Review - SurveyMe single company EIS

This offer is now closed.
SurveyMe is a mobile app that allows businesses to capture real time consumer and/or employee feedback. The company is part of the Deepbridge Technology Growth EIS portfolio and has already received £1.3 million funding. Deebridge is now raising up to a further £700,000 to invest exclusively in SurveyMe.  

Highlights

• Disruptive technology provider well positioned in growing online survey market  

• Established cashflow

• UK and US office with sales presence in South Africa

• Multinational customers with significant scale opportunities

• Co-invest alongside Deepbridge Capital

• Well established pool of trade buyers or IPO to allow an exit for investors within five years

• Raising up to £700,000, minimum investment £10,000

The offer

Deepbridge Capital has committed £2 million to SurveyMe and invested £1.3 million to date as part of the Deepbridge Technology Growth EIS portfolio. 

Now Wealth Club investors have an opportunity to invest in SurveyMe as a single company EIS alongside Deepbridge Capital. 

SurveyMe was established in 2011 and fully launched its software in 2014. It’s an online and mobile app that allows businesses to collect real-time feedback from consumers and employees with the option of offering them instant rewards. 

For instance, a consumer might be filling in a survey on their smartphone whilst having a meal in a restaurant and receive a discount on their meal as a reward. The restaurant manager sees the feedback in real time and, in case of complaints, can take immediate action.    

While there are many online mobile and email feedback systems, the management believes SurveyMe is the only one that gives feedback and facilitates rewards in real time. This is critically important because it provides instant business intelligence, valuable structured feedback provided at the point of experience and can be used as a marketing tool for customer acquisition and retention.

Clients are charged an annual licence fee or can pay per survey  SurveyMe’s software can be scaled to handle unlimited real time feedback from multiple devices and locations.

Today SurveyMe generates operating annual revenues of c. $1 million. It has a diverse client base currently including Nandos, NHS Wales, and Everton FC in the UK. Management information show that approximately 50% of people open the app and complete the survey on the same day.  Customer testimonials are featured on the SurveyMe website. 

Since 2016 the management has focused its growth strategy on two main markets - the cinema and restaurant sector - as well as targeting traction in the US market. SurveyMe Inc is a wholly owned subsidiary and has a team of eight people. 

Currently SurveyMe is in discussions with US cinema chains and several international operators covering 28 countries.  Cinemas work very well: before the film an ad appears on screen asking the audience to download the app and complete the survey to receive a free drink or popcorn. SurveyMe showcased in Cinemacon in Las Vegas in April this year, then proceeded to secure a further six programmes with US and UK cinema chains. The largest in the US is Bow tie cinemas with 59 locations, and Odeon in UK with 114 locations.

Deepbridge Capital valued the company at £800,000 prior to investing. The first investment was in 2015, when detailed financial and commercial due diligence was undertaken.  Ian Warwick, Managing Partner of Deepbridge Capital, sits on the Board and attends monthly Board meetings.   

The fund raising is to be used to continue the company’s roll out in the US specifically targeting the cinema and restaurant sectors, to develop further technology and expand the sales team.

Founders Lee and Nicola Evans split their time between the UK and US offices but have been increasingly in the US. Lee Evans, CEO, and Nicola Evans, COO both with backgrounds in marketing, were inspired to set up SurveyMe after feeling frustrated with limitations of traditional customer feedback methods.

The founders will have 59% shareholding post funding round.

There is currently no debt in the business.

Target return

SurveyMe reported sales of approximately $20,000 in 2015. This has grown to approximately $1m in 2016. SurveyMe is forecast to generate sales of $2.8 million, $5.8 million and $7.4 million in 2017, 2018, and 2019 respectively. 

The EBITDA is forecast to be $1.1 million, $2.3 million , and $3.3 million in 2017 to 2019 respectively. 

Management believe these forecasts are prudent as they are based on scaling up live customer leads as of today. Management expects growth rates to increase exponentially by 2020 due to new client take up. 

The target return is  2-3x capital.

Exit strategy

Selling to a large corporate or floating on either UK or US stock exchange within 5 years.

Risks

A key risk is the experience of the management in operating and growing a business outside the UK.  However, this is partly offset by the experience of Board member Ian Warwick, who worked for 10 years in the US.

It may take longer to secure new business and the sales forecasts may not be met or take longer to be achieved in which case the return to shareholders will not hit the target.  The business does not have fixed assets against which to secure the capital. The quality of the new sales team is critically important to the growth of the business.

Currently there is significant Keyman risk on the founders. As the business grows,  expanding the Management team  will be essential.

The largest competitor and currently only global player in this field, Survey Monkey, may replicate SurveyMe’s model and take more market share.  It is estimated that Survey Monkey currently has 15% of US market share and 6% of global market share (source: IBISWorld Feb2015).

Fees

There are no fees charged directly to investors.  Instead, the underlying investee companies will pay a fee of 2% per annum to Deepbridge. There is an effective 2.5% initial charge, paid from the underlying companies. In addition, there is a dealing fee of 0.65% for sales and purchases charged to underlying investee companies and a further 0.5% per annum custody fee. Finally, there is a performance fee equivalent to 20% of the profit from each individual company with a minimum hurdle of £1.20 per £1 invested prior to any performance fee being applicable. VAT is charged where applicable. 

Summary

SurveyMe looks an interesting co-investment opportunity.  While it is less certain and predictable than an asset-backed company, it does have established revenues and customers, it has proven its concept, started to develop its brand although it’s difficult to predict how scaleable it really is.

The company appears to have a competitive advantage through its technology and if marketed correctly could grow very quickly. There is a risk of entering the US market however there could be significant rewards through the acceleration of growth. 

SurveyMe single company EIS

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