Investors really
really want to invest in Emma Bunton: £420k raise for Kit & Kin fastest in
Angel Investment Network history
The commercial magic of the Spice Girls remains as strong as ever, as Emma Bunton’s ethical baby product business Kit & Kin, was responsible for the fastest raise in the Angel Investment Network’s 14 year history. It achieved its target of £420k in just one week.
Spice Girl, Emma Bunton, Founder of KIT & KIN
More than £1m was offered in total for her eco-friendly nappies, wipes and skincare business but Kit & Kin decided to only accept £420k at this time, an amount which included a key strategic investor.
The raise received unprecedented interest from our 170,000 strong worldwide community of investors. The business was launched in 2016 by Bunton and business partner Christopher Money, with their products available through high street retailers as well as their e-commerce platform. The investment will be used for staff, expansion and stock supply to service larger orders.
According to Mr Money: “The raise via the AIN has certainly surpassed all expectations and we ended up having to cap the number of discussions. We’ve come away from the raise with a select few who will bring significant strategic value that will certainly strengthen our offering and help us realise our potential over the years to come.”
Money and Bunton will be hoping to emulate the success of another celebrity turned entrepreneur, Jessica Alba, whose business, The Honest Company, floated for just shy of $1 billion in 2017.
According to Ed Stephens, global head of brokerage at AIN: “The level of interest for Kit & Kin’s business was unlike anything we’ve ever seen. It would normally take around 6 weeks to raise a similar amount – we had pledges for over one million and had to turn investors away…”
As a business it has some great fundamentals, but clearly Emma Bunton’s extra spice was a key ingredient.
Ed Stephens, Global Head of Brokerage
Bunton was famous for promoting girl power and her business was promoted through a new section on our site focused on supporting female founders and investors. This initiative was set up to address the under-representation of women as investors and founders in the industry.
The Spice Girls (1997)
Our investor community in the UK consists of around 17,000 angel investors, but less than 10% of these are women. We want to lead the way in tackling this industry problem starting with increasing the visibility of women-led businesses and helping them to find investment and mentoring from investors.
Here’s a few of the press publications that leapt upon this story (enjoy the headlines):
£7bn was invested into private UK companies in 2018, down 19% from record levels in 2017 but still significantly higher than any year before 2017, according to Beauhurst. Could this be the beginning of a decline? These are dark and uncertain times; and even those ‘presiding’ over Britain’s exit from the European Union are unable to agree on what the first order effects of this momentous action might be.
Angel investors have far greater flexibility than any other investor type when it comes to adjusting their investment preferences. In times of macroeconomic uncertainty, they can easily defer activity until they have a clearer idea of the road ahead.
The warning signals, then, are there on a wider level. But on the Angel Investment Network platform, 2018 was a strong year with both UK investor and entrepreneur numbers rising to over 30,000 and 115,000 respectively. We now have over 1 million users globally. Our own analysis of the user activity on the site reveals some interesting insights into the angel investment landscape. And perhaps a light for the path forward.
Threadbare Fashion Sector
The High Street has had a tough time in the past year, with high profile fashion brands in trouble including House of Fraser and LK Bennett. According to user data on our site, investor willingness to back startup fashion brands has dipped dramatically with ‘fashion’ as a sector falling from the 6th to the 14th most popular sector in 2018, the largest slide of any category.
The poor
performances of high street mainstays may have played some role in this, but
more likely it is strong performances from other sectors that have contributed
most tellingly to this dip in popularity. Judging from the performances of
software, technology and the so-called ‘impact’ sector, it seems that fashion
brands looking to raise investment will need to embrace technology and/or
ethical mission statements as part of their proposition to regain investor
interest.
Fintech Finesse
It will come as no surprise that the technology and software categories grew impressively and retained top spot for both investor interest and number of pitches looking for funding. The rise of AI and machine learning with applications across so many industries has meant that many new startups have some form of digital technology at the core of their value proposition. The prevalence of industry jargon terms like ‘agrotech’, ‘insurtech’ and ‘fintech’ speak to this intersection between specific industries and the super-industry that software and technology is fast becoming.
Fintech in the UK is a great example. London has developed a well-deserved reputation as a Fintech hub over the past couple of years, thanks, in part, to the growth of companies like Monzo, Starling Bank, Revolut, and payment-linked-loyalty provider, Bink.
Their success has inspired a surge of exciting innovation in the space with some very promising startups coming onto the scene including: Coconut – a current account with inbuilt accounting; and Novastone – ‘WhatsApp’ for the finance sector. Both of whom completed funding rounds through Angel Investment Network in 2018, taking their total funding to £1.9M and £5.6M respectively.
We
expect the fintech space to go from strength to strength in 2019 and beyond,
and it may offer some hope for carrying the UK startup scene on its shoulders
if the going gets tough.
The rise of impact investment
Another area starting to show promise is ‘impact investment’. Investor activity on the website mirrored growing societal interest in ‘impact’ or ‘profit-with-purpose’ – the notion that businesses should have some societal and/or environmental good at the core of their mission while still working for growth and profit, allowing investors to invest in line with their conscience without risking their chance of generating returns.
Investor
searches for impact-related terms were up an average of 24.9% from 2017. The
fastest growing sector was ’renewables’ which climbed from 40th to
32nd (a 25.4% increase in number of searches,‘greentech’
showed a 25.7% increase while ‘environmental’ had a 23.5% increase.
The United Nations’ Sustainable Development Goals
Some of the companies who benefitted from, or perhaps helped create, this growth in interest include: Verv – an AI home energy assistant – and Demizine – an end-to-end home water recycling system using technology originally engineered for space stations. In both cases, it is interesting to note the core role that cutting-edge software and technology plays in their value proposition.
Off the back of this, we recently launched a spin-off platform, Seedtribe, with the mission of building a community of impact entrepreneurs and investors. We are especially interested in the role technology can play for impact companies in bringing about positive change in the world, while generating returns for investors.
Equity property investments remain popular
As a
final point, I should mention the property investment category which performed
strongly on the site for the third year running. For context, our site was
built to connect startup companies with angel investors, but from quite early
on, property development companies would ignore our pitch framework (designed
for startups) and submit their equity property deals on the platform. The
appetite for their type of deal (25-35% returns per year over an 18-24 month
period) was apparently strong among our investor community – perhaps as a less
risky avenue for diversifying their portfolio. This remained the case in 2018
and we expect this to continue even with the current volatility in the property
market.
Summary
Overall, investor and entrepreneur activity on our site has outperformed the sector at large. But in these uncertain times, we recognise that our efforts to support the early-stage investment community will have to go even further in 2019 and beyond.
Whatever the political climate, UK entrepreneurs will continue to bring out innovative solutions embedded in technology across a variety of industries in 2019. The Internet of Things, robotics and AI systems including software for autonomous vehicles are creating real excitement amongst our investor community, and rightly so. It is up to these investors to continue supporting the industry with capital, expertise and contact; and to light a way in these murky times.
Originally written by Oliver Jones, Head of Marketing at Angel Investment Network, for The Haggerston Times
