Need some help? Close Help

Service Octopus

Platform:
Crowdcube
Stage:
Seed
Industry:
Internet
Location:
UK - London
Date Rated:
01/09/17
Raise:
£125,000
Equity:
10%
Valuation (Pre Money):
£1,125,000
Industry: Internet
Location: UK - London
Platform: Crowdcube
£125,000 Seed
Valuation: £1,250,000
Date Rated: 29/08/17

MANAGEMENT

PRODUCT

INVESTMENT
Tax Status: EIS

Business Summary

Service Octopus is a UK comparison and booking platform for professional cleaning services where customers can get a quote and book through its website in just a few minutes. Service Octopus has experienced 40% month on month growth and has achieved £50k in revenue since launch. This round of investment will be used to fund the marketing campaign and to allow further product development.

Financial Overview

Date (y/e) Aug-18 Aug-19 Aug-20
Sales Aug-18£400,624 Aug-19£1,356,085 Aug-20£1,688,934
Gross Profit Aug-18£400,624 Aug-19£1,356,085 Aug-20£1,688,934
GP as % sales Aug-18100% Aug-19100% Aug-20100%
Overheads Aug-18£351,489 Aug-19£803,364 Aug-20£827,469
Operating Profit Aug-18£49,135 Aug-19£552,721 Aug-20£861,465
OP as % sales Aug-1812% Aug-1941% Aug-2051%
Closing Cash Aug-18£49,135 Aug-19£552,721 Aug-20£861,465

Note: This financial information has been sourced from the company on 30/08/2017. Financial data is NOT verified by Wheatfromchaff Ltd.
61%
SKILLS:
EXPERIENCE:
COMMITMENT:
Although there are only two executive members of the team, they have sufficient management and marketing expertise, but further product development skills may be beneficial.
Although there is no evidence of that previous endeavours have been successful, the Founders have strong startup experience and the industry is well known by them.
Although the Founders have invested little cash and time into the business, they are both working full-time.
55%
MARKET:
PRODUCT:
COMPETITION:
The domestic cleaning and removals market is worth about £5bn in the UK. The company is currently targeting only London but intends to cover the major cities in the UK.
The platform is functioning well with few, but good testimonials and has already partnered several cleaning contractors.
The company seems to have the first mover advantage but given the early stage of the business, its platform and the business model could still be easily replicablated.
47%
PROFITABILITY:
CASHFLOW:
RETURNS:
The financial projections provided are limited, but given the lean business model, the company could expect high-profit margins if the 25% commission is sustainable.
This round of investment should provide enough cash to achieve break-even but the company has little protection against any unexpected shortfall.
Although an exit strategy has not been outlined, if the team can deliver the forecast, investors in this round could expect reasonable returns after three years under a trade sale exit.


Conclusion

The business is in a good position to gain market share in London but further cleaning contractors may be necessary to increase the appeal of the offering. However, the intended commission per each booking its very attractive and will invite competitors offering a near identical service with a lower commission. This might encourage Cleaning contractors to move away from Service Octopus. Existing operators in sister markets might find this appealing and could probably move quickly into the market if they so choose.

But Investors should also note that the founding team has significant industry knowledge and even a more modest growth could still provide reasonable returns in the mid-term. In addition the team is lean and can be nimble which a larger company trying to take them on should fear.

This is an interesting deal, not badly priced compared with other platforms trying to build comparison model businesses in the service sector. For an investor who understands the market opportunity and believes in the team's ability to deliver, it is worth taking a serious look at.

Related Links

Crowdcube Pitch

www.serviceoctopus.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