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Creditspring

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Creditspring is on a mission to make emergency borrowing simpler and safer. No more debt spirals.

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Funded 18 Aug 2022
£8,034,420 target
£8,084,566 from 0 investors
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Business overview

Location London, United Kingdom
Social media
Website www.creditspring.co.uk/
Sectors Finance & Payments Digital B2C
Company number 10522518
Incorporation date 13 Dec 2016
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Investment summary

Type Equity
Valuation (pre-money) £85.3M
Equity offered 8.60%
Tax relief N/A
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Business highlights

  • Over 150k members- 10x growth in paid memberships in 18 months
  • Over £600k MRR- And over £11m revenues contracted life to date*
  • Strong unit economics- 20/1 LTV/CAC on a gross basis
  • Customers love us- 4.7/5 stars across two platforms
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Key features

  • Secondary Market
  • Nominee investment min. £56.28 +

Idea

Introduction

Inflation is here. As a result, emergency borrowing is going to be more and more necessary across the UK. Yet most options come with confusing terms, high costs and risks of debt spirals.

At Creditspring, we're on a mission to make emergency borrowing safer, simpler, and less stressful. We do this by removing interest charges that can spiral out of control and swap them for a fixed monthly membership fee.

By removing interest rates we offer two unique value propositions that very few other lenders can claim, 1) It's very easy to evaluate the true cost of borrowing and 2) Your costs will never increase, meaning no more risks of a debt spiral.

While our no-interest loans are our USP, that's not all. We support members along the way with personalised scores, financial education, credit building and more.

More than just a lender, a Creditspring is as an operating system for people who want to improve their finances.

Substantial accomplishments to date

Sep 18: Creditspring launches with initial Core (£250) product

Mar 19: First 1k Gold members

Apr 19: Launched Plus £8 (£500) product

Mar 20: 10k Gold members

Dec 20: Turned growth back on following Covid period of low growth

Feb 21: Launched Plus £10 product

April 21: First £1m in revenues*

May 21: 20k Gold members, MRR exceeds £100k for the first time

Sep 21: Launched Step (£100) product, achieved over £250k MRR

Dec 21: £40mm Debt facility agreed

Apr 22: 100k Gold members, 50k Silver members, Over £600k MRR*

*based on unaudited management accounts.

Monetisation strategy

Creditspring mainly generates revenues from membership fees. We have 4 membership plans, with 3 of them paid (Step, Core, Plus) and one free (Silver).

99% of our revenues come from the above membership fees right now, but we see potential in future platform fees connected to our Stability Hub.

The company projects a gross profit (what is left of revenues after taking out funding costs and credit losses) on the past 34 consecutive lending cohorts.

Use of proceeds

Funds will be used to build the business and get us beyond operational breakeven. With the credit risk burden covered from revenues, incremental funds raised will be deployed roughly as follows:

43% - customer acquisition costs
21% - transaction costs (CRA/cash in partners)
30% - personnel costs
6% - other third-party service providers

Key Information

Debt

The company has the following outstanding loans:

1. £25m senior debt facility granted to its 100% subsidiary IFGL (to fund the group's loan portfolio) at an interest rate of 15% per annum, which was drawn in Feb 2022. Presently £14.65m is drawn under this facility. The senior debt facility is scheduled to mature on 10 Feb 2024.

2. £2m founder subordinated loan from July 2017. The company may elect an interest rate at each coupon payment date (31/7) to settle in cash (at 8%) or PIK the coupon (at 10%). Balance o/s 31/5/22 inc PIK’d coupon to date £2.422m. The loan is to be repaid on July 2027.

3. £50,000 BBLS loan at an interest rate of 2.5% per annum, which was received in May 2020. The loan is set to be repaid by May 2026. The current balance o/s 31/5/22: £40,000.04

The funds raised from this investment round will not be used to repay these loans.

Share Class Disclosure

The company (Inclusive Finance Limited) currently has two classes of shares, ordinary shares and 104,755 growth shares. All investors in this round, including Seedrs investors, will be receiving ordinary shares. Their respective rights are as defined in the company’s Articles of Association with a summary on key topics below:

1. Voting rights: both Ordinary Shares and Growth Shares carry one vote per share on shares which are fully vested with the holder.

2. Proceeds upon liquidation or exit event: Growth Shares shall not participate in liquidation or exit proceeds until each Ordinary Share has first been allocated an amount equal to the “initial hurdle”, being £18.70 per Ordinary Share. The proceeds remaining after this requirement has been satisfied shall be distributable Pari Passu between all vested equity shares (Ordinary Shares and Growth Shares together).

3. Dividend rights: in situations where dividends are declared and payable, both Ordinary Shares and Growth Shares will have rights to receive dividends, to the degree these shares are fully vested with the holder.

Group Structure

Investors in this round are investing into and will become shareholders of Inclusive Finance Limited. This is the holding company for two UK subsidiaries (both 100% owned): 1) Inclusive Finance Growth Limited (company number 12282137). This subsidiary raises senior debt for the group and holds the loan portfolio as collateral for such borrowings. 2) Creditspring Limited (company number 10690814) is a dormant company.

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Investing involves risks, including loss of capital, illiquidity, lack of dividends and dilution, and should be done only as part of a diversified portfolio. Please read the Risk Warnings before investing. Investments should only be made by investors who understand these risks. Tax treatment depends on individual circumstances and is subject to change in future.

This webpage has been approved as a financial promotion by Seedrs Limited (trading as Republic Europe) ("Republic Europe"), which is authorised and regulated by the Financial Conduct Authority with firm reference number 550317. It is not intended to be a promotion of any individual investment opportunity and is not an offer to the public. The summary information provided about investment opportunities on this webpage is intended solely to demonstrate the types of investments available on the Republic Europe platform, and any investment decision should be made on the basis of the full campaign. Full campaigns are available to investors who have become authorised to invest on the Republic Europe platform. All investment activities take place within the United Kingdom, and any person resident outside the United Kingdom should ensure that they are not subject to any local regulations before investing.

Republic Europe does not make investment recommendations to you. No communications from Republic Europe, through this website or any other medium, should be construed as an investment recommendation. Further, nothing on this website shall be considered an offer to sell, or a solicitation of an offer to buy, any security to any person in any jurisdiction to whom or in which such offer, solicitation or sale is unlawful. Republic Europe does not provide legal, financial or tax advice of any kind. If you have any questions with respect to legal, financial or tax matters relevant to your interactions with Republic Europe, you should consult a professional adviser.

Tax Relief (SEIS)

This business is eligible for SEIS relief - providing qualifying investors with income tax relief of 50% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

Tax Relief (EIS)

This business is eligible for EIS relief - providing qualifying investors with income tax relief of 30% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

Valuation (pre-money)

Valuation rounded from £85,342,823

This is the fully-diluted pre-money valuation of the business (i.e. before the new investment comes in and including issued options and other equity interests). In contrast, the post-money valuation is based on inclusion of the new investment in the value.

It is calculated as the pre-money valuation plus the amount of new investment. e.g. If Company A is ascribed a pre-money valuation of £1,200,000 by prospective investors investing £300,000, its post-money valuation is £1,500,000.

The investee business is responsible for setting its own valuation, it has not been prescribed by Seedrs.

Pitch type

Investing in a regular equity campaign is the simplest and most common way to invest in a startup. You decide which business you want to invest in, and if the campaign hits its funding target then you will become one of their shareholders. As the company becomes more valuable, so do your shares; allowing you the opportunity to share in the future success of the business.

Learn more about pitch type on Seedrs

Equity Offered

The equity offered is the percentage of the company’s shares being issued in return for the amount of investment raised.

When the amount raised is less than 100%, the equity offered is based on the target raise. Once the company has raised over 100% it is based on the total raised.

In some scenarios, entrepreneurs may accept additional direct investment after closing their Seedrs campaign. Provided this is within 6 months of the closing and on the same terms, we do not typically offer pre-emption rights on that extra investment (where you have the opportunity to invest again to maintain your percentage shareholding).

Learn more about investing and pre-emption rights.

Nominee investment

This shows if you are able to choose, when making an investment, that you be represented by, and your shareholding be managed by, the Nominee investment.

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Custodian

If you invest in this Campaign, Seedrs will act as Custodian rather than provide our standard nominee service. This is due to the fact that the business is not directly involved in the share sale and Seedrs will not benefit from any rights under a shareholder agreement. As a result, Seedrs will handle administrative tasks as we do normally, but you will not have information or voting rights, updates from the business, preemption on future fundraising, or ongoing support about business trading activity.

Learn more about Custodian here

Secondary market

This shows if the business has opted-in or opted-out of allowing its shares to be bought and sold on the secondary market.

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Direct investment

This is an option to invest and hold shares 'directly' in the company (rather than via the Nominee investment). This option is only available to those investing over the threshold amount, which is determined by the fundraising company.

If you choose to hold your shares directly, you will be responsible for any contractual or administrative arrangements with the company you are investing in.

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Payment options

We are not able to accept card payments for investments into this sector. You can pay for your investment by creating a bank transfer, using funds in your investment account or create a Pay by Bank payment. Your investment will only be completed once the funds have reached our account.

Business Involvement

This Campaign offers shares for sale in business that is not directly involved in this Campaign or the sale. As a result, the Campaign and post-investment experience, including investor rights, will differ from a business-led campaign on Seedrs. Most notably, the business will not engage with investors in the discussion forums both during and after the sale or provide any updates to investors.

Learn more here

Payment options

We are not able to accept Pay by Bank payments for investments into this sector. You can pay for your investment with a card payment, by creating a bank transfer or by using funds in your investment account. Your investment will only be completed once the funds have reached our account.

Drawdowns

This campaign offers the ability to pay for an investment by drawdowns.

Security Token

A security token is a digital asset that represents ownership or other rights. It is a digital form of traditional investments. In the future, you may be able to trade your investment through compatible exchanges.

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None of the information in constitutes part of the campaign and it has not been approved or reviewed by Seedrs.

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