The proptech that acquires and grows vacation rental operators.
Business overview
| Location | Genève, Switzerland |
|---|---|
| Social media | |
| Website | emeraldstay.com |
| Sectors | Property Mixed Digital/Non-Digital Mixed B2B/B2C |
| Company number | CHE-420.659.492 |
| Incorporation date | 30 May 2017 |
Business highlights
- Monthly revenue +240% in December and +600% in January*
- Cash profitable since November 2021*
- 4 acquisitions under LOI
- Funding round alongside €3m credit facility from German VC
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Idea
Introduction
We’re the proptech that has been managing premium vacation rentals since 2018 in 7+ leisure destinations, both online and on-the-ground.
Our technology improves guest experience and optimises operations, from cleaning to dynamic pricing on 3rd party channels such as Airbnb.
It's called Smart Ownership®.
This earned us the 2021 award for “Best Leisure Property Manager”, ahead of US scale ups with hundreds of millions in funding.
🚀 Enter acquisitive growth 🚀
There are 140'000 rental operators globally, 90% of which manage less than 100 homes. Many of them have great contracts with homeowners, but lack resources to operate optimally.
We acquire such operators and integrate them into our technology and operations. We target an increase in their earnings of between 40-70%.
Through each acquisition of €1m, we aim to add between €8m and €10m to our group valuation.
Over the past 6 months, we've built a pipeline of 81 qualified targets and engaged 21.
We are executing our first 4 acquisitions.
Substantial accomplishments to date
2018
🚀 Launched in our first winter destination in the French Alps
👩🏻💻 Developed our proprietary API connecting to multiple third-party and in-house apps
💶 Raised a €180K angel round
2019
Team relocates from Geneva to Barcelona
👩🏻💻 Launched our booking engine and proprietary automated pricing model
💶 Raised a €600K pre-seed round
2020
🚀 Launched in 2 new destinations in the French Alps
👩🏻💻 Developed the owner’s app where owners can see bookings, earnings and reviews
2021
🏡 Doubled portfolio during Covid-19 striken year
🏆 Awarded "Best Leisure Property Manager" at the Shortyz awards
🏆 Awarded Airbnb Superhost status for fourth consecutive year
🏅 Became official Marriott Homes & Villas partner, offering the opportunity for 120 million Bonvoy® members to use/collect points when booking with us.
📈 Reached cash profitability in November 2021
💶 Raised €1.2m seed round, including on Seedrs
2022
📈 Reached monthly revenue of €777k in February, +494% year on year
📊 Grew direct bookings by 100% year on year
❤️ Reached 1'000 reviews with average 4.8/5
🖋 Signed letter of interest for our first 4 acquisitions
Monetisation strategy
OPERATIONS
We make money by cashing in the margin from operating the homes:
1. Revenue: what guests pay us for their stays in our homes
2. Operating costs:
- the revenue-share paid to the owner of the property, minus direct operations costs (- 65-75%)
+ the fees cashed in on extra services provided (+5%)
= Contribution margin: 30%-40% of revenue
ACQUISITIONS
A. We earn the difference between the pre-integration margin of the businesses we acquire and their post-integration margin. We target an increase of 40-70% attributable to optimised distribution, operations automation, economies of scale, and head office synergies.
B. In addition, we earn the "multiple arbitrage", i.e. the difference between the margin multiple we acquire the business at and what our consolidated group is valued at given its larger scale.
Use of proceeds
The proceeds are intended to be used to acquire 4 rental operators that are already under letter of interest with us. The destination of operations are in the Balearics, Costa Brava and South of France.
The acquisitions will be financed 40% by equity and 60% by debt financing provided by our lead investor as part of a structured credit facility.
Given that our existing group is profitable*, we do not need to spend on our overheads for our existing operations.
However a minor part of proceeds (150'000 EUR) will go towards growing our mergers & acquisitions team and our integration team, so that we can prepare PHASE 2 of our acquisitions pipeline.
*Based on unaudited management accounts
Key Information
Advance Subscription Agreement - Key Terms
This investment round is being raised by way of a convertible equity investment structure, in this case, an 'Advanced Subscription Agreement'.
The key terms that apply to the Company’s advanced subscription agreement are set out below. See also attached Key Terms document for further details.
Discount – 20%
Valuation cap and default valuation - EUR 18,000,000.
Conversion is triggered by:
(1) An Equity Fundraise – defined as the Company raising investment capital of at least EUR 2,000,000 from one transaction or a series of transactions, in exchange for the company issuing equity shares;
(2) A Change of Control of the company (transfer of more than 50% of the share capital) or IPO
(3) Longstop Date -12 months from the date of the Advance Subscription Agreement.
(4) Winding up event.
On conversion upon an Equity Fundraise, Change of Control or IPO, the convertible will convert into the highest class of shares at the lower of (i) a 20% discount to the price of the relevant trigger event and (ii) the price a share would be if the pre-money valuation was equal to the Valuation cap.
On conversion at the Longstop Date or on a winding-up event, the convertible will convert into the highest class of shares at the lower of:
(i) the lowest price of any shares issued after the advance subscription agreement is signed; and
(ii) the price a share would be if the pre-money valuation was equal to the Valuation cap.
Debt
The company has been granted a covid-19 relief loan totalling EUR 294,215, which starts amortising in Q3 2022 over 5 years. This loan carries a fixed interest rate between 0% and 0.25%.
The company received a EUR 3M debt facility in Feb 2022 that accrues 11% interest over the first 9 months and matures in Feb 2025. This loan also has a warrant for €300k of shares at this round's valuation.
None of the funds raised will be used to repay these loans.
Outstanding convertible
The company has previously raised EUR1.25m through convertible loans which may convert to equity after this round and dilute existing shareholders. The terms for this can be found on the company's previous Seedrs campaign - https://www.seedrs.com/emerald-stay/sections/ke...
Share classes
The company currently has only one class of shares, ordinary shares, but has contractually agreed 1x non-participating preference rights for certain existing investors. On an exit or liquidation, these investors will receive the higher of (i) proceeds equal to their initial investment and (ii) their pro rata share of proceeds based on shareholding, before proceeds are distributed to all other shareholders.
On conversion of the convertibles issued in this round, the company intends to formalise this preference and create a class of preference shares with a 1x non-participating preference. Investors in this round will be issued the highest class of shares on conversion.
Phantom shares
The Company has a phantom share plan of 5.21% of the equity of the company. This is intended to be granted to its employees, directors and consultants, for them to be compensated for their contribution to the long-term growth and profits of the Company. These shares entitle their beneficiaries to conversion proceeds in cash, without the possibilities to convert them in common shares of the Company nor receive dividends.
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