Doug Higgins explains how his novel idea for training equipment was realised thanks to Find Invest Grow, an uncoventional venture capital group.
If only all good business ideas were as easy to come up with as this: find a problem, feed your brain some facts, wait for them to compute and then churn out an answer. That’s how mechanical engineer Doug Higgins describes the genesis of his fitness equipment company, MuJo Mechanics.
“I was at the gym when I had my eureka moment,” he explains. “I’d filled my brain with all the information about the problem and what I was trying to solve. I didn’t know when the answer was going to come out, it’s usually when I’m doing mundane tasks. It then came to me and it was a good feeling.”
Higgins, 30, wrapped up his workout and immediately began drawing his ideas out on a piece of scrap paper. He was convinced he had something.
This September, Higgins is expecting delivery of his first 50 fitness machines. At £5,500 a piece, they could bring a £275,000 turnover to his start-up if verbal orders for all 50 are converted. After years of hard work Higgins is finally going to begin making some money.
The problem he was working on, as part of his four-year engineering degree, was to do with fitness training. A keen rugby player at university, he had noticed that pre-match training often centred around weightlifting machines targeting the upper body, but there was nothing specifically to develop neck muscles to better withstand a scrum and prevent injury.
His patented solution is a new piece of fitness equipment which trains multiple joints in a single exercise. Higgins came up with a new kind of weights machine that targets biarticular muscles, those controlling two joints — like the hamstrings, which cross both the hip and the knee — and multiaxial joints, such as the hip and shoulder.
Although Higgins officially opened MuJo — “mu” standing for multiple and “jo” for joint — in January 2011, he is still yet to make his first sale. He has spent most of the past two years developing his product, testing the market and securing patents. Even the most adventurous entrepreneurs would label his business plan “risky” especially in the current lacklustre trading climate.
But with the help of Find Invest Grow (FIG), a small and unusual venture capital group which only invests in start-ups run by young entrepreneurs, Higgins was able to bring his creation to market.
MuJo began working with FIG two years ago in the hope of securing some long-term investors for the business. Within months, FIG offered Higgins some carefully selected backers — including the co-founder of LA Fitness David Turner — who helped inject capital into the business.
FIG was able to make use of the Government’s flagship tax initiative aimed at reducing risk for investors, the Enterprise Investment Scheme (EIS). Higgins says that for every £10,000 invested in MuJo, backers stand to lose only £3,500 if the firm goes bust. The generous tax relief is aimed at boosting investment in risky start-ups and in MuJo’s case, appears to be working.
To date, MuJo has raised £400,000 through FIG. Higgins’ main clients are set to go way beyond the original rugby customer he had in mind, including hospitals, care homes and gyms, with the product appealing to fitness buffs as well as patients who need to build up muscles following an accident or due to an illness.
Higgins says the SEIS has so far proved a success in building his and other start-ups. “It’s a really useful process for fundraising and provides money to businesses that otherwise wouldn’t know how. I didn’t even bother visiting the banks.”
The prospect of a scalable business would not have been possible without FIG, Higgins adds. “FIG brought investors to the table, but they also helped us develop a proper business plan. They brought a legal and accounting framework to our business which we didn’t previously have.”
Higgins is the majority shareholder in MuJo, maintaining just under half of the equity, with FIG taking a stake that it hopes will payout in the years to come.
At present, MuJo’s offices are based at the FIG headquarters, in Shepherd’s Bush, west London. The site is a converted, 18,000 square foot former Royal Mail sorting warehouse and now houses around 10 start-ups, which are either part of FIG’s portfolio, or pay rent to occupy the space.
Kit Malthouse, the deputy mayor of London for business, will officially open “FIG Village” on May 2, when the founders will throw a party to celebrate a new start-up community that they hope can replicate the success of Tech City, the east London cluster of small technology companies.
Higgins says the building offers the chance to be around entrepreneurs and bounce ideas off each other. There is a basketball court in the vast foyer.
FIG’s reach extends beyond the warehouse. The investment group has been investing in other start-ups in and around London, with around 15 companies in its portfolio. One of these is Sales Gossip, a website which alerts users to shops which have sales on and the best discounts.
Its founder, Zabetta Camilleri, says FIG helped her to raise funds from angel investors. Launched last September, the site already has 65,000 subscribers and 100,000 unique visitors a month. It makes its money — “not yet in the millions”, but enough to pay her and her business partner a salary — through advertising and listings. She hopes to grow the site to half a million subscribers in the next year.
“Starting a business was 10 times more difficult than I thought it was going to be. All of a sudden you have to be an expert in buying a printer, recruiting staff and managing accounts. But FIG has helped us come up with a proper business plan and helped raise us money. It would have been a lot harder without them,” Camilleri says.