How design de-risks investment opportunities

Why should investors and designers work together?

John Mathers, Chair of the British Design Fund, explains how good design can de-risk an investment opportunity. John was a keynote speaker at KTN’s Break Through Innovation II briefing held at the Design Museum in London on October 2019.

This article contributes to an on-going debate about the role which design can play in the Healthy Ageing agenda. John Mathers and Julian Grice are embedding design thinking in the IRUK Healthy Ageing Challenge and share insights on how design thinking accelerates innovation, increases adoption and creates value for product and service providers. And in the challenging times our population is facing it’s increasingly important that as we age, we age healthily.

Our older population has changed from being a minor segment to be ignored to become a hugely important and vibrant part of our economy. The Healthy Ageing Challenge is leading the UK’s biggest transformation in the lives of older people funding a raft of innovative projects.

Using early stage design, business can create great British products and services that are attractive to investors.

Finding the pearls

Once the pandemic has subsided there will be many entrepreneurs who believe their product and service ideas are a cast iron investment. From an investor’s perspective, sifting ideas worth backing from time-wasters can be a needle in a haystack exercise, however probing the entrepreneurs’ commitment to design is a key factor to distinguish the wheat from the chaff.

The British Design Fund is a venture capital fund that has been set up to provide investment and expertise to early stage companies with well-designed British products, addressing real problems. Currently there is a lot of investment in technology innovation but a serious lack of investment in well-designed, early stage British products, which is a huge barrier as the UK is well recognised for creating good quality products and services. The British Design Fund provides support for the companies in which it invests companies that in both financial commitment and the appointment of experts and mentors to augment the skills in which the companies are less strong

What stands out for you as an investor in relation to design?

The great thing about design is that it puts the user at the heart of everything that a business does. Business owners who take a human centred approach create products and services that are truly customer focused.

By considering design at the beginning of a project development process, we can ensure that the user is always at the centre of everything from the early stages, right through to getting the product or service to market. It also needs to be so easy to understand that people want to use it. Design has a key role in making things useable and desirable as well as sellable and investable.

Companies who consider early stage design, alongside all the other disciples in their business, help to futureproof their product and get it to market quicker. This also helps companies iterate quickly and more effectively. Also, companies with a product or service that is scalable, make a much more attractive investment proposition.

Design makes a difference in healthcare

The healthcare sector is currently undergoing massive change. With the challenges around the NHS, we are being encouraged to stay in our homes for longer, so the market is demanding products that aid independent living. Working with Innovate UK on the Healthy Ageing ISCF, we are looking at how businesses consider their design strategy at every stage in the development of products and services.

According to UKTN April 2020 data, Healthtech is now the second biggest sub-set of the UK tech sector after fintech and there are more than 100 healthtech companies that are on track to become $1bn businesses. In 2019 the sector received $2.3bn in venture capital backing, almost double that of France. The companies in the sector have a combined turnover of £24 billion and employ more than 127,400 people across 3,860 businesses.

PUBLIC’s latest report The Promise of HealthTech, includes the first ever HealthTech 27 — the most promising companies in HealthTech.

One of the biggest challenges this sector faces is that without design being integral in the mix it will become a technology led product or service and NOT a human led one. The Healthy Ageing, or Age-Tech sector, is a human led market and products and services need to be designed to dovetail how people live their lives. It also has to work within the carer system and the NHS.

What makes a good investment?

There are four key elements that make an investable company stand out.

1. The quality of the product or service idea.

2. Is the idea meaningful for the founders and drivers of the business? Is there something in their lives that has resulted in them developing this product or service?

3. Are the owners and key individuals within the business totally committed to growing the business, through good times and bad?

4. How self-aware are the founders and key individuals? How willing are they to accept change as well as advice around new and alternative ideas? Do they know what they are good at, realise what they are not so good at, and recognise when they need help?

What we learnt at the KTN Breakthrough Innovation II briefing

This investor briefing had a real focus on helping individuals with a ‘think-do’ approach. The masterclasses offered practical advice and hands on help for businesses with a key drive to helping companies ‘make things happen’, outlining practical steps to bring design into the mix. The panel excited me as there were lots of interesting individuals with different perspectives providing presentations and in-depth audience conversations.

Edward Hobson, KTN Head of Design and Innovation Effectiveness and John Mathers, Chairman of British Design Fund

The biggest challenge when engaging with design

There is a great danger around design thinking. Many businesses are scared about what ‘design’ is and don’t know how to work with design agencies or service designers. For me design is about making things simple to understand, easy to use and something they want to get involved in. We are entering a new era for design and it’s becoming more apparent that business owners are realising that using great design is key to creating great products and services.

Ex-Design Council chief executive John Mathers joined forces with design entrepreneur Damon Bonser to launch the British Design Fund, an investment fund for UK-based product design and manufacturing start-ups.

For more information and advice about your Healthy Ageing by Design project contact John or Julian:john.mathers2@btinternet.com or julianmpgrice@gmail.com

For more information about funding available to Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS)-qualifying companies visit: https://britishdesignfund.co.uk

To hear from entrepreneurs at the KTN briefing: https://www.youtube.com/watch?v=ea9oEHhccHU

To find out more about KTN design visit: https://ktn-uk.co.uk/interests/design

UKRI are committed to embedding design into all the Grand Challenges. For information and advice about UKRI’s Healthy Ageing Challenge visit: https://www.ukri.org/innovation/industrial-strategy-challenge-fund/healthy-ageing/

For more on the UK Heathtech sector visit: https://www.uktech.news/news/the-uk-looks-to-healthtech-startups-as-coronavirus-pandemic-puts-spotlight-on-fast-growing-sector-20200422

John Mathers and Julian Grice are embedding design thinking in the IRUK Healthy Ageing Challenge and share insights on how it accelerates innovation.