Ever wondered how startups connect with a children's clothing manufacturer in Chennai, India, or find a specialist in small order runs in China? The truth is it's incredibly difficult. Founders can spend years building a network of suppliers, pounding the pavement overseas and often having to take substantial risks on new suppliers.
Supplycompass are trying to solve the problem by matching companies with their network of validated manufacturers. The business is bootstrapped, has built up an impressive roster of advisers and co-founders, and is 76% funded on a £200,000 crowdfunding raise.
We spoke to the founder as part of the latest in our The Investibles series.
1. What is your investment status?
We are raising our first round of investment at the moment, crowdfunding on Seedrs.
2. Describe your business in one paragraph; what’s its vision and what problem does it solve?
Many small and medium-sized brands find it surprisingly difficult to find and connect with good international manufacturers. We’re making it easier for them.
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Supplycompass is an intuitive, informative and structured manufacturer sourcing platform that makes the whole process of getting things made more efficient for both brand and manufacturer. It ultimately helps build trust and create stronger, better relationships.
3. How did you come up with the idea for your business?
Initially, it was when two friends of ours founded a bicycle company. They had so many issues finding the right manufacturer and then so much back and forth with their samples - the whole process seemed to be really difficult and such a waste of their time and money.
A quick Google search for ‘how to find international manufacturers’ leads to either pretty unhelpful blogs or to Alibaba, which is the first port of call for most small businesses. The problem is that online directories such as this have no sophistication and lack the trust of users – Alibaba.com currently has a customer rating of 1.3 out of 10 on Trustpilot. Information is misleading and unchecked, and there is no structure or detail to the requests sent to the manufacturers. The result is little chance of a successful outcome.
We knew there had to be a better way for small and medium-size brands to connect and work with international manufacturers and so we started Supplycompass.
4. What’s your addressable market?
Using a bottom-up approach: there are 296,000 UK small businesses in wholesale and retail. If we capture 20% and assume two £30,000 orders per year our total addressable market is approximately £350m.
Using a top-down approach: UK imports in relevant sectors total £56bn. If we capture 10%, our total addressable market is approximately £560m.
In addition to the current market, we also believe there is a large dormant market here. There are a lot of people who would like to get products made yet don’t because the process is too difficult and the risks too high. We see our service facilitating a huge number of new businesses to make their product ideas a reality.
5. What’s great about your team and do you have a mentor?
Our team is fantastic! Above all, they are extremely passionate and driven.
My co-founder John is a chartered engineer and has four years’ experience sourcing and vetting manufacturers in the oil Industry. He’s transferred a lot of his learning and processes from here into apparel and consumer goods manufacturing, and it’s working fantastically. He also ran a successful cycle tours business prior to this.
Flora Davidson is our creative director and has a background in innovation and brand strategy consulting for sports and fashion labels. She also started her own clothes brand and we’ve analysed her whole production journey, so that our product is perfectly designed to work for small and medium-size brands. It’s so important that you understand your customers’ needs - the best way of doing that is to be one.
We have some fantastic advisors too.
Paul House was managing director of SGS in India and Sri-Lanka for eight years. SGS is the largest manufacturer testing, inspection and certification (TIC) company in the world. He brings extensive knowledge of the TIC market and excellent experience in India.
Duncan Thomson has a history of taking multiple startups from inception to large valuations. An accomplished business leader with an exceptional record of driving new levels of success, he has taken on the role of our marketing strategy lead.
Additionally, one of our main investors was a founding investor in Net-a-Porter and Rapha, and also happens to be the director of a shoe company, so understands the struggle of finding the right manufacturer first hand.
6. What key challenges have you faced and how have you overcome them?
Our first big hurdle on the ground in India was to work out what the Indian head wobble actually meant! Then it was working out how to best hunt down the amazing factories that we knew existed here but were covered in a mist of secrecy. We got over that by really immersing ourselves in factory and business networks here, spending the time to get to know as many people as we could.
Our business is based on trust and transparency, and it’s really important that we built strong, honest and lasting relationships with our factories from the start.
Since then, it has definitely been communication. Half our team is based on the ground in India and the other half in London – different time zones and dodgy internet are a constant battle! We make sure that we have set times every week where we all check in, reflect on our previous week's work, align our ideas and set a clear plan (and deliverables) for the week and month ahead.
7. How have you funded your startup and why did you choose this route?
We have bootstrapped until now. For us, it made more sense to take our product as far as we could without investment. This has allowed us to prove our concept and overcome a number of the key issues first, and meant that we had answers for all the challenges that people threw at us.
We have also been able to explore and understand the problem more deeply, ultimately making us form a much more focused solution to the problem. Importantly, it has also allowed us to raise money on better terms because the business is already revenue-making.
We are now crowdfunding £200,000 to rapidly scale the business – building a fully automated platform, grow our team and attract more brands and manufacturers. Our business model allows us to stay in the black from this point on, however, we may choose to undertake a Series A round to capitalise on the opportunity quicker.
8. How do you market your business and how successful has it been so far?
To date, it has purely been through word of mouth and a small amount of social media, but despite this we have had the most extraordinary amount of interest. We have gained a significant number of our new clients through personal recommendations, which makes us think we must be doing something right!
We keep our loyal followers up to date on our day-to-day happenings via Instagram, which always throws up some treats – we think factories are fascinating and India is insanely photogenic.
We’ve also been lucky enough to be picked up by Forbes a couple of times and we are continuing dialogue with a number of journalists and publications. With a bit of hunting, journalist’s contact details are relatively easy to find.
Some of the money raised will be going towards marketing the business. Our strategy includes:
- A competition for design students, with the winner getting a large contribution to their first order run
- Events to discuss the future of production from users and influencers in the sector
- Partnerships with crowdfunding platforms and forward thinking organisations who are also working to disrupt this sector
9. What are your plans for the future?
In the short term, we are investing our money in areas of the business that will drive growth and improve the customer journey. By June 2017, we are aiming to have finished the initial development of the fully functioning platform. This will allow us to grow our user numbers significantly.
In the longer term, we plan to use the platform and business model we are creating to expand into more countries and different product categories. We believe we have the opportunity to become the go-to choice for anyone who wants to get anything made – offering them the easiest, most efficient and stress-free road from design to delivery. We want everyone, regardless of size to have access to the world’s best performing and responsible manufacturers.
10. If you started again, is there anything you would do differently?
Hindsight is a wonderful thing, isn’t it? I’m sure there are many things that we could have done better but the reality is that all of the challenges, the mistakes, the setbacks, the luck and the interactions are all part of how we got to where we are. I would say it is very important to let these things happen, but make sure you recognise and reflect on them so that they can be used to implement positive changes in your company.
11. What advice would you give to entrepreneurs that are starting a business?
Pick something that is a genuine problem and that you feel passionate about. If it’s a success it is going to be your life for many years to come!
Talk to as many people as you can about it - don’t be scared about sharing your idea. Humans are fundamentally good people. You will learn far more than you ever thought you could by sharing and talking about your idea with people from different circles and fields than you ever expected you could.