Wealth Club allocation filled – applications accepted on a first-come, first-served basis
Wealth Club's £500k allocation has now been filled (27 April). Due to investor demand, West Hill has agreed to extend the allocation. Applications will be accepted on a first-come, first-served basis (cleared funds), subject to the overall capacity.
Market-leading SaaS provider of transformative parking solutions to public sector and blue-chip customers backed by Aviva, Hyundai and Sumitomo Corporation
Parking can be a costly nightmare in cities. In the UK, drivers searching for parking costs the economy over £23 billion a year in wasted time, fuel and emissions.
Local authorities spend £1 billion a year managing parking assets using outdated technology, and £126 million managing parking regulation. In general, motorists are overcharged c.£6.7 billion for parking time they don’t use up.
Looking to transform this, AppyWay (the trading name of Yellow Line Parking Limited, "the Company") has created an award-winning SaaS platform – supplying traffic management, smart parking and data-access solutions to local councils, parking providers (including the NHS and Heathrow airport), fleet operators and the automotive industry. The AppyWay platform has proved 83% more efficient than traditional GovTech regulation systems – and shown to reduce congestion whilst increasing high street access.
The Company aims to provide a core technology for smart cities of the future, in a rapidly global market estimated will be worth over $1 trillion by 2028, which if materialises as planned, could deliver highly attractive returns for investors. It has generated over £2 million in revenue to date and currently has a £10 million pipeline – not guaranteed.
Now, to fund ongoing development and make two strategic acquisitions, AppyWay is raising £20 million in a Series B round (EIS and non-EIS). Of the EIS capacity, which will not be used for the acquisitions, West Hill Capital is arranging £10 million, with £500k reserved for Wealth Club investors. This has now been filled. Applications are now accepted on a first-come-first-served basis. The minimum investment is £20,520 (usually £50k through West Hill).
Based on the company’s forecasts, the mid-case target return is 24x in 5 years (89% IRR) before EIS tax relief – high risk and not guaranteed. West Hill has informed us the offer raised £6 million in the first week.
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The deal at a glance
|Type||Single company EIS private offer|
|Stage||Global scale up|
|Date started trading||2013|
|Funding to date||£11.1 million (excluding the current round)|
|Co-investors (new and existing)||Global corporations and well known institutions, as well as Aviva, Hyundai, Sumitomo Corporation and West Hill Capital investors|
|Sector||Technology – Mobility as a Service (MaaS)|
|Fully diluted pre-money valuation||£83.9 million|
|Market size||Over $1 trillion by 2028, growing 50% per annum|
|Business model||B2B, B2G (Business to Government) and B2C|
|Revenue to date||£2 million, £2.1 million forecast in current year|
|Revenue model||Recurring revenue SaaS contracts, data licences|
|EBITDA profitability forecast from*||2023|
|Forecast revenue in year 5*||£179.7 million|
|Forecast EBITDA in year 5*||£95.9 million|
|Target return in year 5*||24x|
|Target IRR*||89% IRR|
- Recurring SaaS contracts and data licences with blue-chip companies, automotive equipment manufacturers and government
- Co-invest alongside multinational corporate and institutional investors including existing investors Aviva, Hyundai and Sumitomo Corporation
- Highly experienced management team
- Rapidly growing Mobility as a Service (MaaS) market attracting significant capital
- Target return in year 5 24x (89% IRR) – not guaranteed
- Private single company investment with no diversification – high risk
- Minimum EIS investment £20,520 (6,000 Ordinary Shares at £3.42)
- You can apply online – please note, you will also need to become an “elective professional client” of West Hill before your investment is accepted
This overview is based on the information available in the Private Placement Memorandum ("PPM") prepared by the Company in conjunction with West Hill Capital and information provided by the management team and/or West Hill Capital. Wealth Club has not independently reviewed or verified the information. Please read the offer documents carefully to form your own view and ensure you wholly understand the potential benefits and risks.
What does AppyWay do?
Frustrated with the complexity of kerbside restrictions and payment apps he found in London, Daniel Hubert founded the Company in 2013. In 2015 it mapped its first London street – and the AppyWay app was launched. Since then, the Company has raised over £11 million in funding – including securing investment from some of the world’s largest multinational institutional investors Aviva, Hyundai and Sumitomo Corporation.
Today, the Company offers regulation-grade parking data and tools for smart parking management – through APIs and by utilising IoT sensors to establish accurate kerbside demand data. Local Authorities licence the platform so that they can optimise the use of parking spaces, integrate payments and implement local traffic regulations. Ordinary drivers, fleets and logistics firms also benefit by accessing parking restriction data, information on availability, and cashless payments.
Whereas other existing industry solutions tend to be piecemeal – split between providers of kerbside mapping software, real-time-availability IoT devices or cashless mobile payment technology – AppyWay’s API encompasses all three technologies to create a unified, automated solution aiming to meet the needs of smart cities of the future.
In 2020, AppyWay garnered the Local Government Chronicle’s coveted Innovation Award for its ground-breaking smart parking solution in Harrogate and North Yorkshire County Council. In 2019 it was named second Most Disruptive Company in the UK and ranked amongst the Top 50 Disruptive Companies in Europe by Disrupt 50. AppyWay has continued to win innovation accolades within the Parking Industry nearly every year running, since its inception.
CEO and founder Dan Hubert was named a 5G UK Pioneer of the Year 2020 in Swedish multinational Ericsson’s prestigious list of Top 25 Trailblazers.
How does the business make money?
AppyWay generates revenue from its three key products:
- Traffic (B2B and B2G) – SaaS solution for local authorities, providing software to digitise the management of on-street parking, Traffic Regulation Orders and speed limits.
- Smart Parking (B2B) – SaaS management platform for private and public parking providers. Offers real-time and historical parking data and seamless payment solutions. Current customers include the NHS, Next Retail and Softbank-owned ARM.
- Data Access (B2B and B2C) – Data licenses provide fleet operators, automotive systems manufacturers and ordinary drivers parking-restriction data, information on availability and cashless payments. Current customers include ParkNow and Morrisons Utility Services, while AppyWay’s driver app has been downloaded over 400,000 times.
Traffic and Smart Parking customers typically sign up on multi-year recurring-revenue SaaS contracts; the length of data licence agreements varies by customer.
The Company plans to grow organically in the UK by expanding its kerbside data coverage, and internationally into Europe leveraging the breadth of its existing investors’ portfolio companies.
Two strategic acquisitions are planned: one is expected to provide significant additional UK kerbside data coverage, while the other is expected to provide access to a customer base of 110 local authorities, signed up on 3-5 year contracts. The Company’s objective is to accelerate growth and foothold in the market.
Covid-19 and Brexit impact
The Company was impacted by the pandemic during 2020, as local authorities were unable to work remotely and automotive factories were closed. However, with Covid restrictions easing and with significant time invested on platform development during 2020, management believes the Company is well placed for growth in 2021 – not guaranteed.
The Company plans to expand internationally across six EU countries, but does not consider Brexit a material risk as overseas revenues account for less than 10% of the business plan.
EIS Private offer
AppyWay is raising £20 million in this Series B round. £10 million is being arranged by West Hill Capital (“WHC”) under EIS, of which Wealth Club has an exclusive allocation of £500k (now filled). The remaining £10 million is expected to be sourced from large corporate and institutional investors and therefore non-EIS and is being led by corporate finance firm, Ardent Advisors. The non-EIS capital will be partly used to fund the acquisitions.
Existing investors Aviva and Breed Reply Investments are converting loan notes to equity in this round, while other existing institutional investors are also expected to participate.
Based on the company’s forecasts, the mid-case target return is 24x in 5 years (89% IRR) before EIS tax relief – high risk and not guaranteed.
AppyWay is a knowledge-intensive EIS-qualifying company with Advance Assurance. EIS certificates were most recently issued in February 2019.
How is the funding going to be used?
£15 million of the capital in this round will be used towards platform development, expanding UK kerbside data coverage for domestic growth, and for international expansion. £5 million of non-EIS capital will be set aside to make two strategic acquisitions.
The Company could be attractive to Automobile OEMs (original equipment manufacturers), large fleet operators or companies such as Siemens which are heavily invested in the development of smart cities. Should the Company successfully deliver its forecasts, an IPO may also be possible. Please note, exits and timeframes are not guaranteed. See PPM for details.
Daniel Hubert, Founder and CEO, is named amongst Ericsson’s Top 25 Trailblazers 5G UK Pioneers of the Year 2020. Before founding AppyWay in 2013, Dan spent 13 years working for some of London’s top advertising agencies, including the $17 billion-valued Omnicom Group. Dan now uses his award-winning communication skills to promote AppyWay, and the key role it has in the smart cities of the future. Dan has overall responsibility to deliver the business plan.
John Fogelin, CTO and Chief of Security, is a computer scientist with experience growing Silicon Valley technology companies. This includes spending 18 years at Wind River Systems, latterly as CTO when the business was acquired by Intel for $884 million. John has significant IoT experience from his previous Chief of Engineering role at cloud service provider EVRYTHNG.
Daniel and John are supported by an experienced management team including Chief Product Officer Stephen Jones, Head of Mobility Ben Boutcher-West and VP of Marketing and Sales Garry Thornton.
The Company employs 38 personnel and has an Enterprise Management Incentives (EMI) scheme in place to reduce the risk of losing key employees.
Philip Smith, Non-Executive Chairman, has 35 years’ experience in the technology industry. Philip was most recently UK CEO and Chairman of Cisco Systems, the $218 billion US-listed hardware and telecoms giant. Philip is currently Chairman of AIM-listed IQE plc, former Chair of Innovate UK, and was awarded a CBE in 2019 for his services to technology and business.
Ron Kornfield, Non-executive Director, spent over 8 years at Amazon as head of worldwide business development in transportation technology – the team responsible for delivering Amazon’s one-hour prime logistics service. Ron also has experience working with vehicle OEMs while Head of Worldwide Business Development at Alexa Auto.
The board also has representation from the Company’s institutional investors: Timothy Stone, Investment Director, Breed Reply Investments; Dominik Slonecki, Investment Director, Sumitomo Corporation Europe; Ben Luckett, Advisory Board, Aviva Ventures; Syafiq Johari, Advisory Board, Hyundai.
The Company is forecasting sales of £2.1 million in 2021, growing to £9.1 million in 2022. Thereafter, rapid growth is forecast, for revenues of £179.7 million and EBITDA of £95.9 million by 2025 – high risk and not guaranteed. See PPM for detailed assumptions underpinning revenue growth.
One of the planned strategic acquisitions is expected to provide £3 million+ of annual revenues and £1.2 million EBITDA, as well as significant synergies and upselling opportunities – not guaranteed. Please read the PPM for further detail on growth assumptions and risks.
The Company’s most recent unaudited accounts to 31 December 2020 report brought-forward losses of £8.1 million and net assets of £3.5 million. This round should give the Company cash headroom through to 2023, at which stage it expects to be cash flow positive, subject to achieving its forecasts – not guaranteed.
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
This investment is high risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value.
Before you invest, please carefully read the full investment pack – including the PPM which contains further details on the considerable risks, alongside the Wealth Club Risks and Commitments.
This is a single company offer with no diversification. It involves investing in an early-stage, loss-making business, which is by nature high risk and prone to failure. You could lose the amount you invest.
Shares will not be allotted until a minimum of £2 million is raised in the funding round. As West Hill already exceeded this, the first allotment is likely to take place by the end of April. The financial plan assumes £20 million will be raised in this Series B round. While we have good visibility on the progress of the £10 million EIS round we are not certain of when the corporate investment will be secured. Should this be delayed or not secured, the acquisitions would not complete and this would materially impact the ability of the business to deliver its forecasts.
The value of tax benefits depends on circumstances and tax rules can change.
An exit could take longer than the three-year minimum holding period.
Structure and fees
Investors will pay no direct initial or ongoing charges. There are two share classes in Yellow Line Parking Ltd: Ordinary Shares and Preferred Ordinary Shares. Wealth Club investors have a choice to invest in EIS-eligible Ordinary Shares (minimum £20,520) or non-EIS Preferred Ordinary Shares (subject to a higher minimum investment of £250k, please contact us for information on how to apply). Please refer to the PPM for further information on the rights associated to each share class.
WHC will share a part of their fundraising fee with Wealth Club equal to 3.3% of the capital raised by Wealth Club. There are no other fees paid to Wealth Club. Please see the PPM for more details on fees.
Wealth Club investors will invest using a nominee structure. This service is provided by Aldbridge Services London Limited. Woodside Corporate Services is the receiving agent. Please refer to the PPM for further details.
AppyWay’s technology is multi-award winning, reportedly 83% more efficient than existing siloed systems, and underpinned by recurring-revenue contracts with public sector and blue-chip customers.
The market growth opportunity appears significant and the Company has a first-mover advantage. If it can efficiently integrate its planned acquisitions, increasing the multi-year contracts, it could further strengthen this foothold and gain market share.
While we consider the pre-money valuation to be high, it is somewhat validated by the interest from new strategic corporate investors as well as the expected continued support from existing.
If the Company can successfully deliver its plan and secure its technology as a core solution for smart cities of the future, it could deliver highly attractive returns. Bear in mind this is not an easy target and might not be achieved. This is a high-potential, albeit high-risk, opportunity to co-invest alongside multiple strategic investors with the benefits of EIS. As always, experienced investors should form their own view.
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Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
- Single company
- Target return
- 24x (89% IRR)
- Funds raised / sought
- £8.5 million / £10.0 million
- Minimum investment
- Closing soon