By Lisa Walls-Hester on 26th August 2016
Deep in the midst of the holiday season, with offices running a skeleton staff and emails bouncing back with out-of-office replies, Lisa Walls-Hester still finds a steady supply of interesting equity crowdfunding campaigns in the latest Crowd View column.
Three pitches stalled my cursory review of the current platform offers and piqued my interest, enough to warrant a deeper delve into the investor proposition.
The campaigns all have the possibility to become industry disruptors in their respective sectors. While many startups are keen to add this claim to their investor pitch in reality very few businesses have the potential or the entrepreneurial proficiency to accomplish this feat.
To be a disrupter a company needs to solve an existing problem, fill a gap in the market or develop a new service or product that consumers need. If it is successful it will radically change the way its sector peers do business.
These companies are all solving a problem in their respective sectors and offer an interesting proposition for investors if they can successfully navigate the startup hurdles and scale their businesses:
BuzzHire is changing the way businesses and temporary staff access short term work. It provides a platform which matches temporary staff to work in the hospitality sector, where on-demand work is becoming the norm.
The rise of the ‘gig’ economy is seeing platforms spring up around the globe to service this growing workforce and there is an opportunity here for players who can leverage technology to offer speed, convenience, and lower fees than traditional staffing agencies.
BuzzHire claims to be able to fill roles with just three hours notice and offers both workers and hirers a two-way screening service.
The startup launched in August 2015 and already successfully filled 10,000 shift requests and received £400,000 of gross revenue. The platform earns revenue from a fee from each booking and claims to still be 25 per cent more affordable than traditional temp agencies.
The company is looking for an investment of £450,000 for 24 per cent equity and wants to create client and job-seeker density within the hospitality sector in London achieving 230 jobs posted per day in order to break-even by December 2017.
The company expects considerable M&A activity in the online staffing sector over the next few years giving investors various opportunities for an exit. The minimum investment is £500 and the campaign is running on AngelsDen.
The platform aims to connect dog owners with local borrowers across the UK and Ireland. It connects pet owners who are not in a position to provide for all of their dog’s needs, such as regular exercise or full-time care with dog lovers who want to own a dog but for practical reasons can’t.
This platform brings together members who communicate via its platform regarding their location, availability, and needs. For dog owners, it mitigates the high cost of dog walkers and boarding kennels, which are expensive, and dispassionate. Borrowers get the benefits of dog ownership on demand.
Borrow My Doggy is an early stage business, however, it has a proven product, a developed platform and a significant subscriber base. The Company is built around a subscription model, £44.99 for owners and £9.99 for borrowers per annum. This covers a verification process and provides access to a 24/7 vet line and third party liability insurance.
The company plans to build its membership to 365,000 by 2019. Which will bring revenues of £10m and an EBIT of £4.4m.
The platform promises a nice short exit strategy (planning a trade sale in three years) but the big disappointment here is that the minimum investment is £10,000, so not one for retail investors!
Did the company miss an opportunity here? A high minimum investment threshold locks out the crowd and probably many of its 300,000 site visitors who would have undoubtedly liked to claim a stake in the business and at the same time become proponents of the platform.
One company that is looking to its customer base for backing is Vibe Tickets, the marketplace for second-hand tickets has built up a large digital following since its launch which prompted its crowdfunding decision.
Head of product Jonathan Smillie said: "We are a business that relies on the strength of our community and therefore crowdfunding is a nice fit for us."
"We want to get as many people from our community invested in our business as shareholders as this further validates the concept behind Vibe Tickets."
Vibe Tickets is on a mission to disrupt the multi-billion pound secondary ticket market with its new app which brings together buyers and sellers of second-hand tickets.
A report from The All-Party Parliamentary Group on Music, the ticket resale market in the UK is estimated to be worth an annual £3bn and another report by the Europe Economics Group (Analysis of the Secondary Sales Market for Tickets for Sporting, Cultural, and other Events), estimated that between 20 and 40 per cent of tickets re-sold on the secondary market at anything between 100 and 250 per cent increase of their face value.
Vibe is manoeuvring into a competitive market and it is up against some big players, but its unique business model differentiates. The company is not planning to add any fees or margin to ticket prices but will instead generate revenue from delivery charges and optional insurance products. Ensuring a marketplace for transparently and at fair value will make it the first port of call for all ticket buyers.
The company has forecast a turnover of £38m by 2020.
Vibe had an earlier raise of £400,000, including £200,000 from technology entrepreneur Matt Newing and the enterprise won backing from Richard Branson and was awarded £20,000 by the Virgin Media Business competition. Founder Luke Massie spent a day at Branson’s home, meeting his team of experts and associates.
Vibe is now looking to raise £600,000 via a crowdfunding platform for a 10 percent equity share in the business. It wants the capital for further app development, increased staffing and user acquisition.
The minimum investment is £10 and the company is offering both A and B Shares. The campaign is currently running on Crowdcube.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.