Need some help? Close Help

honcho

Platform:
Crowdcube
Stage:
Seed
Industry:
Internet
Location:
UK - North East and Cumbria
Date Rated:
29/11/17
Raise:
£650,000
Equity:
32.5%
Valuation (Pre Money):
£1,350,000
Industry: Internet
Location: UK - North East and Cumbria
Platform: Crowdcube
£650,000 Seed
Valuation: £2,000,000
Date Rated: 28/11/17

MANAGEMENT

PRODUCT

INVESTMENT
Tax Status: EIS

Business Summary

honcho is a reverse-auction marketplace where insurers enter a competitive real-time bidding process paying a £1 entry fee for each auction, aiming to offer the best price to customers. honcho has raised £595k to date to fund the build of the reverse-auction marketplace and a prototype mobile app. This round of investment will be mainly used to fund further product development and marketing.

Financial Overview

Date (y/e) Jun-18 Jun-19 Jun-20 Jun-21
Sales Jun-18- Jun-19£1,044,877 Jun-20£7,593,246 Jun-21£13,437,062
Gross Profit Jun-18-£168,800 Jun-19-£710,598 Jun-20£4,432,594 Jun-21£8,770,218
GP as % sales Jun-18- Jun-19-68% Jun-2058% Jun-2165%
Overheads Jun-18£185,464 Jun-19£810,212 Jun-20£1,290,660 Jun-21£1,949,043
Operating Profit Jun-18-£354,264 Jun-19-£1,520,810 Jun-20£3,141,934 Jun-21£6,821,175
OP as % sales Jun-18- Jun-19-146% Jun-2041% Jun-2151%
Closing Cash Jun-18£257,763 Jun-19£666,779 Jun-20£3,799,836 Jun-21-

Note: This financial information has been sourced from the company on 28/11/2017. Financial data is NOT verified by Wheatfromchaff Ltd.
71%
SKILLS:
EXPERIENCE:
COMMITMENT:
The team has adequate skills to drive the business but further marketing expertise will be needed to implement the plan as the previous CMO has left the company.
The CEO has evidence of a previous successful exit, the team combines start-up experience and industry knowledge with the support of an experienced advisory board.
A CTO will be employed post-funding but the Founders are full-time and they have invested significant time into the business without any remuneration.
53%
MARKET:
PRODUCT:
COMPETITION:
The company's addressable market is worth about £154m and the team aims to provide bids for at least 2% of the market in the third year mainly targeting millennials.
The platform will not be ready until Jun-18 but honcho has already signed letters of intent with seven insurance companies.
The team is clearly aware of their competitors and has a different approach to grab market share but at this stage, the replication risk is still high.
52%
PROFITABILITY:
CASHFLOW:
RETURNS:
Enough marketing spending has been planned to underpin the forecasted growth and healthy profit margins could be achieved but given the company' stage, the sales projections seem aggressive.
The management team has planned another funding round of £2m next year as this round will be not enough to achieve break-even and overheads will need to be closely controlled until launch.
Although an exit with attractive returns could be achievable, the company's revenues could be easily delayed if the business does not achieve its expected market coverage.


Conclusion

The marketing team is not in place yet and the platform and app are still in development, so there is a significant risk of a launch delay. The team has however a significant contingency in the plan to cover any shortfall or unexpected cost if they can indeed raise £2m in the next round.

It is unfortunate that the team have not had the resources to avoid undertaking a Crowdfunding campaign at this early stage as now their business model, technology and client pipeline has been exposed, 6 months before the planned launch, the risk of someone, incumbent or otherwise, replicating their platform has risen sharply.

Investors should note that they will need to invest further in the next round at a £7m valuation if they want to avoid dilution.

Related Links

Crowdcube Pitch

www.gethoncho.com

 

Right To Reply

Are you the entrepreneur? If you would like to publish a comment on our rating, please contact the ratings team.

Latest Forum Comments

Read All Comments

Disclaimer

The views and opinions expressed on this bulletin board are the sole property and responsibility of the author. Neither Crowdrating nor Wheatfromchaff Ltd, nor any of the directors or officers of Wheatfromchaff Ltd accept any responsibility or liability for them. Readers should be aware that comments do not constitute investment advice and may be inaccurate. Please seek to verify and take advice on all comments before relying on them in the context of any investment decisions you may make. if you wish to use the bulletin board please be aware you are accepting full responsibility and liability for what you write. Please look here for more specific rules we impose on people using our bulletin boards. We moderate all bulletin boards and we reserve the right not to publish your comments.

Disclaimer

Your capital is at risk when you invest in shares and debt securities. You can lose some or all of your money and may not be able to realise your investment. Therefore you should should never invest more than you can afford to lose. If in doubt about the suitability or tax implications of any investment, please seek independent financial advice. 

Information published on this website and any other reports or ratings published on CrowdRating.co.uk or by Wheatfromchaff Limited (trading as Wheatfromchaff) have been prepared by us in the United Kingdom for information purposes only. Wheatfromchaff Ltd is Authorised and Regulated by the Financial Conduct Authority FRN: 751017. 

No content on this website or on any reports or ratings published on this website nor any copy of it, nor any other reports or copies of them published on CrowdRating.co.uk may be reproduced, redistributed or copied in whole or in part for any purpose. Any and all reports have been approved by, and are being distributed in the UK and the European Union (EU) only and are not to be distributed in any other jurisdictions where their distribution may be restricted by law and persons into whose possession this or any other reports come should inform themselves about and observe such restrictions.

This report and any other reports published on CrowdRating.co.uk do not constitute an offer or a solicitation to buy or sell any securities referred to herein. It should not be so construed, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information on this website or in reports or ratings published by Wheatfromchaff, or on which this or any other reports are based, has been obtained from sources that Wheatfromchaff believes to be reliable and accurate, and in accordance with COBS 2.4 of the FSA Handbook we have verified it to the best of our ability. However, it has not been independently verified and no representation or warranty, express or implied, is made as to the accuracy or completeness of any information obtained from third parties. The information or opinions are provided as at the date of this report or any other report publication dates and are subject to change without notice. The information and opinions provided in this and any other reports take no account of the investors/ individual circumstances and should not be taken as specific advice on the merits of any investment decision. Investors should consider any or all of the reports or ratings we publish as only a single factor in making any investment decisions.  

Wheatfromchaff does not accept any liability whatsoever for any direct or consequential loss however so arising, directly or indirectly, from any use of this report nor its contents. Investors may receive back less that they invested as investments may fall as well as rise in value. Investors should obtain independent advice based on their own circumstances before making investment decisions. By accepting this report you agree to be bound by the foregoing limitations.

The Ratings we publish have been approved and issued at Financial Promotions in the United Kingdom by Wheatfromchaff in the United Kingdom who is Authorised and Regulated by the Financial Conduct Authority FRN: 751017. Wheatfromchaff Limited registered office is Kilver Court, Kilver Street, Shepton Mallet, Somerset, BA4 5NF and telephone number +44 (0) 1749 347 577. Telephone calls may be recorded. VAT No: 214 0196 49

© Wheatfromchaff Ltd All Rights Reserved February 2017