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LightMe

Platform:
Crowdcube
Stage:
Expansion
Industry:
Retail
Location:
UK - Yorkshire
Date Rated:
04/10/17
Raise:
£300,000
Equity:
20%
Valuation (Pre Money):
£1,200,000
Industry: Retail
Location: UK - Yorkshire
Platform: Crowdcube
£300,000 Expansion
Valuation: £1,500,000
Date Rated: 03/10/17

MANAGEMENT

PRODUCT

INVESTMENT
Tax Status: EIS

Business Summary

LightMe designs and sells bio-oil candles that use a sustainable source of vegetable oil to help overcome the harmful nature of traditional paraffin wax and liquid wax candles. LightMe aims to create the perfect ambience whilst being one of the safest real flame candles in the world. LightMe has developed a wide range of candles with a 35-40 hour burn time per candle. This round of investment will be mainly used to fund working capital.

Financial Overview

Date (y/e) May-17 May-18 May-19
Sales May-17£68,000 May-18£1,305,398 May-19£5,924,379
Gross Profit May-17£7,000 May-18£523,758 May-19£2,179,186
GP as % sales May-1710% May-1840% May-1937%
Overheads May-17- May-18£428,652 May-19£1,129,939
Operating Profit May-17-£256,000 May-18£93,351 May-19£1,046,255
OP as % sales May-17-376% May-187% May-1918%
Closing Cash May-17- May-18£487,409 May-19£1,167,512

Note: This financial information has been sourced from the company on 03/10/2017. Financial data is NOT verified by Wheatfromchaff Ltd.
58%
SKILLS:
EXPERIENCE:
COMMITMENT:
The Founder has gained his managerial expertise in this business and although the team is complete, further sales and marketing skills seem required to support the intended growth.
The Chairman is a successful CEO with industry knowledge and the management team has sufficient commercial experience to drive the business forward.
Although the Founder and the team have invested significant time and cash into the business, their planned salaries will now reduce their cost of failure.
75%
MARKET:
PRODUCT:
COMPETITION:
The UK candle market is worth c £300m and the scented segment is growing rapidly. The global candle opportunity is worth over £5bn.
Although the initial product has not achieved much commercial traction to date, the new fragranced range could allow the company to now take-off. A firelighter range is planned.
The team has created a cleaner and safer alternative to the traditional candles that provide the company with a first mover advantage and the chance to rapidly gain market share.
51%
PROFITABILITY:
CASHFLOW:
RETURNS:
Given the track record the sales forecast seems ambitious although the company intends to invest heavily in sales and marketing. Gross Margins are not that high which will limit profitability.
This round of investment should provide enough working capital to achieve break-even and the company has also an invoice factoring facility to help manage the cash flow.
If the team deliver the planned sales of £6m and £1m in profits then investors could expect substantial returns although it may well take over two years.


Conclusion

Historic sales appear to have fallen from £126k in FY15 to £68k in FY17 with losses rising to £256k as the team have invested heavily in improving the product and branding, supported by the previous investment round of £300k.

The team are confident that the new fragranced range will support a successful relaunch and dramatic sales growth but this is yet to be evidenced so the valuation could be regarded as relatively high in the circumstances. Given the higher price point than mass-market candles B2B distribution will be key to achieving the plan, so it is encouraging they have now secured a senior figure in the Catering industry as a Board advisor.

Pre-emption rights are only available to investments over £15k.

Related Links

Crowdcube Pitch

www.lightme.uk

 

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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

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