Cycling navigation device BeeLine is yet to make a first delivery to customers, but has already closed a successful Kickstarter round and now turned to equity crowdfunding as a way of funding future growth.
You can?t get away from it, the cycling market is buzzing right now. From major brands such as Evans, Ribble Cycles and Halfords, which are cashing in on Brits desire to get out and about on two wheels, to smaller more niche brands such as Blaze and Hiplok, it?s a sector swelling with business activity.
BeeLine is one of the latest to join the party, and is hoping its innovative handlebar-mounted navigation device will capture the imagination of urban cyclists and provide a different way to explore new inner-city routes. Linking mapping technology located in smartphones, the device provides a compass-like bearing with a countdown of how far away the rider is. Moving away from following a pre-defined route, cyclists are encouraged to find their own way and discover new areas.
The business isn?t driving blindly into the market though, a ?150,000 rewards-based crowdfunding round on Kickstarter in 2015 revealed there was a demand?for its product ? with hundreds of interested customers snapping up a model before it had even been made.
US platform Kickstarter has proved to be a popular testing ground, alongside fellow mainstay Indiegogo, for new projects looking to get off the ground. Without the required capital to do a first manufacturing run, entrepreneurs are using sites like these to flesh out initial ideas and create a bank of early customers and ambassadors that are so valuable down the line.
Tom Putnam and Mark Jenner were both at McKinsey & Company, working as management consultants, when they began to map out their first product together.
Business Advice caught up with Putnam while he was at this year?s IFA, a consumer electronics and home appliances conference, and found out that while neither had any experience of building hardware, they both were feeling the need for change.
?We both rode bikes around the city and had a chat about the frustrations of stopping to look at your phone as you lose your bearing,? he explained. ?Originally we thought about designing a nice compass to put on your bike, but then naively thought it can?t be that hard to connect that to Google Maps. Thinking we?d have something on the shelves in three or four months, off we went.?
Like many a hardware designers before them, that timeline went out of the window pretty quickly when they encountered numerous complexities, but the two remained focused on solving a cycling problem they believed the world was in dire need of being rid of.
Their first step was to get the funding required to finance the first run of the device. ?We didn?t ever consider not doing reward crowdfunding, as that kind of funding has enabled companies like us to start with nothing,? Putnam added.
?There?s no way we would have got investors to the level we needed, spending that amount of money on something you didn?t even know if the market existed for.?
Prior to going live on Kickstarter with a target of ?60,000, the two spent around ?50,000 on product development and creating some slick marketing collateral. Reflecting the need to have a great video on Kickstarter, ?3,000 was spent on putting something together that really told the story of what they were trying to do.
Thinking long and hard about the structure of the pitch page, they also built up a mailing list and used PR to get into the media. ?All of that was with a view to making sure we had a great first couple of days on Kickstarter,? he said. ?The way its algorithm works, if you have early momentum it kicks you up to the top of the homepage ? so more discover you, and you can snowball. If you don?t have that momentum, you could end up down on page ten.?
Another important decision BeeLine and the founding duo made, they said, was to engage with a reputable industrial design firm ? in this case Map Project Office. Thinking back, Putnam explained that they realised if production had been done without the firm it would have taken years, but there was also a realisation that the new business couldn?t afford big consultancy fees.
?The designers [at Map Project Office] loved our product, as they were cyclists themselves. It came to a point where they said what can you afford, and we halved what their normal fee was by also giving them equity. Now they?re shareholders in the business and feel invested in the process of making sure we do well.?
Business Advice wanted to know what the main challenges to getting a hardware-based product off the ground were ? especially for two individuals who had no experience in the space. Before engaging with Map Project Office, Putnam and Jenner did the best they could cobbling bits together with bundles of wires all over the place, teaching themselves to code and buying components off of the internet.
The next challenge was having something slick enough to lead a Kickstarter round, which involved months of iterations, 3D renders and models in foam. When they did eventually start raising money on the rewards platform they only had two prototypes, and then had to use those after the fundraising?closed to begin engaging with factories in China.
Building the product in China has been made easier by finding someone out there to act as the contract holder, who then outsources to factories he has years of experience engaging with.
BeeLine is hoping to have products in the hand of its earliest backers by November, but has wasted little time in raising money to capitalise on the buzz it hopes to generate once people are cycling round with the company?s hardware on its handlebars.
Putnam and Jenner have again utilised crowdfunding, this side on the equity side. They have banked ?500,000 from a pool including investors though the Seedrs platform, TrueStart and the London Co-investment Fund (LCIF).
?The timing was right as we are confident that we?ll have the product into manufacture, and now need to scale it up and make it better,? Putnam revealed.
The money will be use for hiring, with the first major role being that of a CTO. Then it?s about marketing and also the ?boring? part of needing money, dealing with cash flow. Tennis star Andy Murray has become an investor through his partnership with Seedrs, and BeeLine is conversations with the likes of cycling chain Evans about stocking its product.
The entrepreneurial duo also have fans in the form of the mayor of London?s office. The LCIF was set up to help young technology and science-based startup businesses in the capital, and BeeLine will be freeing up the data derived from users of its device so that London bosses can best decide where future investment in cycling infrastructure might be made.
Having stepped out of the corporate world of management consultancy to unleash their entrepreneurial passions, Putnam and Jenner are now finally at the point where their idea will become a reality ? and be put into the hands of customers. Utilising the powerful computer we all carry with us by way of a smartphone, BeeLine has set its course firmly on future growth and has the finance in place to make it a reality.
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