For our latest Investor Spotlight series, we chat with Damon Bonser, an entrepreneur and early-stage investor with a track record in building manufacturing businesses and creating value. Damon specialises in funding and launching products and brands into the market, scaling up early-stage businesses and seeing them through to exit.
Damon is also the CEO of the British Design Fund, which recently launched its fifth round and is currently open to investors until March 2023. More information can be found here.
Before we dive in, our readers would love to get to know you better. So, can you tell us a bit about your background on how you started investing?
We launched the British Design Fund in response to a gap in the market. No venture funds focused exclusively on early-stage product design and manufacturing businesses. The team behind the British Design Fund has the expertise to help launch and grow product businesses. I’ve experienced the manufacturing sector, having established several product businesses.
What startups do you invest in, and at what stage? Why do you choose to invest in these types of startups?
We invest in seed-stage, UK-based product design and manufacturing businesses. The team have broad experience across many manufacturing sectors and understands what it takes to launch and scale a product business. We only invest in businesses to which we, as a team, can add value.
When choosing investment opportunities, which one do you go with the most: your head, your heart, your gut, or a combination of the three? Why?
We have a rigorous selection process that ensures all investment opportunities are assessed with the head, heart and gut instinct. When the companies come to pitch, they are already at the 4th stage of our selection process. This means that the committee can focus on the team and size of the opportunity knowing the fundamental commercials and competition have been analysed. This allows the committee to explore softer elements, such as team dynamics and the chemistry of the founders.
How often do you invest in a year, and do you have a typical investment ticket size?
We invest all year long and typically invest £150k.
What was the most rewarding startup you’ve invested in so far? Why?
We have a 100% success rate so far; no startup funded by the BDF has failed, so it would not be fair to pick one.
Making mistakes is part of the “growing pains” every successful investor needs to go through. Can you share with us one investment mistake you’ve made and the valuable lesson(s) the experience taught you?
We have had some challenging start-ups that we invested in and have taken considerable energy to bring to market and scale. Others, with the right team in place and the right chemistry, have grown with much less input from us.
So what distinguishes these businesses?
Much of it is down to the founders and the scale of the opportunity. You have to do all your due diligence on the commercials, the competition and all the usual checks on the team. But we work much harder to create enterprise value by putting products and commercials above team and scalability.
What are some “myths” or misconceptions people have when investing in startups, particularly on crowdfunding platforms, that you’ve debunked throughout your journey?
That hardware is complex, and all start-ups are hard. Invest in what you can understand and add value to, and you will be ahead of the competition.
There has been much talk about the need for investors to support startup founders from minority groups. This may be obvious to you, but can you share with our readers why it’s so crucial for investors to help startups with diverse and inclusive teams?
You avoid backing only founders and businesses that fit into your comfort zone. You will miss fantastic opportunities and reduce the diversity of your portfolio, exposing yourself to greater risk through downturns.
If you had a chance to spend a day with someone and have the liberty to ask anything, who would that person be? What three questions would you ask?
I’d like to spend a day with Monty Don and ask him:
a) What should I plant against a north-facing wall?
b) Why my Wisteria refuses to flower?
c) Is it too late to divide my hostas?
Can you share your favourite quote with us and why this is so relevant to you?
Hire slow, fire fast.
People are everything, and the wrong people can drain the life of a potentially great business.
Great! Now, let’s go to the main focus of this interview. What are the critical red flags you watch out for when choosing startups to invest in and why?
Part-time jobs or other businesses on the side need to be 100% focused on the business we are investing in.
What would make a startup stand out and get you interested to learn more about them? Can you share with us examples to show this?
A founder with unique insights into a problem that they can solve with a scalable and protectable solution. See our portfolio here.
What are the top three traits startup founders need to have to be able to launch their startups successfully? Can you expand on why you chose these traits?
- Commercial acumen
In your opinion, what are the critical elements of an excellent investor-investee relationship? What tips can you give startup founders to ensure they consistently provide this with you and other investors?
An investee that is willing to listen to more experienced commercially savvy investors. Investors can listen to founders with more sector expertise than themselves.
How often should startup founders update their investors on their progress? What method is, in your opinion, the best way for startup founders to use when updating their investors?
Monthly board meetings with a P&L, cash flow and balance sheet, sales plan and a list of requests for support from the board.
Let’s flip things around. What three things can cause an investor NOT to invest in a startup, and why?
- Not answering questions an investor asks
- Not understanding your market
- Not knowing where your first sale will come from
As a parting gift to our readers, what are the top three pieces of advice you can give them about investing in startups?
- Avoid FOMO (cryptocurrency being a case in point)
- Do your research
- Support your founders
Thank you for these fantastic insights and for your time. We truly appreciate it and wish you all the best in your investing journey.