By Daniel Hunter
Business Growth Fund (BGF), established to help Britain’s fast-growing smaller and medium sized businesses, today (Monday) announced a £4.8m investment for a minority stake in Wow! Stuff, a leading UK toy development company.
This is BGF’s third investment in 2012 and its fifth since launch, bringing their total capital committed to fund the expansion of fast growing companies to £26m.
Wow! Stuff was founded by dynamic entrepreneur Richard North in 2006, together with scientists Kenny McAndrew and Dr. Graeme Taylor. In five years, it has developed revenues of nearly £20m and a pipeline of innovative toys that include 2011 Christmas bestsellers such as the Air Swimmers, My Keepon and Flitter Fairies; and Dave the Funky Monkey, which upon launch in 2010 achieved sales of 250,000 units in 8 weeks and won Hamley's toy of the year. Wow! Stuff is now achieving a CAGR of 42%, with more than 50% of sales generated overseas.
Global toy sales in 2010 totaled $83.3bn, with the USA representing the single largest market (26%). The UK market is estimated to grow to £2.5bn by 2015. Despite wider economic conditions, the overall toy market continues to grow, with Wow! Stuff’s price point of £20-£60 per toy proving resilient in the current macroeconomic environment.
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.
Based in Wolverhampton in the West Midlands, Wow! Stuff is a toy development business that creates or sources inventions from across the world and sells these products direct to retailers in the UK, Europe and the US. It generally owns the Intellectual Property of the toys or secures exclusive IP rights. Wow! Stuff also creates gifts and gadgets, which are sold under licensed brands such as Top Gear, Wallace and Gromit, Doctor Who and The Science Museum, London. The business currently employs 30 people.
BGF’s investment will enable the company to bring new and revolutionary products to market, develop future innovations and expand into the US, where significant growth opportunities exist. In addition, the company is 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 their supply chain and logistics.
“In six short years Wow! Stuff has achieved a reputation for innovative product development, successful commercialisation and high quality partnership with brand owners," Alistair Brew, Investment Director for BGF commented.
"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. For all these reasons, it is a highly attractive business for us to support with growth capital and we are delighted to be working with Richard and his team.
“Wow! Stuff is also well placed to expand into the US, the world’s largest toy market. We are looking to back British businesses that have the means and ambition to take advantage of export opportunities and will work with them to make this happen.”
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