British Design Fund 2 SEIS/EIS
The British Design Fund 2 is an SEIS/EIS portfolio seeking to raise up to £2 million.
- Invests in the product design and manufacturing sectors
- The UK has the second largest design sector in the world
- Investors are expected to hold a minimum of five portfolio companies
- Choice of EIS and/or SEIS investments
- Target return of £3 per £1 invested after six years - not guaranteed
- £10,000 minimum investment
Read important documents and apply
The fund was launched as a collaboration between Damon Bonser and John Mathers after working together at the British Design Council. Mr Mathers, former CEO of the Design Council, helped to create Spark, an incubator programme for early-stage design and manufacturing companies. Mr Bonser joined the scheme as a mentor, having already built and launched his own product design business. Spark provided companies with a small amount of funding, often to help develop initial prototypes, however, after this stage the businesses typically struggled to find follow-on funding and industry expertise.
In response, the British Design Fund (“BDF”) was launched specifically to provide early-stage funding to UK manufacturing and hardware businesses.
The BDF team has since expanded to include David Motum, an experienced publisher within the events and media sector; David Kremer, co-founder of Rubik’s Brand Limited; and Jonathan Silverman, an IP specialist.
Watch a video interview with Damon Bonser:
Every company must have a physical product that solves a tangible problem. Founders must also have intimate knowledge of their market and should be able to demonstrate clear market demand – this can take of the form of pre-orders or crowdfunding. BDF will only invest if the company has developed a prototype and secured some level of IP protection. Furthermore, the companies should be realistically capable of trading within 12 months after investment. For this reason, the investment team will avoid businesses with big R&D requirements, this rules out most medical device companies which need to go through multiple clinical trials before they can trade.
BDF will not invest in a single product, each company must be able to produce a range of products as this reduces risk and makes it easier to secure deals with distributors. On average, the fund prefers to take a 20% stake in each business.
The majority of companies are expected to qualify for SEIS but EIS will be available for follow-on investments. The minimum portfolio size is five companies, although it is anticipated that most investors will receive eight to ten. The default split between EIS/SEIS investments is expected to be equal, however, investors can specify their preferred allocation if they wish.
As the fund was only launched in 2017, it has yet to make any exits.
Exits may be achieved through a variety of routes – none of which are guaranteed. This includes trade sale, management buy-out or sale of shares to other shareholders. The fund’s target return is 3x after six years, however, this is not guaranteed.
The fund has invested just under £1 million into six companies, as at October 2019. BDF are looking to target a total portfolio of 10-15 companies within the next few years.
Deal flow is expected to come through the investment teams’ strong industry connections and accelerator partnerships. On average, BDF reviews around 50-100 companies per quarter.
There have not yet been any failures in the portfolio – however the fund is relatively new and small. Past performance is not a guide to the future.
Examples of previous portfolio companies
Please note, these are examples only: new investments will be made in other similar investments.
Kokoon was founded by Tim Antos to solve a simple problem – to help people sleep. An insomnia sufferer himself, Mr Antos was recommended audio techniques after visiting a sleep clinic. Whilst the audio worked, it was difficult to find headphones that were comfortable enough to sleep with. Unsatisfied, Mr Antos designed Kokoon headphones specifically to promote good sleep hygiene and comfort.
Kokoon headphones are wireless, noise-cancelling and cushioned. Collectively, the company produced over 200 prototypes to get the ergonomic design correct. In recent years, the product has been developed to integrate sleep tracking software into the headband. This allows the headphones to track R.E.M cycles and determine the best period to play audio to promote sleep or function as an alarm.
The company first raised funding through Kickstarter, reaching just under $2 million from around 8,500 backers. BDF invested £150,000 in December 2017 to help drive sales and marketing.
Ports and harbours routinely require dredging to remove sediment deposits and maintain water depth. Not only is this vital to ensure safe navigation it is becoming more necessary as vessels increase in size.
Conventional dredging techniques are often expensive and can damage the environment by disturbing sensitive sea beds and reducing water quality. By contrast, Lutra Marine has developed a patented dredging technique which can remove sediment and rock without disrupting local habitats. The equipment can be deployed from the shore or on vessels for versatility.
BDF invested a first tranche of funding in 2019 to support product development and demonstrations for potential contractors.
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
SEIS investments are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks.
Tax rules can change and benefits depend on circumstances.
This SEIS fund invests in early-stage businesses which are more likely to fail than larger ones. So you should expect a number of failures in the portfolio.
A summary of the main charges and savings is shown below. Some of these will be payable by the investor, whilst others by the investee companies. The investment may have additional charges and expenses: please see the provider documents, including the Key Information Document, for more details.
|Full initial charge||—|
|Wealth Club initial saving||—|
|Net initial charge through Wealth Club||—||Annual management charge||—|
|Performance fee||20%||Investee company charges|
More detail on the charges
Timing of the offer and discounts
The fund anticipates taking up to 12 months to fully deploy investor capital following the closing dates. However, it may take longer.
British Design Fund has informed us that it aims to allot a certain number of subscriptions received before 28 February 2020 in the 2019/20 tax year. This means that those investments could be eligible for carry back to 2018/19. Please note, this is not guaranteed.
Potential allotment in 2019/20 - deadline is 28 February 2020 (cleared funds)
Read important documents and apply
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
- Target return
- Funds raised / sought
- £2.0 million sought
- Minimum investment
- 28 Feb 2020