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Adludio (F-K-A Future Ad Labs)

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We are pioneering a new age of CAPTCHAs that are Engaging, Simple & Secure.(F-k-A Digital Spin)

100%
 - 
Funded
£60,000 target
£60,000 from 70 investors
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Business overview

Location London, United Kingdom
Social media
Website -
Sectors Advertising & Marketing Digital B2B
Company number 08227542
Incorporation date 25 Sep 2012
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Investment summary

Type Equity
Valuation (pre-money) £340K
Equity offered 15.00%
Tax relief

SEIS

  • Idea
  • Market
  • Team
  • Updates
  • Investors 70
  • Discussion
  • Documents

Idea

Introduction

We propose a new method of CAPTCHA which is engaging, simple, secure, and can include advertising. CAPTCHAs are those bothersome validations which are often required to complete an on-line registration form, or forum comment. CAPTCHAs are usually sets of distorted words which the user has to type before submitting a form. CAPTCHAs combat the increasing amount of spam generated by 'bots', clever pieces of computer code trawling the Internet inserting spam. As bots become more sophisticated, so CAPTCHAs become more complex.It is now sometimes impossible for humans to decipher CAPTCHAs. We introduce CAPTCHAs that we think are more engaging and simpler without compromising on security. We can also embed advertising with which the user interacts, promoting brand awareness. By changing CAPTCHAs to focus on tasks that only humans enjoy and are good at, we would allow for a more interactive and fun experience for users, reduce the amount of failed CAPTCHAs, and reinforce a brand message.

Intended impact

There are over 200 Million CAPTCHAs completed successfully each day. However a significant number of unsuccessful CAPTCHAs are from genuine users who are prevented from completing forms because the CAPTCHA is too difficult. If this occurs frequently, a user tends to give up and leave the website. We refer to the amount of people that a website loses due to an ineffective CAPTCHA process as the 'attrition rate'.

We believe that our interactive CAPTCHAs will alleviate the irritation associated with the majority of the current CAPTCHAs by creating a fun experience that reduces the attrition rate and still offers all the security a website owner requires. Our CAPTCHAs would also incorporate advertising that engage users and allow for a substantial brand impact. Hosting our CAPTCHAs would provide a new revenue stream for website owners, while our advanced analytics would enable the adverts to be tailored to the users' specific geographical location, demographic and interests, regardless of the site it is being used on.

Substantial accomplishments to date

Google Campus:
We have successfully been accepted at Google Campus London which gives us an excellent opportunity to interact within an innovative IT community and gives us the credablity to help sell our product.

Website launch:
Our website has been launched and we have created a social media presence on Facebook and Twitter.

Alpha testing completed:
We have completed the first stage of our Alpha testing for our demo CAPTCHAs. They are currently showcased on our website.

Beta testing registration:
Sign up for our Beta testing has begun. This includes registration for Advertisers and Web developers.

Introduction to new media Ad Agencies:
We have made contact with two influential figures in the digital advertising space who like our product and have agreed to mediate contact with potential clients.

Monetisation strategy

We expect our business model to evolve as we progress. In the up coming months we hope to have two types of customers, advertisers and website owners.

Advertisers -
They would be charged a one off implementation fee and a basic subscription which will increase according to the effectiveness of the campaign (usually measured in click-throughs).

Website owners -
We would have three initial offerings.

Free:
We would allow use of our basic CAPTCHAs for free. These would be selected to include adverts or not. If they choose to include ads, the host would benefit from a new revenue stream that will be generated from the 'click-through' on the ads. In addition Digital Spin would make a small commission on the number of click-throughs. Our free CAPTCHAs are important to Digital Spin to help gather more information about spam and the sophistication of bots being used. This means that our security will continue to evolve and improve as the use of our free CAPTCHAs increase.

Premium:
This would be a subscription based service and will scale according to the level of analytics and security the vendor requires. If it forms part of an ad campaign then additional revenue could be generated for the website host for each click through, and Digital Spin would also earn a commission on each of these click throughs.

Bespoke design:
These would be custom designed CAPTCHAs that can be styled and provide a user experience which is fully integrated with the website theme. The fee structure would either be a one off design and development fee or a subscription based service (depending on the level of security and analytics selected by the web developer). This is currently a small part of our plan but we think will help us to lead this sector since we believe it is a unique offering in this field.

Use of proceeds

Annual Budget
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Seedrs Commission - 4,500
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Computer Equipment
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2 x servers - 9,250
1 x laptop - 800
Adobe Illustrator - 570
Adobe Photoshop - 680
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Marketing & Advertising
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Website costs - 460
Advertising for opening - 900
Brand development - 2,465
Marketing & business cards - 900
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Office Expenses
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Annual rent - 7,200
Holding deposit - 1,200
Legal & Professional Fees - 2,500
Tel & Internet - 740
Postage & courier - 90
Printing & stationery - 370
Travel Costs - 925
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Remuneration
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Freelance Developer - 16,650
B Hoyle - 2,450
J Dvoriankina - 2,450
J Kotze - 2,450
L C Murphy - 2,450
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Total - 60,000
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Market

Target market

Advertisers:
We would provide a novel advertising medium that allows advertisers to directly engage with users. Users would be presented with, and interact with, a particular brand image. By default the brand messaging, slogan, or offer, would be re-enforced upon completing the CAPTCHA through a human test of comprehension.

Brands: We would provide an advertising medium that automatically promotes brand awareness, and though the game-like reinforcing of a brand message in a fun way, users can be left with a positive brand sentiment.

Website owners:
Our purpose built and styled CAPTCHAs would be ideally suited to large, popular websites with a lot of web-traffic, who wish to have more control over the CAPTCHA process, allowing them a more seamless integration of their web theme and authentication process. The choice of free and premium options, would allow website owners to have control over the extent to which they want to monetise their CAPTCHAs while placing the website's security as a paramount goal.

Characteristics of target market

Worldwide there are over 200 million CAPTCHAs completed each day. This number has grown dramatically and does not appear to be reaching saturation.

Re-CAPTCHA dominates, with approximately 95% of the market share. While their offering is free it can be difficult to decipher leading to a high attrition rate and has a 7% failure rate, which is a large number when considering 200 million. Once the success rate drops to 75%, users often give up and leave the site.

Visually impaired users, can use an audio alternative, but these typically lead to even higher attrition rates. Dr Sue Fowler at the Dyslexia Research Trust, states that people suffering from disorders such as dyslexia also have difficulty completing standard text based CAPTCHAs.

There are other non-text based alternatives to reCAPTCHA but we do not believe that they are able to be styled to a web site owners needs, include advertising in an engaging, interactive way, and are open to security issues.

Marketing strategy

We have built a website which enables advertisers and website owners to contact us directly. We have already been in contact with website owners who are excited by our idea and are willing to run our CAPTCHAs on their sites during the Beta Testing phase. This we hope would further increase our web presence and visibility.

We are in contact with many other startup companies at Google Campus, and beyond, who all need a CAPTCHA solution. By offering a revenue stream to these startups we would ensure that we are visible among all young up-and-coming web startups and thus garner visiblity on their site during their marketing campaigns and subsequent growth. There are many events hosted at Google Campus which facilitate the introduction of tech startup products and services to industry leaders. We intend to take full advantage of this and demonstrate our CAPTCHAs at every possible events to make sure we can reach is aware of our service.

We have begun putting together an ad campaign called "Humans like to be engaged" which will aim to show that our CAPTCHAs are far prefered by users above traditional offerings such as reCAPTCHA. We also plan on building a complete set of statistical data highlighting the effectiveness of our CAPTCHAs routing out bots and stopping spam which will be used in this campaign. We will also be contacting digital media magazines and websites to help review our product and promote our ad campaign showcasing that we have a viable alternative to traditional CAPTCHAs. We are hoping that at least two articles will be written about our company in digital media and advertising magazines.

Finally we have managed to catch the eye of some experienced and influential new media advertisers, who are all impressed by our product and willing to mediate contact with, and introduce us to, potential clients. We will also be contacting brands and large corporations directly, seeking immediate investment, by demonstrating and showcasing our demo CAPTCHAs.

Competition strategy

First mover advantage in UK: We believe our product offering is unique and new media advertisers will want to differentiate themselves by using our service.

Security:
We believe our CAPTCHAs first and foremost have to complete the job they are designed for, stop spam and automated registrations. Underlying our aesthetic charm we have already attempted to include fundamental security but plan to expand this in the future with a range of advanced detection and security features.

Easy of implementation:
We have tried to make the implementation of the CAPTCHA as easy as possible. We are confident that with a basic level of security it would only require a single line of code to be included on prospective vendors site. This is, to our knowledge, a first of a kind method and the simplest CAPTCHA yet to implement.

Quantitative skills:
Two of our team members have PhDs in data intensive subjects. We believe we are in a very strong position to optimise our offering using their quantitative skills and provide advanced analytic reporting.

Access to web startups:
We have access to many startups through Google Campus that will need our product and we want to encourage them to use it.

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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 campaign for Adludio (F-K-A Future Ad Labs) has been approved by Seedrs Limited (trading as Republic Europe) ("Republic Europe", "us" or "we"), as of 5 July 2012 as a financial promotion. Republic Europe is authorised and regulated by the Financial Conduct Authority with firm reference number 550317. In approving this campaign, Republic Europe has concluded that the information, taken as a whole, is "fair, clear and not misleading." This means that for factual statements we have reviewed evidence of their accuracy, and that for aspirational statements we believe they are phrased appropriately in light of their speculative nature. You should note that in the case of factual statements, the evidence we review is provided by the business, and we do not audit it, which means that we may not be able to identify forged or altered evidence. You should further note that in the case of aspirational statements, the nature of the type of businesses presented on the Republic Europe platform is such that they are likely to have high ambitions, and we may approve statements that convey those ambitions even where we do not believe, or we do not have a view on whether it is likely, that they will be fully realised. The pre-money valuation and investment sought in the campaign are those set by the business: they are not reviewed or established by us, and the valuation is not an independent view of what the business is worth. Given the nature and type of businesses presented on the Republic Europe platform, it is possible that the business has very little cash remaining prior to receiving this investment, and the investment sought may be necessary for the business's on-going existence.

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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 £340,000

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.

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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).

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