Wow! Stuff targets rapid expansion after BGF investment
THE Business Growth Fund (BGF), established to help Britain’s fast-growing smaller and medium sized businesses, has invested £4.8m for a minority stake in Wolverhampton toy company Wow! Stuff.
It is understood to be the first West Midlands investment made by the Birmingham-based fund.
Wow! Stuff is behind toys such as Air Swimmers and My Keepon, both of which were named in Hamley’s Top 5 toys for Christmas 2011 and Toys R Us’ USA Fab 15 list for 2011.
This is BGF’s third investment in 2012 and its fifth since launch, bringing its total capital committed to fund the expansion of fast growing companies to £26m.
It was introduced to Wow! Stuff by Birmingham’s Springboard Corporate Finance.
Wow! Stuff was founded by Richard North in 2006, together with scientists Kenny McAndrew and Dr. Graeme Taylor. In five years, it has developed retail sales of more than £30m.
North is a serial entrepreneur who was credited by HSBC as Business Thinker of the year in 2010. Wow! Stuff was also nominated as winner of the Orange Innovation award at the National Business Awards and was included in the Sunday Times Fast Track 100 in 2010.
BGF’s investment will allow the company to bring new products to market, develop future innovations and expand into the US, where significant growth opportunities exist. The company is also looking to acquire a Shenzhen team of engineers and an American and UK based team of inventors enabling it to bring sourcing and the supervision of its manufacturing processes in-house.
In addition to funding, BGF will contribute operational support to the company both through the introduction of a non-executive director and chairman and through enhanced management of its supply chain and logistics.
Alistair Brew, investment director for BGF, said: “In less than six years Wow! Stuff has achieved a reputation for innovative product development, successful commercialisation and high quality partnership with brand owners. Over and above its recent success with blockbuster toys such as the Air Swimmer, it has a desirable new product pipeline that is exciting the toy market and enjoying significant early stage interest from global retailers.”
North said: “Wow! Stuff aims to create and bring to market fresh, exciting and innovative products with mass market and international sales appeal. Our products are now available in the USA, France and Germany and we’re targeting 40 more countries over the next three years. New ‘invented here’ products will increase by more than 300% over the next 36 months and we’re targeting retail sales revenues of more than £100m.
“BGF’s investment is great news for us. Their financing and the additional expertise they bring to us as a partner investor will help us to turbo charge our ambitions and maintain our position as one of the fastest growing privately owned British companies. We would love to think of ourselves as the Dyson of the toy world.”
Aside from Springboard Corporate Finance, a number of advisers were involved in the deal. Ernst & Young delivered the financial due diligence, CiL the commercial due diligence and Catalysis the management due diligence. On the legals, The Wilkes Partnership advised management and BGF was advised by Pinsent Masons.
The Pinsent Masons team advising on the deal was led by corporate partner Paul Harkin and senior associate Ann McCarthy, assisted by solicitor Phoebe Matthews (corporate) and associate Joanna Alderson (intellectual property).
Commenting on the deal Mr Harkin said: “We are delighted to have had the opportunity to work with the BGF team on one of its early investments and look forward to working with the fund as it continues to invest in home grown business talent throughout the UK.”
