Introduction - Straw Fuels Ltd has developed a disruptive and innovative,
sustainable product, “Straws”, for the domestic and commercial heating and
BBQ markets. The product is delivered as 6 logs, individually wrapped and
including firelighters to make a pack. Straws are easy to use, clean and
provide a high-efficiency burn. The raw material, straw, is an agricultural byproduct, replaced annually, making Straws carbon neutral. An abundant waste
resource, costing £80/tonne is processed into a high quality product sold for
£400 to £1,500/tonne.
Over the last 3 years the founders have spent £1.25m developing the
technology, refining the manufacturing process and building the brand. Over
2,000 customers and 200 trade retail outlets have been secured, generating
sales of £250,000. We count Raymond Blanc at Le Manoir as a customer.
Every pack made has been sold!
Funding - We are seeking £800,000 to industrialise our pilot plant. The pilot
plant has a current annual capacity of 70,000 packs. The proposed production
plant will reduce our cost per pack from £3.00 to sub £1.50 and produce 1.2
million packs a year.
Revenue growth - Sale expansion will be through the distribution channels at
a markup of 33% building brand and product awareness to attract direct on
line order flow with a markup of over 3x.The vision of the founders is to build a
significant UK and international business within 5 years with sales of £8m and
profits of £3.6m. Further expansion is expected globally through direct
ownership or JV/Franchise models. An exit will be pursued in Year 5, which is
likely to be to a large trade buyer.
IP - Straw Fuels has invented a unique process to densify straw and turn it
reliably and efficiently into the final product, an efficient and clean fuel log.
While the process uses existing technology from multiple industries significant
intellectual property has been developed. The substantial R&D investment
has enabled the team to gain an
in-depth knowledge of this
process. While patent advice has
been taken which indicates the
process could well be patented we
are reluctant to take this step, the
current strategy being to keep
confidential the details of the
manufacturing process. This will
change as the business develops.
Revenue and Customer Sale Break Down
Year 1
Year 2
Year 3
Revenue
£205,211
£1,787,000
£3,584,000
Gross profit
£44,324
£1,054,000
£2,108,000
Gross Profit %
21.6%
59.0%
58.8%
Profit/-Loss
-£175,909
£821,000
£1,683,970
Profit/Sales %
-86%
46%
47%
200 pack distributor trade out lets
0
1,425
3,000
200 pack trade out lets
200
1,075
2,000
Customer @ 40 packs
Total customer
600
800
2,750
5,250
5,500
10,500
Pack volume
64,000
610,000
1,220,000
Percentage of mkt
Average Pack price
0.023%
£3.21
0.22%
£2.93
0.45%
£2.94
Product USP - Straws are:







Triple the density of oak
5% moisture
Burn longer
Burn hotter
Great BBQ fuel
Clean easy & convenient
Carbon negative
Straws can be burnt in open fires, stoves,
chimineas and BBQs.
Market - UK fuel market is huge with 1 million
stoves in place and 200,000 sold each year. We
estimate more than 150 mil pack of straws could
be burn in the Fires & stove of the UK. We
understand the UK BBQ market is the largest in
Europe at 120 mil BBQ’s a year.
The domestic fuel market is characterised by a
fragmented supply base offering poor quality
product at high cost in an increasingly
unsustainable manner. The UK is 4th largest
wood importer in the world and lowest forest
density in Europe the supply is reducing as
demand builds.
Team - David Scott - Managing Director. Cofounder and major investor. Responsible for
strategy, brand management and online
marketing. Investment banking background with
HSBC, Merrill Lynch and Jardine Fleming.
Matthew Bremner - Supply Chain Director. Cofounder and investor. Responsible for
manufacturing and supply chain. Background in
property development and financial services with
JP Morgan & Jardine Fleming.
Cormac McGovern -Sales Director. Co-founder
and investor. Responsible for sales, distribution &
retail sales. Background in hotel management
and distribution with DPD.
Further product information can be found at
http://www.straws.co.uk
Further enquires contact David Scott at
ds@strawfuels.com
RISK WARNING: At this stage this document does not constitute an invitation to invest and is for information purposes only. Note that unquoted
early stage investments are high risk and are not readily realisable as there is no recognised market for shares and investors may not be able to
obtain reliable information about value or risk exposure.
This document is intended only for sophisticated investors categorised by the FSA as ‘Intermediate Customers’. It is not intended for US investors.