Unique Slimming Programme

Charlotte Moens – 679884 – Business Angel Investing

I would consider investing in Lighten Up Limited for the following reasons :

• Customers and prototype : a real prototype exists with this pilot program that already attracted over 600 people. Since May 1999, 9000/month has been generated. Moreover, a national health and fitness chain has contracted to present pilot workshops in two of their London sites. So customers with willingness to pay exist. They have a database with good conversion rate to buy the new products.
• Managers : John Verity has proven general management experience and has already set up on his own while Judith Verity has relevant knowledge about the product, the market and the slimming world. Other smaller shareholders have complementary knowledge. The managers bring real industry experience and connections (notably Pete Cohen).
• Selling strategy : clearly defined :  via major bookstores, telesales, mailshots, enquiries, …
• Market size and growth : 5 billion only in the UK (135 bn in lifestyle market), with possibility to expand to USA, English-speaking markets of Australia, New Zealand and South Africa and Europe even though world-wide registration of the Lighten Up trademark is not yet completed. The opportunity space is increasing since there is a growing market need for motivation-bad courses in slimming and fitness.
• Competitors : notably Slimfast, Weight Watchers, …
• Advantage : joint venture provides here an unique and sustainable advantage as it would allow to accelerate national spread of the product. Also the product has really good endorsement by famous athletes and nationwide publications.
• How much did the founders invest themselves : quite a lot.
• Cash flows : positive from 2001.

Before investing, I would need to undertake some issues and additional investigation :

• Cost structure : I would like to have a better description of the costs in order to analyse if the costs are mainly variable and to have the gross margin.
• Balance sheet : needed to analyse the working capital and the assets and liabilities.
• Deal (200000 in return for 15% equity share) : 120000 of them are going to pay the remuneration of the directors, which do not bring any added-value to the project. I would then renegotiate the deal in a way that the money goes to more useful projects in order to bring new information and new added value for example.
• Projections : some more information is needed about them in order to understand the average sales and prices forecasted.
• Competition : how does this product differ from all the other ones ? How to avoid new entrants with almost no entry barriers ?

Exhibit

...