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UK - North East and Cumbria
Date Rated:
Valuation (Pre Money):
Industry: Internet
Location: UK - North East and Cumbria
Platform: Crowdcube
£650,000 Seed
Valuation: £2,000,000
Date Rated: 28/11/17



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.
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.
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.
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.


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


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