Commuter Club

Idea

Introduction

Commuter Club is a unique tech platform that brings together data, retailing and credit to save commuters time, money and hassle. We help commuters find and purchase the right ticket for their commute through a simple online journey and access the big savings of annual tickets through a low-cost, convenient monthly payment plan. Like Netflix for commuting.

Already the leading independent retailer and finance provider in the UK’s £6bn season ticket market, Commuter Club is growing fast. To date, we have issued £70mn+ in loans to over 20,000 customers and achieved a CAGR revenue growth rate of 300% (2014 - 2018). Now with a proven acquisition model, attractive unit economics, great customer lifetime value, and improving margins with scale, we expect to issue tens of millions in tickets and loans this year.

Our goal is to become the go-to-hub for all commuter needs – a Trainline for Commuters in a £100bn global market – and we’re already well on our way to achieving it.

Intended impact

The UK is one of the most expensive places in Europe to commute. Commuters spend £6bn each year, and sometimes over 10% of their income, just to get to and from work. Yet they often suffer poor service and frequent fare hikes. To make matters worse, our research suggests that 85% of commuters pay more than they should because they’re buying the wrong ticket.

Commuter Club was founded to help commuters, starting by making the most cost-effective ticket - the annual season ticket - affordable for everyone. We did this through an innovative lending product: a monthly payment plan that grants the savings of an annual ticket but keeps the convenience of monthly payments – like a subscription service.

For commuters, the value proposition is strong: they can save up to (and sometimes even above) 20% compared to buying monthly or weekly tickets or using contactless. That can be the equivalent of over 4 weeks of free travel each year. Commuters sign up online, have their ticket delivered, lock in fares and enjoy a fully managed subscription service.

Substantial accomplishments to date

Since our last fundraise in 2017, Commuter Club has achieved significant progress, growing fast while maturing our lending platform. Key highlights include:

• Grown loan book by circa £33m in FY2018, generating just under £1.3m in revenue (Based on pro-forma unaudited management accounts).

• Transitioned to a lower-cost, multi-funder platform (Making our funding ability more secure); onboarded a new funding provider (Zopa) and concluded an agreement with a new funding provider at an attractive 20% lower funding cost.

• Secured 1 of just 3 DfT licenses granted so far to retail season tickets, which allowed us to begin internalizing fulfilment, improving commission earned.

• Launched a new retail portal and ticket finder tool, helping us cater to the mass market and further reduce acquisition costs with our credit option as an upsell to season ticket buyers.

• Launched an attractive new customer value proposition with more savings upfront (2 weeks free upon joining) and relaunched a mobile-first customer journey, achieving >2x increase in conversion and improved cost per acquisition (Comparing Oct 2018 to Mar 2019).

• Updated brand and marketing channels with a distinctive new brand identity.

• Expanded our corporate solution to leading clients like Monzo, Pret a Manger and Hakkasan.

Commuter Club has been featured in the press and received multiple awards including the Sunday Times Tech Track, FinTech 50, the Financial Times' ‘Innovation to Watch’, and the UKBAA’s ‘One to Watch’. The business is backed by leading UK angels including Peter Jackson (ex-CEO Travelex) and Chris Adelsbach (MD Barclays Techstars).

With a 2/3rds renewal rate and an attractive lifetime value, Commuter Club has been able to achieve a CAGR revenue growth rate of 300% between 2014 - 2018.

Monetisation strategy

We are building a diversified revenue model targeting a £150m/year opportunity across interest revenue, ticket retailing commission, SaaS fees and fee services:

LENDING INTEREST
Customers pay 5.6% interest on the price of their annual ticket. Even with the interest, customers still make significant savings over other ticket options.

TICKET COMMISSION
We earn 2% commission on the retail of season tickets, and 5% commission on the retail of point-to-point tickets (which can be cross-sold to our existing user base).

SAAS FEES
Commuter Club offers a fully managed outsourced solution to companies as an employee benefit, charging monthly SaaS fees.

FEE SERVICES
We plan to start offering additional commuting services including automatic delay refunds and premium subscriptions, and cross-selling insurance solutions and first- and last-mile services.

Use of proceeds

Our goal is to be the go-to-hub for commuters, taking a significant share of the UK commuting market through a diversified product offering. We intend to build a book of £150m+ by 2022, generating a highly profitable business with multiple exit options to either financial or transport players and delivering strong returns to our investors.

We are raising capital to continue to fund our growth and acquire customers, develop our tech platform, upskill our team and reach profitability in 2020:.

• Invest in the core platform (20%) – onboard a new, lower-cost lender and deliver a self-service portal to improve operating costs and customer experience.

• Upgrade skills in product, marketing, and engineering (20%) – plus, evolve our ticket finder tool and launch a smartcard to improve UX, reduce risk, and facilitate new revenue opportunities.

• Grow and acquire customers (60%) – fuel marketing growth and brand building to scale our loan book and build a self-sustaining back-book of customers.

Important Information

Any discounts, rewards and/or offers listed by a company in its campaign are subject to the terms and conditions applied by that company. It is the company’s responsibility to honour such discounts, rewards and/or offers and Seedrs does not take any responsibility for them.

Some existing shareholders in the company hold preference shares. These shares have 1x non-participating preference rights and are convertible to ordinary shares. This means that in the event of a return of funds the preference shareholders will receive the greater of £470,000 (their “Preference Amount”) and their proportionate (pro-rata) share of any proceeds. If the preference shareholders receive their Preference Amount this will be received before ordinary shareholders receive any returns, after which all ordinary shareholders will receive returns on a pro-rata basis.