Azoomee EIS

New: limited opportunity to invest in profitable company to support surge in customer demand and business opportunities. Offer closes 3 April 2020

Azoomee is an established children’s online fun and learning platform. The company is currently profitable and well capitalised. 

But, in response to a huge uptick in global demand for its services during the current lockdown crisis, Azoomee is now seeking to raise £750,000 to help fulfil higher customer demand and follow up identified business and marketing opportunities. £450k has already been committed. 

With Azoomee’s acquisition of Berlin-based Da Vinci Media GmbH on 30 December 2019, the combined group is reporting £1.3 million EBITDA in the year ending 31 March 2020 and is expecting base case growth of at least 25% in the new financial year – not guaranteed. 

Wealth Club members acted quickly to invest in Azoomee’s previous funding round, which raised £3 million.

The current limited funding round is at the same share price as the previous. This offer is only available to existing investors and Wealth Club members. Applications must be submitted online before the deadline – Friday 3 April 2020, cleared funds required.

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value, so you could get back less than you invest.

Read important documents and apply

Highlights 

  • Scaled and established provider of entertaining educational content for children
  • Revenues of £5.9 million and EBITDA of £1.3 million in year ended 31 March 2020 (unaudited)
  • Well capitalised with £2.2 million cash in bank
  • Expected base case growth of 25% in new financial year, not guaranteed
  • 55 million subscribers in 150 countries in 20 languages
  • Covid-19 impact: 38% subscriber growth and demand. Increased business activity, including new $100k partnership with South African telco
  • 90% of revenues are generated from blue-chip B2B partners across 50 countries
  • 85% of revenues are recurring – subscription model and long-term contracts
  • Pre-money valuation approximately £23 million
  • Target return of up to 4x (before tax relief) – high risk and not guaranteed
  • Single company private deal with no diversification 
  • Minimum investment £21,500

Azoomee EIS

The offer

As millions of households across the world prepare to see out the COVID-19 pandemic safely indoors, parents of an estimated 300 million school- and nursery-age children turn to trusted online resources to entertain, educate and motivate young minds. 

Market-leading Azoomee provides direct access to millions of customers in the family segment through their website and high-profile partnerships with major global corporations, including Vodafone, O2 and Amazon. 

As a trusted (NSPCC-endorsed) provider, Azoomee has inevitably received a surge in demand for its high-quality children’s digital content, to the extent that it saw nearly 40% subscriber growth within the last fortnight of March 2020.

Azoomee has responded quickly with customised Home Learning content.

The company also identified at least 65 new opportunities for linear TV and digital business development across its markets in Europe, Asia and the African continent, over the same period. It recently closed a deal ($100k+) with MTN Group, a South African multinational mobile telecommunications company, operating in many African, European and Asian countries.

Azoomee is now seeking £750k under EIS, of which £375k is already committed, to help fulfil higher customer demand and follow up identified business and marketing opportunities.

In our view, this is a rare single company investment opportunity, given the entity’s maturity, size and international reach. Please keep in mind that past performance is not a guarantee of future success and experienced investors must form their own opinion: capital is at risk.

The business

Out of the thousands of EIS-qualifying companies that look to raise funds each year, less than a handful may expect to be profitable early on. Azoomee (the trading name of Tinizine Limited) is among the rare few.

Azoomee acquired the already profitable Berlin-based Da Vinci Media GmbH (“DVM”) on 30 December 2019. Impressively, within three months of the acquisition, Management has completed the operational integration. 

The newly formed Azoomee Group (“the Group”) is reporting revenues of £5.9 million and EBITDA of £1.3 million in this current financial year ending 31 March 2020 (unaudited). Management expects base case growth of 25% in the year ending 31 March 2021, with a longer-term forecast reaching EBITDA of £8.5 million by 31 March 2023 – not guaranteed.  The company is behind forecast in the current FY. Due to the distraction of the acquisition and integration of Da Vinci Media, senior management weren’t able to spend the time closing deals and building the pipeline.  However, Management aims to catch up and does not intend to change its long term forecast. 

The Group addresses a large and ever-growing market for high-quality digital content for children, through two distinct brands. Azoomee is “safe and fun”, offering positive screen time that is safe and fun for children aged 4 to 8; Da Vinci provides “STEAM-focused learning” for 8 to 12-year olds.

The Group attracts 55 million subscribers in 150 countries. 

The Azoomee brand

From a very young age, a significant portion of a child’s daily life is now spent engaged in online interaction, learning and play. Parents value this not only as a form of entertainment but as a virtual necessity enabling children to acquire the kind of skills future jobs will demand.

However, this is a minefield of inappropriate content for children, so the question that concerns most parents is: “How can I ensure my child is only exposed to safe, meaningful, high-quality content online?”

With the welfare of their own little ones in mind, seasoned entrepreneurs Douglas and Estelle Lloyd founded Azoomee in 2015 and developed an award-winning online educational platform specifically for primary school-aged children.

In four years, Azoomee has gained the trust of parents and become one of the UK’s fastest-growing young Education Technology (“EdTech”) companies.

Azoomee (meaning “safe haven” in Japanese) is endorsed by the NSPCC. Families can subscribe to Azoomee on any device and get unlimited access to games, videos and activities. The content is available in numerous languages and handpicked by educators with an emphasis on 21st-century skills.

The Da Vinci Media brand (DVM)

Founded in 2007 by Ferdinand Habsburg, DVM is an independent media business dedicated to providing high-quality on-air and on-demand educational programming to primary-school-aged children, with the world’s largest video library (1,000+ hours).

DVM has achieved 10% year-on-year growth by negotiating long-term contracts with public broadcasters, satellite companies and cable/internet providers. Its premier broadcast channel Da Vinci Learning is viewed daily by over 30 million homes all over the world.

Management team

CEO Douglas Lloyd and COO Estelle Lloyd shared a skilled background as financiers as well as digital media entrepreneurs before they went on to found Tinizine Limited.

Major shareholder Ferdinand Habsburg, the founder of Da Vinci Media, has 25 years of experience in media and digital education across Europe. He continues to contribute to the success of the business as a non-executive director. He remains a major shareholder in the Group.

They are supported by a team of highly experienced and proven media and tech leaders, as well as by non-executive directors who are major investors with relevant expertise.

New hires include a Head of Finance and a Head of Marketing, additions to the marketing team, two infrastructure software engineers and a project manager to support software development – bringing together industry leaders in video, games, digital and business development to create the leading European kids’ EdTech business.

Target returns

Predicated on achieving its base-case forecasts, the Group expects revenues of £7.5 million in the new financial year ending 31 March 2021, with an upside case of £10 million (not guaranteed). 

The business is well funded with £2.2 million in cash.  Bank debt is £1.9 million amortising over 5 years, with the first capital payment due in September 2021. 

The combined businesses should now enjoy significant cross-selling opportunities underpinned by streamlined costs and synergies of content and technologies.

By 2023, in line with the Information Memorandum, the Group is forecasting annual revenues of £23 million, EBITDA of £8.5million and target returns of up to 4x.

It is important to remember that risks apply and that all forecasts, target returns and timeframes are not guaranteed, nor is success. Experienced investors should form their own view.

Exit options

Should Management be successful in delivering on the forecasts, in our view the Group is likely to be an attractive acquisition target for both large media companies and private equity firms – however exit options are 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.

EIS investments are 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 Risks and Commitments and the offer documents to ensure you fully understand the risks. 

This is a single company private EIS offer with no diversification. It involves investing in an early-stage business which is by nature high risk and prone to failure. You could lose the amount you invest.

The value of tax benefits depends on circumstances and tax rules can change. 

Fees and charges

There is no direct initial fee charged to the investor. Wealth Club fundraising fee will be 6% of funds raised charged directly to Tinizine Limited.

Wealth Club charges Tinizine Limited a six-monthly fee of £2,750 plus VAT to prepare shareholder updates for Wealth Club investors. Wealth Club will also be entitled to a performance fee predicated on Wealth Club investors receiving a return of greater than 1.5x return before the benefit of EIS tax relief. Wealth Club will be entitled to 2% of the surplus over this return, and this fee will be charged directly to Tinizine Limited on exit.

Wealth Club is acting as a broker in this fundraise. After that, it will monitor the company’s progress and prepare investor updates twice a year. Wealth Club does not take a seat on the board so cannot influence the business. 

Our view

In our opinion this is a unique opportunity to invest in a commercially compelling global business that is responding quickly to an increase in demand and business development opportunities. The business has established routes to market and is expected to deliver significant profits, all with the benefit of EIS tax relief.

Driving the growth of Azoomee and the Group are ambitious and proven entrepreneurs Douglas and Estelle Lloyd who have delivered attractive returns to investors before. We are reassured by the commitment the management team has shown in this deal. 

Douglas and Estelle have invested significant capital sums into Azoomee and the founder and major shareholder of DVM, Ferdinand Habsburg, is leaving considerable value in the Group, clearly with the expectation that further shareholder value can be created in future.

Read important documents and apply

Register your interest – no obligation

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.

The details

Type
Single company
Sector
Education & Technology
Target return
4x
Funds raised / sought
£450,000 / £750,000
Minimum investment
£21,500
Deadline
3 Apr 2020 (5pm) for allotment in 2019/20
Last updated: 31 March 2020

News about EIS Investments. Read all