Analysis: Investments in Sugru come to sticky end
Manufacturer of next-generation adhesive struggled to fund necessary marketing
While converts love Sugru, FormFormForm couldn’t grow its sales quickly enough or get sufficient brand awareness to make enough people seek out the product in shops.
Timing is everything. That’s something that will no doubt be on the minds of FormFormForm’s founders Jane Ní Dhulchaointigh, James Carrigan and Roger Ashby this week. The maker of Sugru said it was selling up to adhesives company Tesa after it found it needed more than a great idea and the support of a community of committed users to keep its sales growing.
On paper, Sugru should be a smash hit. The product, a mouldable, durable glue that turns to silicone when its dries, means people can repair or customise products that may have headed for the bin under other circumstance. Its community of users regularly shares “hacks” they have put together using the product, from modifying furniture to creating hanging herb gardens.
LaunchSince its 2009 launch, Sugru has gone from an online product to being sold in stores, with FormFormForm doing deals with retailers such as B&Q and Target.
The problem is that while converts love Sugru, FormFormForm simply couldn’t grow its sales quickly enough or get sufficient brand awareness to make enough people actively seek out the product in their local retailer.
Sugru was, it could be argued, ahead of its time. When it launched in 2009, we were in the middle of a global downturn. Despite this, its popularity grew. These days, the product fits in perfectly with the growing trend for repairing items rather than replacing them; it matches exactly with efforts to use fewer resources and reduce our carbon footprint.
But FormFormForm has come to a point where it needs more money to plough into marketing campaigns to help get it over the next bump.
After its bank decided it would no longer provide the debt financing Sugru had been counting on, the company was vulnerable.
FoundersNí Dhulchaointigh and her co-founders found themselves facing the unenviable choice of accepting an offer from Tesa and leaving their investors nursing losses of up to 90 per cent, or facing an even worse situation. It has chosen the former, selling for nine pence a share.
After two rounds of redundancies and considering all its options, it looks like the best way to keep Sugru going. It’s a disappointment for investors, but the company lives on to develop its product – with the backing of deeper pockets than more rounds of crowdfunding.
It’s all about scale; unfortunately, it’s a lesson that many business – FormFormForm included – can learn only the hard way.