Matt Kelly comes from a non-entrepreneurial family, yet the university dropout has forever had a creative eye through his love of designing logos, which has seen the e-commerce ‘bedroom brand’ expert launch a myriad of online companies over the years.
However, following the collapse of his multi-million-pound business during the pandemic, the 27-year-old’s mental health hit an all-time low and he even contemplated ending his life. It was then that he spotted a gap in the market for using mushrooms as a natural wellness solution.
Since launching Spacegoods in 2022, the business has received over 30,000 customer orders and generated £1.4m revenue with one product in less than its first year. That figure is projected to rise to £8m for 2023. “Our mission is to become the world’s number one mushroom brand and given the rate the functional mushroom market – and our fanbase – is growing, it’s a very exciting time to be on this journey,” says the York-born 27-year-old.
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Kelly has already been on his own rollercoaster journey in business, having first launched a clothing brand while at university, discovering Facebook ads in 2016 and starting to dropship (commissioning suppliers to send deliveries directly) ripped jeans from China.
After dropping out from his advertising degree at Northumbria University, he went to an e-commerce conference in Singapore to learn more about dropshipping and became a ‘full-time nomad’ for three years, living in Europe, Bali and the US. He supplemented his lifestyle through further online companies selling jewellery, leggings and kitchen gadgets.
Moving to London, Kelly’s ultimate vision was to build a brand that was creatively interesting, as well as building an asset to sell in the future. “I was good at going from ‘zero to one’, a logo and turning it into a business. It grew into a £3m run rate,” he says.
This segued into an LED neon sign brand called Neon Beach, initially a side project as he had wanted one for his bedside table. Launched just before Covid, it morphed into £1m per month revenue within three months. “I thought this was going to be the biggest thing ever,” he recalls today. “I had several online businesses and I had gone from bootstrapping to £12m in revenue in 2020. I thought I was invincible.”
While the jewellery business was running flawlessly, Neon Beach hit complex supply chain issues during the pandemic. Kelly admits that it grew rapidly on very small foundations as he spent money to try to improve logistics up front. “It went very quickly from being potentially very profitable to an insolvent business,” adds Kelly.
He faced a social media backlash and a reporter at his front door claiming he was a scam artist. “I went into war mode, didn’t sleep properly for six months and it was a crippling amount of pressure,” he admits. “What do you do when you are self-funded? I had no VC backing or experience around me. It was a humbling time.”
Kelly was bailed out by a £2m fund in March 2021 which essentially paid back customers. While both brands still run today, Kelly sold his equity six months later.
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Hesitant to now jump into another brand too quickly, Kelly was also diagnosed with bipolar disorder three years ago and, having been prescribed traditional medication, he soon discovered microdosing and the possible effects of creating a brand for the future. He had spotted a potential gap in the mark for a therapeutic mushroom brand.
“Broadly, too many people are being described with pills,” believes Kelly, a keen rower and marathon runner over the years. “Personally, is taking 100m of sertraline going to make you feel good? It dumbs you down to a robot state. Natural supplements can ultimately be a lot better than what are prescribed by a GP. That’s my wider belief.”
As Kelly couldn’t swallow tablets as a child, his broad idea was to create a legal powder alternative to a psychedelic microdose and he began working with a nutritional lab in Surrey.
Spacegoods’ key characteristics were ‘focus, energy and calm’, while he had to pivot from talking about psychedelics — and face being banned from Instagram adverts — to coming up with a viable, legal product. He spent five months working on the brand before Spacegoods’ first product, Rainbow Dust, was launched in April 2022, the soft-touch packaging and the brand colours spawned from his love of the 1980s era. He had proved that he could venture from ‘zero to one’ again.
“There is this weird glamorous misconception of what an entrepreneur is given you can spend 15 hours looking at a computer screen,” he says of launch. “Neon Beach was serving a need for myself but you can’t really change the world. At least with mushrooms I can do something beneficial for society and perhaps change the world in some way.”
Indeed, he has had messages that the product has changed people’s lives, while others have stopped taking ADHD medication in preference for Kelly’s product. “I really didn’t think it was that profound but for some people it has far more of an impact than a hot beverage, which is pretty cool,” admits Kelly.
As an early teen and with an early eye for creating visuals, Kelly had numerous fictitious brands saved on a computer. Now, the York-born entrepreneur believes he has one (now with two products) that has longevity, given that the functional mushroom market was projected to be valued at a $9.3bn valuation by the end of last year.
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“The whole product and vision is from my brain,” he adds. “People have helped to make it, obviously, while the ultimate alchemy of entrepreneurship is painful for the most part. But you can go from an idea to a real thing and there is lots of romance in that.”
Behind the Spacegoods brand
What Matt Kelly has learned today…
“I will never be a sole shareholder ever again,” Kelly says of his 2020 travails. “It was too stressful and if I had experience around me perhaps it could have been avoided.”
Being on top of the numbers now, he says, is pivotal. “They are almost always worse than people think they are in reality. I’ve seen it before and I’ve been one of those guys. I’m older and wiser through a lot of pain, suffering and bad decisions along the way.”
His honesty has also transcended into a successful podcast charting his journey, while his network has grown from sharing the story and raised nearly £500,000 from angel investors in the process. “I’ve now got wise people on my side, people who have sold businesses for millions and who are older than me,” he says.
He owns 76% of the business and his lean start-up has six freelancers on board, as well as hiring a finance director. “It’s way better than owning 100% of something that is very stressful,” he says.
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