They believe the smartphone, called “phone (1)”, with minimalist apps and design, is both cool and user friendly.
“For too long, the smartphone market has been dominated by the same players and that's led to unimaginative, bland design across the board,” said Nothing co-founder and chief executive Carl Pei.
“As well, these players have created closed-off ecosystems that lock people in, limiting their choice about the products they can access and use. This is what I want to change with Nothing.”
The price is being kept under wraps but bosses say it will be “competitive” and will not force customers to have several preloaded apps on the devices, unlike rivals.
A 15-strong, London-based design team has been assembled, with 35 expected by the end of the year, with bosses saying it will be “the most compelling alternative” to Apple's ecosystem
Mr Pei said the UK has a strong track record of creating software companies, but not hardware.
The entrepreneur knows the smartphone sector well, having set up Chinese-based OnePlus – a smartphone manufacturer – in 2013.
Nothing recently announced it had raised $70 million (£53 million) in a fund-raising round, bringing total investments to $144 million (£109 million).
Investors include EQT Ventures and C Ventures and bosses are aiming to raise more cash as it expands to become Europe's dominant phone maker.
“By having a phone that is conceived and designed here, Europe finally has a challenger brand to the US and Asia (Apple and Samsung) again,” Mr Pei said.
He also revealed the company poached Dyson's head of design and product experience, Adam Bates, from the vacuum business best known for its sleek design.
The new phone will be minimalist and could match its recently launched headphones, which are see-through, and sold 400,000 units in six months from launch.