Creative Director.
Katie Cannon, Head of Sales, her powers to inspire action are legendary.
Laure de Brauer, Head of Marketing, an awesome and experienced FMCG marketing pro.
Jude Pullen, Head of RD&D, champion of design thinking.
Simon Thompson, Operations Manager, with 20 years’ experience.
Zixia Guo, Head of Business Administration, our GM’s right hand.
Investors & Advisors
Chris Thompson & Bill Sermon – Viadynamics Innovation Consultancy
Robin Klein – The Accelerator Group (TAG)
Lacomp EIS Fund – our first Equity Investor
Marks & Clerk Patent and Trademark Attorneys
Bristows LLP Law Firm
Atto Partners – Awesome Design Agency
Adam Clyne – Head of Digital EMEA, Weber Shandwick
These notes should be read alongside the Financial Snapshot
- Key sales drivers: Retail expansion into new outlets, particularly in North America
- Further sales drivers: One of our challenges is building market awareness of the product. We have now increased our spending significantly with a strategy based on market penetration and building fame e.g. this year our Facebook audience increased by 10% in each of Feb and March 2015, in March we had 76,000 unique visitors to our homepage
- Other sales drivers: We have minimal presence in the EC, other than in the UK, Ireland and Scandinavia; we simply have not had sufficient resources to tackle these markets. We are assuming that Latin America and European retail sales commence in 2016
USE OF FUNDS:
- Sales and Marketing: whilst we are expanding well into numerous retail chains, we need enhanced product awareness, fame, share of mind and understanding to drive trial – increased targeted digital marketing, increased merchandising and staff education and more in-store marketing.
- Additional headcount: specifically in sales and marketing. Whilst the majority of revenue will increasingly come from retail outlets, we still need people ‘on the ground’ to drive sales through these retail outlets.
- Manufacturing capability: We have capacity to meet the estimated demand for a year, demand after that period needs additional capital spend. We have modelled a capital spend of £800k in the three year period; the vast majority of this is on manufacturing facilities and equipment.
- Additional spend on Research and development. Sugru’s formulation will continue to be enhanced and adapted to open up new market opportunities.
EXPENSES AND PROFITABILITY:
- Expenses are primarily rising in order to both set up, and cater for, future significant expansion. We are not profitable in 2015 and 2016, these are our investment years that we expect to reap rewards in 2017 onwards.
- Gross Margins will improve as we take advantage of economies of scale and a new manufacturing facility and equipment. Our current cost of sale is split approximately 50:50 between fixed and variable. As we grow the fixed element will rise, but more slowly than revenue.
- Overheads are planned to flatten out in 2017; we will have built teams in 2015 and 2016 that will be able to cope with revenue growth.
EXISTING DEBT OR EQUITY INVESTMENTS:
- There is a £130k loan against a manufacturing machine, repayable by the end of 2017. We will renew this loan when it expires.
- Equity: We have raised £5.4m equity investments to date – to create the technology and associated IP and to build the business. The majority of the funds have come from high net worth individuals, many of whom have been an invaluable source of general businesses assistance, as well as a source of funds.
- Debt: We are in the process of closing a £2m debt finance facility. This will be repaid within three years.
- Next rounds: We have assumed that we will raise an additional external equity of £300k in Oct-15 (offset by whatever amount we overfund to in the current Crowdcube raise) and £1m in 2016.
- We have a working capital requirement in that retail sales are collected after 30 to 120 days, but a significant proportion of costs are up front for inventory, or immediate, e.g. payroll.
- We will use invoice factoring in June 2015 (around £204K).
The Exit Strategy
As we achieve our global mission to inspire and empower people everywhere to fix and make things with Sugru, the product and the Company will reach significant scale and value.
We are dedicated to building a great company for the long term. While we don’t envisage a 100% exit in the foreseeable future, we are planning to establish one or more strategic partnerships during the next 3 years. We believe that partnering with the right group or groups will help us expand the business in many directions including global distribution and possibly manufacturing. Rather than planning for an IPO, we believe that partnering will give opportunities for those investors to exit at a time suitable for themselves.
The leading global groups in the adhesives and materials industries are all active in corporate investment and acquisition, and the Company already has relationships in place with many of the main players. We continue to build value in our technology and IP which is a necessity for these partnerships to flourish. One of the main attractions to potential commercial partners is where we are unique in the industry – our consumer brand and unique approach to product development and marketing in an established product category – open user-driven innovation and online community marketing.
The timing and terms of any joint venture or strategic partnership will be decided by our experienced board and will be in the interests of furthering our mission, our global growth and importantly increasing valuation of all our shareholder’s investment.
We welcome investment and support from investors who are excited by our mission and the commercial potential of Sugru and its underlying technologies. While we are planning for exit opportunities for investors in the coming 3 – 5 years, it may be that these opportunities don’t arise in that timescale, however there is a mechanism to trade your shares at anytime if you wished to do so by offering them back though the company to existing shareholders. While there is no published price or guarantee that existing shareholders would take up the offer, in that case a shareholder would then have the opportunity to find an independent buyer. Having said all that – we particularly welcome investors who are in a position to take a long term view and build the business with us to its full potential.
Rewards with monetary value over £1000 can affect the amount of EIS you may be able to claim. Please obtain independent tax advice if there is any concern as Crowdcube does not provide legal or tax advice.
· Invest £10 and get
All investors will get a quarterly email update from the leadership team with news on the Company’s progress and a preview of exciting upcoming milestones and occasional requests for your help with new initiatives and launches.
· Invest £100 and get
BECOME A SUGRU BFF. You’ll also get invited to our annual Sugru Shindig, a chance to hang out with the Sugru team over drinks for an evening in a cool venue, see presentations about the Company’s progress and new initiatives. A chance to get fully up to speed on all things related to Sugru so that you can keep championing it at any chance you get. Sugru partee!
· Invest £500 and get
BECOME A SUGRU BACKER. As well as the Shindig, you’ll also get up to 5 x 50% off vouchers every year so that you can share a little piece of your Company with your friends and family and get them addicted to this fixing mind-set too. More fixers = Boom!
· Invest £1,000 and get
BECOME A SUGRU CHAMPION. Meeting so many likeminded people at the Shindig will get you really charged up, and you’ll also get up to 15 x 50% off vouchers every year so that you can share a little piece of your Company with not only your family but your colleagues and neighbours and your local milkman too. Get them fixing, and build the business at the same time. When you turn up at the Shindig, you’ll also get the hug of your year from our James, the Chief Sugru Guru.
· Invest £10,000 and get
YOU’RE SUGRU FAMILY. As well as the annual Shindig, and getting all you need to fuel the level of fixing going on in your area, you’ll get an invite to an annual working lunch earlier in the day with Jane, Roger, the board, the rest of the Sugru leadership team and early investors. You’ll see more in-depth presentations from the team, and take part in a lively and productive Q&A session. Then, onto the Shindig!
· Invest £100,000 and get
YOU’RE PART OF THE TEAM. All of the above, plus an invite to quarterly conference calls with the Sugru leadership team where you can make input that helps build the company. Bring your A game and help us benefit from your networks and experience.
This company is offering both A and B shares. If you invest £20,000 or more you will receive A-shares which have full voting rights. If you invest less than £20,000 you will receive B-shares which have no voting rights or pre-emption.
Sugru has submitted their plans to raise money, details of their structure and trade etc. to HMRC and has been given advance assurance that the proposed share issue is likely to qualify for Enterprise Investment Scheme (EIS) tax reliefs relating to their shares.
Tax relief is available to individuals only, who subscribe for shares in an Enterprise Investment Scheme (EIS). Relief is at 30 per cent of the cost of the shares, to be set against the individual’s Income Tax liability for the tax year in which the investment was made.
If you sell, give away, exchange or otherwise dispose of shares, tax reliefs can reduce your Capital Gains Tax bill. Your shares must meet certain conditions to qualify for these reliefs.
The availability of any tax relief, including EIS and SEIS, depends on the individual circumstances of each investors, and may be subject to change in the future. If you are in any doubt about the availability of any tax reliefs, or the tax treatment of your investment, you should obtain independent tax advice before proceeding with your investment.
Investing in start-ups and early stage businesses involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Crowdcube is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own investment decisions. You will only be able to invest via Crowdcube once you are registered as sufficiently sophisticated.
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