InvestorConnected- Pitches, Financials, Valuations
InvestorConnected helps entrepreneurs, investors and lenders make better decisions about the businesses they care about. Using the platform you can create pitches, generate financials and value businesses all in one place!
InvestorConnected was founded by two people that have significant experience of the investment and accounting worlds, Thierry Clarke and Jeremy Hunt. After spending many years talking to both investors and entrepreneurs, they realised there was often a huge disparity between the way in which these two halves of the funding ecosystem communicate and interact with each other.
Although there has been a lot of development in the small business funding market over the past few years, most of the offerings have tended to solve only one side of the equation (either looking at entrepreneurs or investors). Below we have outlined some of the key issues which existing platforms still don’t address.
- Pitches are difficult to create and tend to be inconsistent in structure (missing out key information investors / lenders need)
- Financials are of great concern to investors, but entrepreneurs often struggle to generate these and present them in an effective way
- Investors / lenders who are offered hundreds (or even thousands) of potential businesses opportunities have no easy way to filter and / or analyse business pitches and financials
- Valuing small businesses is often a key when looking at investing in equity, but to do it through accountants or consultants is often costly, time consuming, opaque and inconsistent
All of the above issues centre around one key problem, the way in which information required to receive or offer funding for a business is gathered, structured, analysed and presented. Thierry and Jeremy’s vision was to create an online platform that both standardises and automates the processes of business funding, and then use this infrastructure to develop solutions that connect both sides of the market, and provide better insights. Whether you’re a startup, scaleup, investor or lender, as long as you’re interested in funding the InvestorConnected platform can make the process easier, cheaper and more efficient!
Our business & market situation
InvestorConnected is a platform that provides market leading tools to bridge the gap between capital and small businesses. At its core, the platform helps small businesses create pitches and financials in a structured format that is suitable for investors / lenders. This structure allows us to create a number of solutions that make the process of funding more efficient and cost effective for entrepreneurs and investors / lenders.
Our award winning pitching system enables entrepreneurs to present their business, project or idea in the most professional way. Entrepreneurs can receive feedback and continually evolve their pitch, keeping interested investors updated throughout. InvestorConnected is the only platform that caters for all types of funding including equity, bond, and loan – each of which is linked to our offer tracking system.
A core part of the platform is the industry leading iValuation system. This technology enables users to easily generate standardised financial projections in an International Financial Reporting Standard (IFRS) compliant format, bypassing the need to hire an expensive accountant. Using both historical statements and projections, the platform is able to perform detailed financial analysis and generate an indicative valuation for the business. The financial projections, analysis and valuations are then presented in a detailed but easy to digest report, which can be linked to a pitch and shared with potential funders.
Using structured data the platform allows users to easily filter and find businesses. InvestorConnected helps investors to define what they are looking for in a business and then uses our matching algorithms to find or filter businesses that meet their criterion. This is done using over 70 different data types covering both the pitch and financials - something which no other platform can do!
With this powerful set of tools, InvestorConnected is able to create a number of solutions that generate significant value for investors, lenders and entrepreneurs. The company’s initial focus is on delivering solutions in three areas;
- Business Analysis - providing valuations and analysis for businesses looking to raise funding.
- Filtering & Matching – helping professional investors to manage their deal flow and due diligence processes. Enabling investors to filter the large volume of business for key criteria, allowing them to not only save time and money, but also increase the breadth of their analysis.
- Raising capital - linking small businesses to angel investors, professional venture capital firms for equity financing, but also with banks and alternative lenders for loans.
InvestorConnected is a powerful platform that has a number of applications within the funding ecosystem. Our goal is to become the market leader in the provision of small business funding infrastructure.
We are initially targeting small businesses at any stage of development that are looking to grow. So in short, we focus on both ‘startups’ and ‘scale-ups”. In the UK alone there are 5.5 million small businesses, and 657,000 new business were launched in 2016. These businesses raised over £40.5 billion in funding in 2015 from a variety of sources.
Our core market are these entrepreneurs who are seeking funding to grow their business. From the funding side, we are focussing on venture capital companies, alternative finance companies, angel investors and banks.
Initially, we are focussing on building our user base in the UK, but our platform is designed to be global and therefore we also aim to gain traction from users across the world.
Over the past five years there have been a number of platforms developed to address the issue of funding for small businesses or projects. Sites such as Kickstarter and Indiegogo (social funding), Invesdor, Crowdcube and Seedrs (crowdfunding), Funding Circle (peer-to-peer loans) and networks such as AngelList, Gust and F6S have grown in popularity, but most tend to be narrowly focused on a small section of the market.
Many of the sites focus specifically on the funding aspect of business (the vetting process is manual, expensive and time consuming), which limits the number of businesses they can attract to the site. There are few sites that provide any type of intelligent matching (AngelsDen has a limited matching service) but there are no platforms that provide financial profiling technology. Rather than seeing these companies as competitors, we see these as potential partners which can use our financial profiling, valuation and filtering technologies.
Gust is our biggest competitor as it has quite comprehensive pitching capabilities and has created a number of solutions within their platform. They are US based but have recently started to try and build their business in the UK. Despite their success in the US they have yet to make a significant impact on the professional UK investor base.
There are a number of things that we believe give us an edge relative to our competition:
- Financial Profiling – Our iValuation system, not only assists with the creation of their financial projections, but also provides detailed analysis and valuations for a business;
- Structured Approach - Enables the easy categorisation, analysis, matching and comparison of small businesses on both qualitative and quantitative factors;
- Flexible Funding – Users can create pitches for that cover different types of funding – i.e. equity, bond, convertible or loan. This enables us to link in to the full spectrum of funding solutions.
- All Stages – We don’t only focus on the startups. We cater for small businesses at any stage of development that are looking to grow;
The success of the site is largely dependent upon both partnerships with investor and entrepreneur groups and our ability to attract users through online searches and referrals. Flowing from that the volume of traffic that the site receives and our ability to convert this traffic into paying customers. As a result, our marketing / sales strategy will be split between offline and online channels.
Off-Line Marketing Strategy
We plan to become an increasingly active member of the angel investor community in the UK (with particular focus on London) through attending, speaking and running our own events. We were admitted to the UK Business Angels Association in March 2016 and intend to leverage this partnership in order to broaden our network of investors.
Similarly, we intend to form partnerships with a number of other organisations that will give us access to larger pools of entrepreneurs and investors. We are targeting the growing number of entrepreneur hubs / co-working spaces, event companies and media outlets in order to scale up as quickly as possible.
Online Marketing Strategy
We aim to be as clever and cost effective as possible with our online marketing strategy. We shall ensure that the platform is optimised to generate as much traffic as possible. We have implemented Search Engine Optimisation (SEO) techniques to ensure that we are as high up the search results as possible. This will also be greatly helped by the volume of user generated content that will make the platform more visible and drive traffic to the site.
We also plan to leverage other social networks (such as Facebook and LinkedIn) to engage with users’ contacts and advertise the site. To do this we will also use targeted sponsored adverts to reach larger audiences.
Through both our partnerships and search generated traffic we have estimated (using an industry standard model) that by the end of 2017, the site should receive approximately 5 million search referrals per month. Of that traffic, we hope to convert a fractional percentage (0.03%) of these views into verified users. Over the next five years, we hope to gain 123,000 users and have high hopes of being able to beat that target.
Looking at our competitors, we have validated that there is a market that our growth targets are reasonable. For example, AngelList has managed to get over 2 million users over the last 6 years; F6S have over 500,000 startups on their platform over 5 years and Crowdcube have funded over £192 million over the last 3 years. As a consequence, we believe that our projections for users and businesses are quite conservative and we have the potential to generate significantly more traffic than we have projected.
Traction and Market Validation
We launched a minimum viable product (MVP) version of the platform for testing purposes in February 2016. Since then we have acquired over 1,000 users on the platform, who have created more than 250 iValuations and have uploaded over 120 pitches.
During this time, we have analysed the usage of the platform and conducted a significant amount of market research into the requirements of hundreds of investors and lenders to ensure that our system meets the requirements of the majority of the marketplace in order to ensure that our production launch was as good as possible.
We launched our commercial platform in the second week of October 2017 and since then we have signed partnership agreements with a number of investor groups, and proud to say that Invesdor is one of our partners. In the first month we have generated over £2,000 in revenues, have a strong pipeline of partners who will be working with us to refer more users to the platform.
Sales from the platform are derived from the growth of the user base and encouraging users to utilise the solutions we offer. To monetise the user base we intend to use four different types of proven internet based revenue generating models.
Using these business models we intend to maximise the revenue generating potential of the platform with our target being to generate over £9 million (per annum) of revenue by year 5 of trading.
- Transactions - To generate transactional revenues, we intend to sell a number of products across the site. This will start with us selling the iValuation. We estimate that we will be able to generate over 1,000 transactions per month with an average fee of £200 by 2020.
- Subscriptions - For some solutions we will charge subscription fees to access. The first of these will be for the Syndicate deal flow product (outlined below), for which we will charge a fee between £250 and £600 per month. Secondly, we will make some of the premium features and data of the site (i.e. things that will add the most value to entrepreneurs or investors) only accessible for a monthly fee. This approach has been used successfully by sites such as LinkedIn who have managed to convert a significant number of their user base to premium subscriptions. We intend to follow this proven path.
- Commission - This is potentially the largest source of revenue and will be generated from taking a percentage of funds raised by businesses via the platform. Initially, this will be from services such as loan referrals (taking a 1% referral fee) and links with crowdfunding platforms (taking a 3% commission). We will also apply this model to any other third parties that we plan to let operate over the site.
- Advertising - We intend to operate an advertising platform which allows small businesses and professionals to advertise to each other. We will generate revenue from driving traffic to third party sites using either Pay-Per-Click (PPC) or Cost per Mille (CPM) methodologies.
By utilising these four revenue generating techniques, we have identified over 25 possible revenue drivers that we can exploit over the next five years. Having a diverse set of revenue streams not only maximises the potential of the user base and allows us to be dynamic with our pricing, but also reduces the risks of putting all our eggs into one basket.
The team currently consists of seven people; two directors; a part time CTO and CCO, two full-time developers and a part-time designer. Below is an overview of the senior team members, their roles and backgrounds.
Founder & CEO (Director)
Thierry has over 15 years’ experience in the financial services industry and has been a regional head of Central & Eastern Europe responsible for over 23 markets, for the UK’s largest asset management company. Through that he has worked with a large number of professional inves central banks, pension funds, insurance companies, retail and private banks. Prior to that he worked for the Bank of New York, as part of their sales team and also as a project manager in their custody operations.
Thierry holds an Honours degree in Law from Queen Mary's University in London.https://www.linkedin.com/in/thierry-clarke-2941384/
Co-Founder & CFO (Director)
Jeremy is a chartered accountant and over the last 10 years has worked for one of the big four accounting firms, a global investment bank and a FTSE100 asset manager. He has spent his time working in Finance departments, Audit, Enterprise Risk Management and Business Management teams
He graduated from the University of Bristol with a first class Masters degree in Physics. Since then he studied for the ACA, qualifying in 2010.https://www.linkedin.com/in/jeremy-hunt-70aa441b/
Yashar has over 12 years of experience in the IT industry, managing infrastructure platforms and large projects. His main areas of expertise lay in building teams from the ground up and creating scalable infrastructure for companies. Yashar is currently head of IT Operations for a large British Retailer and has previously worked for the successful start-up Matches.com.
He graduated from Royal Holloway university in 2003 with a BSc in Computer Sciences.https://www.linkedin.com/in/yashar-soltanzadeh-88936915/
Tsvetelina has over 12 years of business development experience in the events, property, and resources industries. Over her career she has been a senior manager in a number of start-up organisations. She has a track record of developing high performance sales and managing teams through proper recruitment, selection and training of key staff.
She graduated from Sofia University with a first class degree in English.https://www.linkedin.com/in/tsvetelina-zapryanova-227a8224/
Head of Development
Paul has over 10 years’ experience in the web development and design industry. As a contractor he has worked for a number of large and small organisations across a number of technologies. Paul has also founded his own digital agency and number of other internet based businesses including Minute Surveyor.https://www.linkedin.com/in/paul-cotterell-35275419/
Unlisted growth companies are high-risk investments. Making a high-risk investment involves risks, for example the risk of losing your investment, lack of liquidity, irregular or rare dividends and dilution of your stake. Please study this risk warning before making a high-risk investment.
It is recommended that you familiarize yourself with the investment target of your choice, reduce risks by investing in several investment targets and balance your investment portfolio with more liquid investments. We also advise you to pay attention to the Target Company specific risk descriptions, which you will find included in the pitch materials.
Attached to the pitch there is a creditworthiness report that may be relevant for the investment decision
Using the financial model we have created, we have run a number of different scenarios in order to understand the key risks to our business. Below is a synopsis of the key risks to the business and how we will attempt to mitigate them:
The main challenge that our business faces is the ratio of fixed to variable costs that we have. The main fixed cost that we have is people, whereas we have very little variable costs. This means that with every new customer we gain a high margin. However, this also means that if our sales drop this will have a larger impact on our business.
In order to mitigate this, we realise that we have to keep a close eye on our staff costs. When possible and reasonable, we try to use fixed term contracts to provide flexibility and enable us to scale down our team if necessary.
The majority of the platform has been designed and built by a small team which is one of the key risks to the business. In order to mitigate this, we have taken two steps; (1) Incentivised employees to stay with the organisation through a share scheme; (2) we are increasing our documentation and standardising much of our programming by using frameworks which will enable us to get other developers to use the platform.
By having additional funding, we will be able to broaden our development team thus increasing the number of people that understand the platform, which will mitigate this risk.
Our success will rely heavily on gaining new customers to the platform. We have a number of strategies that we are planning to implement (which have been outlined above) to tackle this.
Our plan anticipates that we will need to access additional funds after two years in order to grow the platform further and build out our team. There is a risk that if we do not obtain this funding that we may not be able to expand.
In order to mitigate this, we are looking at ways in which we can generate additional income within the next 12 months. This includes consultancy work and the producing additional workflow tools for investors which we would be able to charge for within the next 6 months.
There is a risk that regulatory authorities may in the future interpret the information presented in our service as financial promotions. We don’t see it as such, as the platform does not enable clients to invest and merely provides the ability for people to present their business plans or generate financials. Also, we have ensured our activity does not cross this line by asking for legal advice. Our main competitors in the same field of business share our view. In the event that regulatory approval is required, the directors have experience in being “regulated persons” and would be happy to attain the required regulatory authorisations.
Current credit rating
Credit rating company Experian has given Investor Connected a credit score 15(/999): maximum risk. There’s a deficit in shareholders’ funds. This is due to the company being loss making. The company has no outstanding loans but a £44k director's loan.