Wi5 EIS

Close extended to 29 January 2021

Co-invest with West Hill investors: Order & Pay provider experiencing accelerated uptake, spurred by Covid-19

Mobile Order & Pay technology lessens the interaction and time it takes for restaurants and shops to serve you your order. Simply point your phone camera at a venue’s QR code to bring up its menu on your phone, then tap to order and pay. 

In a mobile pay market estimated even before the pandemic to be worth c.$1 trillion globally by 2024, demand for the technology is now accelerated by its crucial advantage of helping venues comply with restrictive Covid-19 regulations.

Wi5 Technologies Limited (“Wi5” or the “Company”) offers a best-in-class Order & Pay solution recognised as one of the most reliable on the market and easiest for both businesses and customers to use. Wi5 is a market leader, delivering its clients a 30% increase in average transaction values.

Its clients include university campuses UCL, Goldsmiths and Royal Holloway, and national restaurant chains Pizza Pilgrims, CrepeAffaire, New World Trading Company and Pho. Wi5 has been successfully trialled with a national chain of coffee shops as a handy “grab and go” solution for customers across several UK outlets – a solution that can also be extended to supermarkets.

Whilst behind its previous forecasts, the Company is currently experiencing unprecedented demand. Currently used at 294 locations, Wi5 Order & Pay transactions have increased by 160% in value every month since June – reaching over 296,000 transactions, worth £3.8 million, in October alone. Note, past performance is not a guide to the future. 

Wi5 is now raising £5 million under EIS to deliver its technology to thousands more locations, both in the UK and internationally. This investment round is led by West Hill Capital and £3 million has already been secured. Wealth Club has negotiated a £500k allocation exclusively for its members. 

Predicated on raising £5 million in the current round and a further £25 million in a Series A round expected in 2021 (not guaranteed), the Company forecasts turnover of £195 million and EBITDA of £116 million by FY23. Based on the illustrative assumptions in the Private Placement Memorandum, the targeted equity return in 2023 is 32.1x (high risk and not guaranteed) before EIS tax relief. 

This round is being structured through an Advance Subscription Agreement (“ASA”). Please see the ASA FAQs document and the Private Placement Memorandum for the key terms of the ASA.

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.

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The deal at a glance

Type Single company EIS private offer
Stage Pre-Series A round – scale-up funding
Date started trading 2017
Funding to date £8.7 million
Co-investors Wayra (Telefonica / O2 backed accelerator), West Hill high net worth investors, private investors
Sector Technology
Fully diluted pre-money valuation 25% discount to Series A, or £39 million
Market size $924 billion in 2024
Business model B2B
Revenue to date £0.1 million - £10.8 million expected in FY21 – not guaranteed
Revenue model Transaction fees; Subscription fees to be phased out in 2021
Profitability forecast from* 2022
Forecast revenue in year 3* £195 million
Forecast EBITDA in year 3* £116 million
Target return in year 3* 32.1x
Target IRR* 218% IRR
*These are forecast and not guaranteed. Capital is at risk – you could lose the amount you invest.

Highlights

  • Secure and easy-to-use Order & Pay technology, with pandemic fuelling accelerated demand 
  • Raising £5 million in pre-Series A funding round (£3 million secured)
  • Opportunity to invest at 25% discount to Series A round under ASA
  • Experienced management team and board who have invested over £1 million
  • Single company EIS private offer with no diversification, high risk
  • Minimum investment £20,000
  • 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 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 included, the company forecasts or the deal details. Please read the offer documents carefully to form your own view and ensure you wholly understand the potential benefits and risks.

Wi5 EISHow does Wi5 work?

The online Wi5 Merchant Dashboard lets a business instantly create, edit and publish menus, manage out-of-stock items and get access to customer insights and analytics. A helpdesk and support team provide any assistance needed. 

Once set up, a business’s customers can bring up its menu on their mobile phones, simply by joining the venue’s WiFi or by using a phone camera to scan a code on the table. Customers click to pay through Apple or Google Pay and the order is fed to the venue’s Electronic Point of Sale system, ready for staff to prepare. There is no need for customers to download an app to use Wi5’s Order & Pay solution.

The technology improves customer turnaround time and saves labour costs. Altogether, plus Wi5’s ability to deliver better revenues (30% increase in average transaction values), this could make Wi5 an attractive consideration to businesses looking to embed this technology into their longer-term operating models.

Wi5 charges venues a transaction fee of c.3% the value of transactions processed through its technology. There are no set-up or subscription fees for new customers.

See how Wi5 works – watch video case study:

This video was published by Wi5 in January 2021
 

Covid-19 impact

Covid-19 appears to have elevated the role of Order & Pay solutions from “nice-to-have” to “must-have”, as it enables some businesses to operate under pandemic restrictions. 

Also accelerated by Covid-19 is the way tech-savvy customers increasingly expect sophisticated ways to pay wherever they shop. A recent study found 58% of people (70% in the case of younger people) are now more likely to order through their phone than before the pandemic.

Wi5 has seen increased demand for its service and looks well positioned to benefit from these trends – not guaranteed.

How is the funding going to be used?

The capital raised in this round is expected to fund the following:

  • Further product development, including a table reservation system
  • Strengthening the sales team and increasing marketing spend
  • Supporting international expansion

Management 

CEO Prask Sutton leads the executive team and is responsible for overall strategy. Prask has founded several companies, both in the UK and abroad. Since 2010, Prask has held the roles of Head of Innovation, Chief Innovation Officer and Chief Executive Officer at a number of media, marketing and design agencies. 

COO Jon Clarke is responsible for the day to day running of the business. Jon has 13 years of operations experience in media, design and consultancy, including rolling out cutting-edge technologies for blue-chip customers.

The management team also includes CTO Lionel Martin, CSO Gavin Peters and interim CFO Oliver Burton.

Non-executive director and entrepreneur Alberto Menolascina is a former director of corporate strategy at Deliveroo, where he co-led the Series D, E and F funding rounds. Upon closing the offer, West Hill will appoint former partner at hedge fund manager Brevan Howard Asset Management Alex Underwood to the board, and will also look to appoint an independent Chairman in 2021.

Financials

Since May 2017 the Company has raised £8.7 million of equity funding. It most recently received EIS Advance Assurance in September 2020 and has issued EIS3 certificates in its previous investment rounds. 

The Company is behind its previous forecasts, and previous target returns have been shifted back. This is primarily due to Telefonica deciding to pull out of the market that would have involved rolling Wi5 out to Telefonica Wi-Fi customers. Wi5 is now forecasting £10.8 million of sales in 2021, growing to £195 million in 2023. The Company expects to become profitable in 2022 and generate EBITDA of £116 million in 2023, not guaranteed. Please read the Private Placement Memorandum for further detail and growth assumptions and risks.

Structure of the offer (ASA) and fees

Investors will be investing in the company directly. 

Under the current offer, investment will be via an Advance Subscription Agreement (“ASA”). This means investors who believe in the growth potential of Wi5 have the opportunity to invest now at a 25% discount to the proposed Series A share price aimed at institutional investors.

Please see our ASA FAQs document and the Private Placement Memorandum for more details.

Investors will pay no direct initial or ongoing charges. Please see the Private Placement Memorandum for more details on fees. West Hill will share a part of its 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. 

Risks – important 

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.

Before you invest, please carefully read the Private Placement Memorandum 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.

Tax relief will not be applied until shares are allotted, which under the ASA needs to be by 31 July 2021. So, the investment date for EIS tax relief purposes will likely fall in the 2021/22 tax year. Please refer to the ASA FAQs document and the PPM for further details. 

The illustrative returns included in the PPM assume successful completion of this £5 million offer. They also assume a £25 million Series A round completes at a share price of £555.13 (post-money valuation of c.£120 million) – not guaranteed. The Series A share price is not currently known. If the Series A share price were different or the funding rounds did not complete, returns may be materially different than set out in the PPM. 

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.

Our view

While the Company has shifted its previous forecasts back, it is currently experiencing significant demand fuelled by the pandemic. It appears to offer an easy-to-use, market-leading solution which is not only helping compliance with Covid-19 rules but also driving revenues for hospitality businesses. The result is that the hospitality industry looks to be embedding Order & Pay solutions into their longer-term operating models. Wi5 appears well placed to benefit from this (not guaranteed).

Investors who believe in the growth potential of Wi5 have the opportunity to invest now at a 25% discount to the proposed Series A round aimed at institutional investors: note, however, this may take 6 months or more and capital will be tied up and not allotted until this happens. 

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.

You should read the Private Placement Memorandum carefully and form your own view on this high-risk single-company offer.

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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.

The details

Type
Single company
Sector
Technology
Target return
32.1x
Funds raised / sought
£4.2 million / £5.0 million
Minimum investment
£20,000
Deadline
29 Jan 2021
Last updated: 17 December 2020

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