Datamaran EIS

Offer now closed

This EIS offer is now oversubscribed (2 December 2019). 

This is a chance to invest in a technology company that’s already helping global blue-chip institutions address material risks and comply with a growing body of regulation. 

Last year a new EU Directive on non-financial disclosures came into effect. More than 6,000 large companies in 28 countries need to comply. This is just one of the 4,000+ initiatives that require or recommend disclosure on non-financial matters such as Environmental, Social and Corporate Governance (ESG) issues – and the number continues to rise. 

Traditionally, large companies have employed specialist consultancies to generate ESG analysis manually, but this is costly, time consuming and only accurate at the time it’s produced. 

Datamaran was developed to change this. Its patent-pending software helps large institutions monitor and analyse emerging ESG risks and opportunities in real time.

The software is already used by over 50 blue-chip clients, including Amazon, Morgan Stanley, Deloitte, Barclays, Santander and Nike. 

In the last financial year, Datamaran has generated revenues of £1 million, all recurring. It expects to double revenues in the current financial year and be profitable by 2021 (not guaranteed).

To help support its growth, now Datamaran is raising £1.8 million (including over-allocation option) under EIS. The offer is arranged by West Hill Capital, a respected private equity and venture capital firm with which we have collaborated in the past, and is only available to West Hill and Wealth Club investors. 

The minimum investment through Wealth Club is £22,020 (normally £50,000) and you can apply online. Please note, as part of the application, you will be asked to complete your investor registration forms for West Hill to become an elective professional client of West Hill. 

Highlights 

  • High-growth early-stage business with over 50 blue-chip clients 
  • Increasing regulatory pressure to monitor and manage non-financial risk could support demand
  • Scalable Software as a Service (SaaS) model 
  • Revenue generating and aiming to be profitable by 2021 – not guaranteed
  • £1.5 million invested to date by the three founders as well as board directors, with additional £400k committed this round alongside £400k from existing investors
  • Target return of 7-11x before EIS tax relief after four years – not guaranteed 
  • Pre-money valuation of £12.6 million (fully diluted) 
  • Minimum investment £22,020 
  • Applications will be handled on a first come, first served basis
  • High-risk, single company private offer with no diversification

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

This overview is based on the information available in the offer documents, prepared by West Hill Capital. Wealth Club has not reviewed or verified the information included, the company forecasts or deal details. Please read the offer documents carefully to form your own view and ensure you wholly understand the potential benefits and risks.

The offer

The idea for Datamaran is rooted in the experience of one of its co-founders, Marjella Lecourt-Alma.

She spent seven years at GRI (the Global Reporting Initiative) – the most widely used standard for measuring and reporting on ESG issues – and became the organisation’s youngest female Director at age 30. 

Whilst at GRI, she saw the challenges businesses face in monitoring and reporting on sustainability and non-financial risks and decided to take action. Together with former Wall Street trader, Jean-Phillipe Lecourt, and technology and analytics consultant, Jérôme Basdevant, they set up Datamaran in 2014. 

The aim was to automate the process by using big data analytics and natural language processing to provide fast, efficient and powerful insights into non-financial risks. 

The result is a SaaS platform, built by data scientists and ESG experts, that continually mines and analyses millions of data points to provide clients with up-to-date, accurate information and insights on material ESG and other non-financial risks on an ongoing basis, at the press of a button. The board believes the platform is market leading from an automation and technology standpoint, with competitors providing inferior manual or static solutions.

Progress to date and growth opportunity

In just over five years, Datamaran has made significant progress:

  • It now has offices in London, New York and Valencia and employs around 50 people
  • It has submitted applications for seven patents, which are currently pending
  • It has over 50 blue-chip clients, including Amazon, Morgan Stanley, Deloitte, Barclays, Santander and Nike
  • Clients pay licence fees under yearly contracts, providing recurring revenues – nearly 20% of clients are on multi-year contracts
  • There is no undue reliance on any customer – the top five account for less than 20% of annual revenues
  • Secured two distribution partnerships with large consultancy firms ERM and EY which are expected to generate significant revenues
  • Datamaran generated revenues of £1 million (all recurring) in the 2019 financial year and expects to double that in the current year ending in June 2020. £1.3 million has been secured already
  • It aims to be profitable by FY21 – not guaranteed

The company mainly sells directly to corporates but has also signed two distribution partnerships: with Enterprise Resources Management (ERM) in February 2019 – one of the world’s leading sustainability consultancy firms – and with Ernst & Young (EY) in November 2019. The partnership with ERM is already generating revenue.

There are also other potential applications of Datamaran. Hedge funds, mainstream investment managers and equity analysts are increasingly looking at companies’ ESG data alongside traditional financial performance. Datamaran can give investors visibility on issues historically opaque and open to PR spin. Datamaran is building awareness in the sector through brand partnerships (e.g. with NASDAQ) and plans to target it in 2020.

Funding 

Progress to date has been funded by an investment of £6.9 million from its founders and board (who collectively invested £1.5 million to date), VC Run Capital, West Hill Capital and other private investors.

Now Datamaran is raising a further £1.8 million under EIS at a pre-money valuation of £12.6 million (fully diluted). The founders, board of directors and existing shareholders will be investing alongside this, with £800k of commitments confirmed to date. This includes an investment of £300k from Non-Executive Chairman Marco Ariello, who has over 25 years of investment banking, private equity and venture capital experience.

Funding will be used to support the continuing growth and will be utilised in the following areas:

  1. Marketing and PR (events, webinars and roadshows, content marketing and digital marketing);
  2. Increasing staffing across product development, sales and marketing;
  3. Working capital to deliver the plan

The offer is arranged by West Hill Capital and is only available to West Hill and Wealth Club investors. The minimum investment through Wealth Club is £22,020 (normally £50,000), equivalent to 6,000 shares.

Market validation 

“I use Datamaran to give us information that we really can’t get anywhere else. We started using Datamaran for benchmarking purposes. It’s one thing to be able to read a company’s report but it’s another thing to have the insights that Datamaran gives us that are completely objective and unbiased.” – Jennifer Leitsch, VP Corporate Responsibility, CBRE

“With Datamaran’s data-driven approach to materiality analysis we have incorporated a wider range of data and stakeholders than was ever possible before and managed to get an evidence-based perspective into regulatory, strategic and reputational risks and opportunities.” – Phillips Annual Report, 2018

“We have trained 75 ERM professionals on the value proposition, we now have 75 people who understand the magic that is the Datamaran/ERM partnership” – Keryn James, ERM Group Chief Executive

Target returns

Datamaran forecasts sales of £14.9 million and operating profit of £10.7 million by 2023. 

It targets a return of 7-11x after four years (before EIS tax relief), based on multiples of 10-15x operating profit if the business successfully achieves its forecasts.

These are targets and there are no guarantees.

Management team

The three co-founders have complementary skills. 

Marjella Lecourt-Alma (CEO) is a former director of Global Reporting Initiative (GRI). Jean-Phillipe Lecourt (CFO) has 20 years’ experience in international trading and risk management with JP Morgan, Bank of America, Deutsche Bank and BNP Paribas. Jérôme Basdevant (CTO) is a software architect and consultant with close to two decades of experience in data analytics and innovative technology. 

The remainder of the board is comprised of three non-executive directors with experience across private equity, investment management, IT services and telecoms. 

The business is also supported by an experienced and high-profile advisory board.

Exit options

The management team intends to stay in the business for the mid to long term in order to fulfil its growth ambitions. 

An IPO, trade sale or sale to private equity are some of the options, but timeframes and exits 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 tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments on the Wealth Club website and the Information Memorandum to ensure you fully understand the risks.

This is a single company EIS offer with no diversification. It involves investing in an early stage business which is by nature high risk and prone to failure.

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

Fees and charges

Investors are investing in the Company directly so will pay no direct initial or ongoing charges. West Hill will pay an introducer fee of 3.3% to Wealth Club. 

Our view

We believe this is an exciting opportunity to co-invest alongside West Hill and experienced investors in a high growth Company with an impressive set of existing blue-chip clients and an attractive recurring revenue model.

The Company has made encouraging progress to date and significant commitments made in the previous and current round from the management team and board members, many of whom are experienced investors, further validates the business model, in our view.

The increased focus on sustainability issues and the ever-tightening regulatory landscape should also help support demand. Since 2013, there has been a 72% increase in the number of recorded regulations concerning non-financial issues. The cost of non-financial risk is also rising. Between 2008-2012, the top ten global banks alone lost close to $200 billion through litigations, compensation claims and operational mishaps. Datamaran could be well positioned to take advantage of this.

Heightened financial consequences and increased awareness of non-financial risks appears to be reflected in recent M&A activity. Several acquisitions of firms providing ESG solutions have been made by larger providers of information services, looking to broaden their service offering. This provides encouragement that if Datamaran can scale, it could have an active pool of buyers – although this is not guaranteed.  

For experienced investors comfortable with the significant risk, this is a promising co-investment opportunity to invest a high growth, early-stage business, albeit investors should make up their own mind.

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
Technology
Target return
7x
Funds raised / sought
£1.8 million / £1.8 million
Minimum investment
£22,020
Deadline
CLOSED
Last updated: 29 November 2019

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