Carbon Black System Ltd is raising funds on Crowdcube to enable the business to take the Carbon Black wheelchair to a global audience who have been patiently waiting for an affordable version of the innovative, super lightweight, carbon-fibre chair to launch officially. We caught up with Steve Ryan, Managing Director, to discuss in a bit more detail the company’s achievements and aspirations.
We noticed on your pitch page that you recently reduced the pre-money valuation in this campaign and the share price in this round – can you expand a bit more on why you did this?
Before we launched our pitch, we gave some detailed thought, and took advice, on what would be a fair price to reflect both potential returns and the risk attached for new investors. While we were successful in gaining some traction, we were surprised, given the quality of our product and our exciting plans, that our progress was a bit slow. We consulted with people who had shown interest in our pitch but chosen not to proceed, and they generally said they loved the product and our plans but returns on exit just weren’t what they were looking for.
We consulted with existing shareholders and agreed it would be appropriate to drop the pre-money valuation and share price so that the potential return on exit is enhanced.
Your business has been around for a few years now - what has changed that makes you believe the company can be a resounding success with Carbon Black II?
There was keen anticipation in the market when the original Carbon Black was launched, and it didn’t disappoint regarding looks, functionality and user experience. There was a widely held expectation that it would be expensive – but the original price of £14k, driven by high manufacturing costs, was way beyond expectations and well out of kilter with the rest of the premium manual wheelchair market, which was around £2.5k to £6k.
We have had some success in reducing costs of manufacture, but in 2017, the Carbon Black was priced at £9,995, and the company was unable to gain the sales volume required. Potential customers were telling us that they loved the chair, but it was unaffordable for them – so dealing with that issue became our number one priority.
We undertook a reasonably detailed exercise, including recruiting a procurement specialist with in-depth knowledge of manufacture in the Far East. We also identified a highly skilled and reputable Carbon Fibre bike manufacturer, which already supplied to Europe and North America and therefore is ISO accredited. They quickly bought into the project and made the first two chairs for testing earlier this year. We were thrilled with the finish of the chair, and it’s robust, but very light construction.
We are now able to offer the Carbon Black II for sale at £3,995 – a price that sits right in the heart of the premium wheelchair market.
While we can see you’ve made significant progress in reducing the price of the chair, do you have any evidence that this will give you the sales growth you’re planning?
Before embarking upon the Carbon Black II development, we undertook a detailed survey of potential customers who had previously enquired about buying the chair, and why they didn’t go ahead with the purchase – 91% said it was down to price! Before launching our campaign on Crowdcube, we also undertook some low-key marketing to “get a feel” for demand as a result of the change, and we already have ten people in the UK who have paid a deposit and want to be one of the first to have a Carbon Black II. Also, we have appointed our first distributor in the UK. Pyxis, based in Edinburgh, will have distribution rights for Scotland and North of England and are also participating in this funding round – a clear indication of their commitment and confidence in the product.
Similarly, we have 45 potential US customers who have placed formal pre-orders with a potential value of $275,000 to $300,000 once specs/options have been confirmed. These will be completed once our FDA 510k application is approved (a process we are currently in). It’s worth emphasising that this demand has come with almost no marketing – so we believe the potential is vast.
Finally, have you had to sacrifice on quality or design to achieve the cost savings?
Absolutely not. The design of the chair is the same as the original – although the process for making the carbon fibre part has changed slightly. That change, however, allows for fewer individual sections to be made, meaning less joins less weight and more strength. Unlike the original chair, we have introduced adjustability which is helpful as we all change shape, weight and capability as years go by. This will also enable us to create a second-hand market for the chair adding another revenue stream to our bow. We are now in a position where we will take back chairs as a trade in for a new one which is exciting news for both existing and new customers.
If you’d like to find out more about the idea and team behind Carbon Black System, take a look at the pitch page and invest from just £10.
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