With $50M, Isembard hopes to bring manufacturing back to Europe

0:00Mike Butcher:Hello and welcome to Path Founders with me, Mike Butcher. Component manufacturing is a trillion dollar a year market, but it's an area dominated by small, often family run businesses that are rapidly dwindling as the owners retire. apparently. Ismbard is a UK startup that manufactures high precision components, operating both its own factories and franchising the idea out to existing ones. Joining me now is Alexander Fixgerald, who's the founder and CEO of Ismbard. Welcome to the show. Great to be here, Mike. For those of us who have no clue what component manufacturing factories are about, tell us what the issue is here and how you're what the problem is that you're going to solve yeah so i think the um cool thing most people don't realize is the businesses you know the names of as like great product companies whether it's apple or even spacex or rolls royce or any large business they may design their products and they may assemble them and then they may sell them but the actual individual components that make up those products are made by their what's called supply chain but that word supply chain hides like a whole long tail of tens of thousands of small businesses and effectively the way to think about it is everything in the world is made up of different manufacturing processes so some things are made by like cnc um so that's like cutting precision parts some injection molding a lot of plastic parts and etc there's loads of them and so all these companies have to go out and work with these small businesses but the real existential threat right now is just as demand is rising in the west in critical industries like aerospace, defense, energy, robotics, the actual supply of that, the number of machines that can make those components are dwindling in the way because of the point you mentioned in terms of age and we think we found a way to actually in our own small way but like growing much bigger as we like to say like small acorns and mighty oaks solve manufacturing for the west.

2:06Mike Butcher:Okay so let's Let's unpack that a little bit. So presumably, maybe maybe 50 years ago, there were there was a small factory somewhere in the north of England, producing a widget for a British car manufacturer. And perhaps that widget is now made in China. You're saying that there are still these component factories in Europe, but they're kind of going down the hill. and you've got an idea about how to apply AI to these actually quite crucial companies, which are small kind of often mom and pop shops, but a lot of them being outsourced to China. So what's the plan? Yeah. So, I mean, there are still those companies in the US, for example, there are 40 ,000 CNC, what they call CNC machine shops with an online presence.

2:53Most of them have maybe 20 people, maybe 10, 15 machines, and actually more than that in Europe. So the plan is we started with our own factory in Northwest London in Park Royal. You can still make factories in London if you have the right will. So we started with our own factory developing their own software to run that factory, our own processes. And now we're scaling up the number of factories. So we have our own factories where we make the components for other customers. But we also, as he said, franchise out those factories. So we started in January 2025 with our first factory in London. We're now at six factories, three in the UK and three in the US, and half of them are franchisees.

3:35And we want to scale to 25 factories by the end of this year. And the majority of them are franchisees. And those franchisees, crucially, are net new, so people starting from scratch. So maybe coming from manufacturing, people coming from other franchising businesses, or just generally doctors, lawyers, bankers, even some VC investors as well.

3:55Mike Butcher:Has it become cheaper to set up these small factories? You can. The funny thing is you can actually start with a fairly low. But people think the word factory holds a lot of like it hides a lot of things as well as reveals a lot of things. Like fundamentally, you need to make the minimum viable factory is two machines, two CNC machines, a wall, some power, some coolant and then a few other bits and bobs which we help with. And so you can actually set up a factory from signing a franchise agreement within two to three months because you just basically need four walls, power and the rest will be sorted.

4:33Mike Butcher:How fascinating, especially when you're dealing with technology companies, as I do a lot. Well, anyway, the reason we're talking today is that you've now announced that you've raised 50 million dollars in a Series A funding. in fact within a year of your seed round and I gather it was led by New York based Union Square Ventures and some other investors obviously. First of all tell us you know what was the kind of opportunity you think that your new investors saw in what you're doing and also I'd like to ask you why you thought a New York based VC was the best approach. Yeah. So we've got to, I got to meet Rebecca at USV last year.

5:19And I think what like struck me was they're very like thesis driven, but they also don't, they're not a like spray and pray approach to investing. They like make very few investments a year. And it's very thesis driven behind businesses at the edge of large markets with network effects. And so I think it was just, I think what struck me when I spoke to them was outside of any other like the investors who reached out to us. The one question they didn't ask is why franchising? Because they immediately got it. And that was like a very like, yes, you get it. We're not going to be at Loggerhead. So that was kind of the rationale.

5:52Obviously, they've had some really great companies before. And I think why New York based? So we had obviously New York, USD led the round, but we also had a British fund, IQ Capital, alongside as well as a West Coast US fund, Tamarack Global. Both of those have invested a lot in like deep tech companies building physical products in the real world. So those are all potential customers of ours.

6:16Mike Butcher:So you got a bit of pushback from European VCs about the franchisee model? From the US as well. Like I think as with anything, most investors are like less actually, I'd say the majority of investors aren't actually first principles thinkers. They'll see what's gone on in another sector and then try and try apply heuristics to that. I think fundamentally what we're doing is new. It's not just building a manufacturing business, not building technology business with software and AI, but also a fundamental business model change. And by definition, it's useful having that as a filter because it means you can say no to investors very fast.

6:54Mike Butcher:Fair comment. Well, you're also doing something called Mason OS, which is an AI driven proprietary software platform. How does that fit into the business model? Yeah, so it's what we've been building in our own factories and constantly build with every single other of our franchisee factories. The thing that struck me from starting this business is like the depth of the problem to solve in manufacturing is huge, but also the breadth, because very few companies in the world have actually scaled manufacturing. And the problem with manufacturing is it's a huge orchestration problem. You need to be able to deal efficiently with designs from the work you actually want to make.

7:33You need to be able to track goods. You need to be able to schedule that across multiple machines. And you need to do that all within a quality framework, especially for these critical industries. So what Mason OS does is effectively collapses all of those disparate products, which are usually like point solutions for typical manufacturers, and collapses that into one single operating system across the whole factory. And it does that not just in one single factory to optimize that, but also enables demand to be orchestrated across multiple factories. And those two things have never been connected before.

8:05I see.

8:06Mike Butcher:So how does that impact your business? It gives you the scale you wouldn't otherwise have, I presume. Yeah, it enables us to, one, deliver product faster to our customers, and two, enables us to scale faster with our customers because we can see, like traditionally there has been like software or AI for like supply chains, But that has been targeting larger businesses who are managing a supply chain, but they never have the data or visibility to see what's going on in actually all the machines making components. Whereas for us, we have that supply chain or like orchestration way of solving manufacturing, but at the same time run what's going on in each single machine.

8:49So it's like a connected holistic system. Right.

8:52Mike Butcher:So that's that's clearly going to be pretty beneficial. And I gather you also have 25 factories by the end of this year or aiming to do that. And you're launching into Germany, France and Ukraine. Now, that last part is very interesting. And I think there's obviously a wider discussion that you're you're concerned with, because being in Ukraine, presumably you'll be involved in in some kind of defense aspect of of of of that. and what was going on there, obviously. Yeah, I think, so we have aerospace customers, defense customers at the moment, robotics customers. I think we want to be a part of SOL helping support Ukraine, not just for the fight now, but also for their reconstruction in the future as well.

9:36And I think, like, how we launch in new countries is we set up our own factory first with a GM. It can be relatively small, less than 5 ,000 square foot, a couple of machines. means we start delivering product to customers in that geography to be able to like move from a 10 weekly time to less than 14 days and deliver high quality at a good price. But then because we can each of our first factory essentially acts as like a seed that like seeds the franchise in that geo and becomes the shop front window where franchisees can go in and say, actually, I could run a factory crazily enough and enables us to scale.

10:15So we think it's like, I think there's another thing in like this business, which is like, there's an obvious trend, there's a semi obvious trend and the non obvious trend is like the obvious trend is reshoring increasing spending critical industries. That's obvious in terms of a demand spike for our customers. The semi obvious trend is like, now starting this business now in the last year means the space at which you can build software and AI is 10 next what you could do even a couple of years ago. But the non-obvious trend, I think, is actually the rise of AI, actually, and what that means for typical, what people actually want to do with their lives.

10:48And I think what you'll actually see is a rise of entrepreneurship. People want to start and own their own businesses. And I think franchising is this kind of, it's like this unsexy thing, which no one thinks of as sexy. But I think, like, actually, if you can make it sexy again, and if you can, like, really tell a great story and have a great product, as well as give great economics to franchisees to make a financial return, I think you'll see a new wave of businesses going through that.

11:13Mike Butcher:Okay, but how feasible is it to do that reshoring you spoke about in terms of, say, bringing this small component manufacturing back from places like China to Western nations? Is it feasible? I mean, we're already doing it. One of our big customers is a warehouse for products customer. And actually, they were initially going to get all their work done abroad, but actually we can match on price, but be much faster on delivery because we're not having to physically send the product and not having to pay any duties, etc. across multiple borders. There's the integration on the software side. And for our larger customers, what we do is we don't just do the component manufacturing.

12:01We also sometimes manage their supply chain for them. We don't just do one manufacturing method, but multiple manufacturing methods and assembly. And it's for some government customers who are going into government, we actually co-prime with them and actually be a direct consortium when they go into bid for these programs. And then they can do that with knowing that they'll be relying on a sovereign production manufacturing base in each of those countries.

12:28Mike Butcher:This is all happening in the kind of wider context of sovereign supply chains, the whole defence industry. Presumably, you're going to have a lot to do, certainly in sort of the civilian sector. But how are you going to be able to dovetail in with more difficult or paperwork heavy areas like defence? Yeah, so I think about it in two ways, finding work and delivering the work. Finding work is, that's why the franchise model works, because the franchisor, us, can focus on the long BD into not just large incumbent primes and government programs, but also the faster growing businesses. And where the franchisees can get the benefit of that sexist versus a single business not being able to develop relationships with all of those different companies.

13:16And on the quality side, quality is fundamentally a software problem, because can you track who does what to a product at what time? And are you capturing the details of the product and like the specific measurements, the tolerances or the like, essentially the designs or how big a product is and does it hit the specification? Those are all fundamentally software problems. And those are software problems which we can build in our own factories in our building. And now we've just been recommended to get this thing called AS9100D, which is the aerospace standard to be able to deliver aerospace parts.

13:53And that's learnings we can not just learn in our own factories and test and iterate, but then pass those savings on to our franchisees as well.

14:00Mike Butcher:Well, it's very appropriate that you've named your firm after Isenbarg Kingdom Brunel, which I presume that's what you've done, right? Yeah, I mean, I think as with maybe less, it's less for Americans, but I think as with anyone who's grown up in the UK, it's like embedded in everyone's psyche, the name or like, when you see the image of the Industrial Revolution, it's this bloke with a top hat standing in front of chains. And yeah, I think there's like, I think it's like, maybe in a sense, it's a bit like Tesla in that sense. But like, I think, I think people have forgotten how important the Industrial Revolution was to like, humanity more generally.

14:38um and it's probably the most important thing that's happened to us even the internet's only been a relatively minor addition to like our general well-being or like gross world gdp um and so it's like i think it's partly a harkening to that but also partly like looking forward to the future and actually what you need is a bunch of people with who are really highly ambitious and work hard and and that's when you achieve great things well it's certainly we're clear that

15:04Mike Butcher:we're living in a very different era now, certainly with the rise of generative AI. It's so interesting that you're using that to apply to what many would have thought would have been a really quite hard problem to solve in manufacturing. But for now, Alexander Fitzgerald, founder and CEO of Isambard. Thanks for joining Path Founders.

15:34.