Beeline

Idea

Convertible Details

This investment round is being raised by way of a convertible instrument.

The key terms that apply to BeeLine convertible are as follows:

• Discount – conversion at a 20% discount to the valuation set by a Trigger Event.

• Valuation cap of £8,000,000

• Conversion is triggered by ("Trigger Events"):

o An Equity Fundraise – defined as the Company raising investment capital of at least £500,000 from one transaction or a series of transactions, in exchange for the company issuing of Ordinary Shares;

o A Change of Control of the company (transfer of more than 50% of the share capital); or

o An IPO – being a listing of the company’s shares on a recognised stock market or secondary market.

• Longstop Date is 12 months from the date of the convertible agreement.

If conversion has not been triggered by the longstop date shares will be issued on the longstop date at a valuation based on the lower of (i) the lowest price of any Ordinary Share issued after the date of this Agreement; and (ii) a pre-money company valuation of £3,000,000 on a fully diluted basis. The convertible would also convert to equity at this price in the event of winding up or liquidation of the company.

Introduction

Beeline is a connected hardware company on a mission to change the way we navigate, helping people to have better journeys the world over.

Their first product is a beautifully designed connected navigation device for cyclists, that makes finding your way by bike simple, safe and enjoyable via a unique form of navigation. Launched on Kickstarter in late 2015, the Beeline cycling device is now in full production, with over 6,500 units sold. It’s stocked in key UK retailers already (Evans Cycles, Harrods, Firebox, Amazon) with more launching soon.

Having achieved great early traction, the next step is to prove scalability and grow fast, pushing direct website sales, expanding the UK distribution network, and growing internationally.

Beyond this first product the Beeline team intend to revolutionise journeys more widely. This will be through a range of products for various activities, software that evolves based on feedback, and a community platform allowing users to share their experiences.

Intended impact

Our ambition is to make navigation not just about getting from A to B but about enjoying that experience.

Industry Disrupting
o Current navigation hardware tends to be expensive, poorly designed and awkward to use. By using the power of the user’s smartphone, we’re able to create products which are vastly lower priced and a pleasure to use. While our strong design focus results in products which turn heads.

Fun, Engaging & Safe
o Traditionally, navigation is extremely prescriptive, leaving the user a passenger to instructions. Beeline’s first iteration uses what we call "fuzzy navigation", giving a general direction to head in and the distance to get there, giving the user the freedom to pick their own path. It allows the user to choose which turns to take, allowing them to avoid busy, major roads, sticking to the pleasant, quiet back roads which can often be quicker by bike anyway.

We believe this is much more in tune with our instinctive way of navigating and makes riding more fun and engaging. We've heard fantastic feedback to confirm this from existing customers as well as retailers and distributors. Because Beeline requires just the occasional glance rather than extended focus on instructions, it allows the rider to keep their eyes on the road. Combined with the freedom to choose quieter streets, we believe this means Beeline can keep cyclists much safer.

Community & Sharing
o Behind the hardware lies software. On the surface this drives the app and will allow riders to track, share experiences, and play with each other. In the background we will learn from how people ride and the feedback they share, allowing us to provide better routing in future and to help city planners. We believe that together we can make cycling better for everyone!

Substantial accomplishments to date

- Ran a hugely successful Kickstarter campaign in late 2015, hitting our target of £60k in 3 days, going on to raise £150k and sell 3,500 BeeLine devices. This puts BeeLine in the top 0.2% of Kickstarter projects ever (by funds raised).

- Received international press coverage, including mainstream (The Guardian), cycling (Cycling Weekly), Tech (TechCrunch) and Design (Wired). Wired named Beeline as one of their "Top 20 most cleverly designed objects of 2015".

- Built a great Team, with backgrounds in big business, startups, design, engineering, app development, manufacturing and marketing.

- Won the Design Week 2017 Award for best Consumer Product Design and was nominated for the Beazley Design of the Year 2017, exhibited at the London Design Museum

- Accepted into SEEDCAMP and HARDWARE CLUB, arguably one of the world's top early stage funds and the world's top hardware startup community respectively.

- Manufactured 9,000 devices with scalable logistics to deliver products to customers.

- Received investment from institutional investors, accelerators, our manufacturing partner and over 300 private investors.

- Established key retail relationships, the first of which are already live.

Monetisation strategy

There are 3 strands to Beeline's monetisation strategy:

1) Device Sales:
We will sell our hardware devices directly through our own website, through retailers and via distributors to achieve maximum reach. The RRP of the first product is £99 with a gross margin of 60% to accommodate retail. Since shipping in January, we’ve made headway into direct marketing optimisation, with an expert joining the team to hone this to provide truly scalable marketing channels.

2) Premium App Features and Content:
Since launch we have already released new features in the app, in line with our philosophy of constantly evolving the software based on feedback. Features so far have been free, driving towards better engagement, community building and developing a defensive network effects. In future, we will develop paid, premium features, providing a recurring revenue stream to the business.

3) Routing Data:
As we build a large community of users we will learn from the way they ride and the feedback they provide. This will allow us to better understand cities from a cyclist's point of view and to build what we hope will be the world's best cycle routing resource. In the long term we'll be able to monetise this by licensing it to other routing providers, to businesses that use bicycles for delivery in the growing on-demand economy and to cities looking to improve cycling infrastructure. In the long term we expect this data to be a large part of our appeal and valuation driver to potential acquirers.

Use of proceeds

Now that we are in full production, the funds we are raising now will be growth capital to help us find traction and scale. We will use these funds in three key areas:

1) Direct Marketing:
Running marketing tests to understand and optimise our direct sales funnel, developing scalable channels through which know we can grow fast by investing in.

2) Retail and Distribution:
Expanding our network of physical and online retailers by nurturing existing relationships and chasing down new ones, both at home and abroad. This means building and managing relationships, supporting retailers with marketing and in store material and ensuring we can provide stock.

3) Working Capital:
In order to scale fast we will need to manufacture and stock inventory to ensure we can meet demand. This poses a cash flow challenge for which we will use the investment to manage.