May 2017

UKnow Editorial – May 2017

 

Normally we do not write about our clients and their businesses for various and obvious reasons. However, this month is an exception.

As mentioned in last month’s newsletter, one of our clients had a massively successful run recently on an international crowdfunding platform following their invention of Nimuno Loops, now commonly referred to as “Lego Tape” (caveat – be aware of all the counterfeit wannabe’s out there!). What is not so widely known, is that this invention comes from the same company that invented the popular children’s bike Y-bike almost a decade ago. We experienced this incredible journey with them and both we and they thought it a good idea to write about it as we are all great believers in the use of technology and alternative business strategies such as crowdfunding to grow entrepreneurs and businesses. I realised as we went along that our traditional ways of thinking about business have to change if we want to stimulate invention and entrepreneurship. I was so excited to see what is already happening in the world and look forward to being part of that change.

What a privilege to live in such exciting times!

We hope that you find our newsletters interesting and informative. As always, if you want to respond to or comment on any of our news items or other relevant information, please contact us at news@unikone.co.za or 022 – 482 1169, or join the conversation on our social media platforms on Linkedin and Facebook.

Warm regards until next month.

 

Read more →

The Story of Ybike, Nimuno Loops and the Chrome Cherry Design Studio

It all started with four friends – let’s call them Pierre, Phil, Jaco and Koos. A bunch of creative, forward-thinking entrepreneurs. Sometimes a bit crazy… but hey, we like crazy!

All four of them have successful careers individually.

Pierre Swart spent many years at British American  Tobacco, ending up as Global Head of Innovation Delivery (Next Generation Smokeless) before leaving the company in 2011 to establish his own international career in design, innovation and consulting. He is based primarily in the United Kingdom and the United States, where he currently resides. Phil Conradie owns and manages a manufacturing and consulting company in the signage industry in Cape Town and you will see his products countrywide on many car dealerships, drive-through restaurants and petrol stations – and even my office reception! Jaco Kruger has been many things in his professional career, ranging from restaurateur to business development manager and consultant. He currently juggles his time between his duties in managing the business of Chrome Cherry Design Studio in Cape Town, his passion for underwater hockey (yes, he is a Springbok!) and his artistic career. His sculptures arecarried by many prestigious galleries, including the Melrose Arch Gallery. Koos Pieterse is a chartered accountant who has served as the Chief Financial Officer for Media 24 and the Chief Executive Officer for On the Dot Couriers. In 2016 he decided to also pursue an entrepreneurial career and his is currently involved in various business enterprises in different industries.

They met and became friends over the years and frequently exchanged thoughts about creating a business that could give life to all their inspirations and ideas. As with all great decisions, the guys finally made the firm commitment at a wine festival to form a company that could innovate, design and develop their own products. And so the company Chrome Cherry Design Studio was registered in 2004.

Many design ideas were attempted, but the first product of company that finally made it to market was the YBike – a new take on the children’s push bike. The innovation was in the way the bike was designed to improve children’s balancing abilities and motor skills. The traditional push bike is essentially a trike as it has two wheels at the back. The YBike has only one. This also has the added benefit of children not bashing their heels against the back wheels when pushing the bike forward. This innovation went on to win the Toy of the Year. Today YBikes are still sold worldwide and has become a bit of an icon amongst South African parents and children.

For the next few years the team continued to improve on and grow the YBike range, but they also started to look at expanding to non-related products in the toy and other markets.

Cue Anine Kirsten and Max Bassler. These two youngsters joined the company during the last few years as product designers, working with Jaco on product development, and a renewed focus was placed on innovation and design outside of the YBike range. Ideas started to flow and the company gained some new energy and momentum. I am always amazed at what goes on in their minds. At every management meeting I get so excited about this creativity and obvious talent when they deliver their progress report that I cannot understand why every proposed product is not launched and becomes a roaring success. But for a product to make it to market successfully takes much more than just a good idea.

The idea of Nimuno Loops grew from the team’s experiences and observations when they attended the Toy Fair in New York. The patent for Lego expired recently, which gave rise to the idea of creating a new generation Lego compatible creativity toy.  Back home they started experimenting with the idea, prototyping several possibilities and then going back to improve upon it until they presented a final product that was ready to go to market.

As it was a new concept that would require initial capital layout for machinery and other expenses, the team decided to use crowdfunding as a means of raising the capital to finance the production, instead of more traditional ways such as obtaining shareholders loans or third party financing.

After much research and preparation, the crowdfunding campaign was launched during March on the platform Indiegogo. The team split their manpower to have people on the ground in New York, while others manned the station in Cape Town. The initial target to be able to produce the first batch of Nimuno Loops was calculated at $8 000, and was therefore registered as the required target funding. At first, the response to the campaign was disappointingly slow, raising only a few thousand dollars in the first few days. And then, suddenly, it went viral! The team had to work all hours of the day and night marketing the product, answering backers of the campaign on their queries, and expanding the offering on the campaign as it gained more and more success. It was a 24 hour job for the 30 days of the campaign, leaving barely enough time to have a cup of coffee as the world jumped on this new phenomenon. I remember sitting in our monthly management meeting in Cape Town and the excitement was building as each hour passed. When we started our meeting, around $200 000 had been raised. Three hours later, at the close of our meeting, it was approaching $400 000.Every few hours for the next few days we would text each other with the achievement of a new unbelievable target. On 16 March, the $1 million mark was reached. The campaign eventually raised in excess of $1,6m dollars on Indiegogo.

Nimuno Loops has broken many records during its campaign, having raised funding of more than 20 000% of its target on Indiegogo – the most a campaign has ever achieved. Due to its success it is still available for purchase on the “In Demand” section of the platform. It has been hailed by influential media as ground breaking and “the best invention of 2017”, even featuring in Time magazine.

However, it was quite disturbing to experience how quickly counterfeit products were advertised during the course of the campaign and even now how many companies sell “Legotape” as their own product, while it is in fact counterfeited as Chrome Cherry Design Studio have registered all the patents and trademarks on this innovation.

The company that is today Unik Professional Services has had a professional relationship with Chrome Cherry Design Studio almost from the beginning. As with most start-ups, initially the owners managed most of the work themselves. However, as the business grew the workload and administrative burden increased. Also, with the increasingly complicated business and tax environment, they eventually needed professionals and experts to take care of the business administration, giving them the freedom to focus on the business itself. Our services to them grew over the years from the standard compilation of annual financial statements and the corresponding tax compliance, to the outsourced management and advisory services that we offer today. These services include attending to the daily financial and administrative duties, compiling management accountsand financial analysis that we review with them monthly at management meetings, taking care of tax and other legislative compliance, and offering full business advisory and tax structuring services.

Working with such a team of innovative, forward-thinking entrepreneurs also gave us the opportunity to innovate within our scope of services and work in ways that are not necessarily traditional. I love the fact that we can manage the entire back-office administration of the company on online platforms from wherever we are. Utilising emails, Skype and online systems to perform our duties and provide output to the client erases the need for both us and them to be physically based at a fixed place. We have grown with them as their business expanded and broke new grounds.  It is incredibly exciting to be part of a changing business world and help pioneer new ways of thinking.

Nimuno Loops is currently running their campaign on the South African crowdfunding platform Thundafund at https://thundafund.com/project/nimunoloops where it is available for pre-sales.

What a proud moment for South African entrepreneurship!

Oddette Boshoff

Director

 

 

Read more →

Crowdfunding 101

Crowdfunding has become all the rage, but to many this concept is still quite foreign. It is a wonderful alternative way to obtain financing for your venture, bypassing a lot of the red tape and obstacles faced by start-ups and early stage businesses, such as providing the security required by traditional financing options.

There are a number of different platforms, all with slightly different features, that facilitate crowdfunding – some based locally and some international. In short, it is an online system where you can market your product, service or idea and hopefully raise funds from a large number of participants worldwide in advance to make those dreams a reality. Your idea does not even have to be a business! Social causes and other non-profit ventures have had much success with crowdfunding.

There are a number of different ways in which you can utilise crowdsourcing to raise funds, including:Donations: Participants support your campaign by simply donating money toward it, having no expectation of any reward.

  • Debt Funding: Participants contribute money toward the campaign as a loan, expecting the capital and some form of return on equity such as interest once the enterprise reaches set milestones.
  • Equity Funding: Participants contribute money towards the campaign in exchange for equity in the business, with an expectation of a worthy return on capital.
  • Pre-Sales: Participants buy your product in advance (mostly before production even starts) at a discounted price.
  • Purchasing Experiences or Unique Items: Participants can support campaigns by purchasing unique experiences such as dinner with the campaigner, or a hand-drawn sketch to help raise funds.

So, to begin you will choose a crowdfunding platform based on your individual needs and preferences. All of them have slightly different processes and features and it is important that you are fully aware of these. You then have to package your brilliant, well thought-out idea and make it as visually attractive and informative as possible, especially in a digital format. Your campaign video for instance is the most important tool you have to explain and sell your campaign. The challenge is to get your product, service or idea noticed amongst all the other great ideas marketed on the platform. You have to decide on what terms you attach to your proposal. For instance, you have to state the minimum amount of funding you need to be able to proceed with your enterprise (and therefore for your campaign to be a success). You can opt for a fixed “all-or-nothing” goal, meaning that if you did not reach your minimum amount by the end of the campaign, your supporters will be refunded their contributions and you will receive no money. Alternatively, you can opt for a flexible goal, meaning you will receive all contributions made by supporters whether you reach your set goal or not. You have to set a number of days that your campaign will run, during which time people can contribute to your campaign. During your campaign it is wise to frequently engage with your audience and even update your offerings if possible, based on feedback.

Once your campaign has ended, the platform hosts will transfer the funds raised to you, minus their agreed costs. Some platforms offer the option of people continuing to contribute even after your campaign has ended due to its popularity.

As simple as this sounds, this market is fast becoming a specialist area on its own, with marketing campaigns now designed around the launch on the platform to increase chances of success.  Some platforms offer various levels of support during the campaign and can even be contracted to assist with the fulfilment.

Crowdfunding offers a significantly simpler and quicker access to financing, especially for start-ups. To my mind, one of the biggest advantages of this concept is that your product, service or idea is already validated as successful or not before you fully launch your enterprise. Customer feedback is immediate, which allows you to tailor or change your offering before production starts, potentially saving you an incredible amount of time and money. On the downside, participants have to keep in mind that the crowdfunding industry is still somewhat unregulated, which certainly poses risks for all involved.

Although traditional financing methods will always have a place, these alternative and innovative ideas are changing our world forever. However, I expect this will evolve more and more and we as business participants will need to understand, adapt and use this to our full advantage.

Oddette Boshoff

Director

Read more →