King of Shaves turns to customers to raise £5m
Will King to raise £5m by offering customers 'shaving bonds'
The award-winning entrepreneur behind the King of Shaves brand is looking to raise £5m by selling ‘shaving bonds’ to his customers.
Will King, the founder of King of Shaves, is offering customers the chance to buy £1,000 shaving bonds, which offer interest at 6% a year, 12 times the current Bank of England base rate.
The money will go towards marketing and promotion for the Azor, the system razor King launched last year, as he continues his challenge of the ‘duopoly’ of Gillette and Wilkinson Sword in the razor market. The Azor has already amassed a 10% share of the UK market, which is worth £400-500m.
Savers will be tied in for three years, and each individual will have the opportunity to buy up to £5,000 worth of bonds. King, who has been approached by a number of VCs eager to invest in the business, said he wanted to get his customers engaged with the brand.
He told Growing Business: “My ideal investment profile would be 5,000 individuals, geographically spread across the UK, £1,000 each, and have those 5,000 individuals looking out for us when they’re out and about.
“If you’ve got relatively small amounts of money on deposit at the moment, whether in a bank account, deposit account or an ISA, the rates of interest are very low, and it seemed a good way of giving our customers a much better return on their money as well as giving them a great shave in the morning. So it seemed to tick lots of boxes for the brand and for the business.”
Together, Gillette and Wilkinson Sword own around 95% of the £3-4bn global razor market. However, King views ‘lack of awareness’ as his biggest competitor. With up to 5,000 people invested in the success and growth of King of Shaves, he hopes to mobilise an army of brand champions, spreading the word to family and friends.
“It will get our customers actively involved in the brand from a saver perspective and a growth perspective, as well as purely a user perspective,” he added.
King of Shaves recently demerged from KMI, the company King founded with business partner Hiten Dayal in 1993, following the success of the Azor launch last year.
“[The money] is going to lever up the Azor brand, with my ambition of getting it to be the number one selling handle by the end of 2009,” added King.
While the bond is not a government-backed (secured) investment, King is confident of his business’ ability to continue on its impressive growth trajectory and remain profitable.
“I’m relaxed about it,” he said. “We’ve been around for 16 years, and we’re repeatedly approached by private equity houses and more recently some bigger companies to invest in the business. We’re on a great growth track and the company makes great profits. It’s also potentially a precursor to an IPO further down the line.” More than a million men use the King of Shaves range daily, with a product being sold every three seconds. Retail sales this year will be £20m.
The shaving bond has been approved by BDO Stoy Hayward, which is regulated by the Financial Services Authority.
© Crimson Business Ltd. 2009