A re-invented toilet for a better world: a more efficient flush; improved hygiene, saving water and money
Business overview
| Location | London, United Kingdom |
|---|---|
| Social media | |
| Website | propelair.com/ |
| Sectors | Home & Personal Mixed Digital/Non-Digital B2B |
| Company number | 03681995 |
| Incorporation date | 10 Dec 1998 |
Business highlights
- £1.1m adjusted sales 2019*, with traction in UK and South Africa
- Experienced management team led by ex-Dyson MD UK & Ireland
- VC backing from Investec and Nobel Sustainability Fund
- 8 Trademarks, 57 Patents and 26 design registrants
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Idea
Introduction
Propelair has developed and patented, what we believe, is the world’s lowest water-flush toilet system, helping commercial customers reduce costs, their environmental impact and improve hygiene.
Toilets waste vast amounts of clean water. This is not only costly, but with 2 billion people worldwide without safe water already, and an increasing number of regions being chronically affected by drought, this is an urgent social and environmental issue.
Propelair’s innovative toilet saves water, using air to propel just 1.5 litres of water per flush, compared to up to 9 litres for conventional toilets. As well as removing waste more efficiently than other toilets and saving tons of water, it saves money, reduces water processing (saving carbon), is quick to refill and is more hygienic than a conventional toilet, reducing aerosolised germs, including COVID-19, by 95%. As this system is designed primarily for commercial use, maintenance and associated costs are also significantly reduced.
Substantial accomplishments to date
The technology behind Propelair has been refined over 20 years to produce, what we trust, is the lowest water flush toilet in the world and a considerable improvement in hygiene compared to ordinary toilets. We have securely protected this revolutionary technology with 3 patent groups, 3 registered designs and a wealth of accumulated knowledge. Since our inception, we have made significant progress and have achieved the following major milestones and accomplishments:
Our toilets are currently saving close to 1bn litres of water per year (enough to fill 285 oil tankers) and, based on our calculations, close to 260 000 tonnes of CO2 per year (the equivalent of 40 car trips around the Earth or 1.4 million kilometres).
We have installed over 4,000 units in the UK and South Africa. Customers include service stations, shopping centres, universities, restaurants, banks and many more.
With our new management team we expect to grow our sales pipeline from 40,000 units to nearly 85,000 units in the future.
We were awarded the prestigious Horizon 2020 grant in 2017 to develop new innovations.
We plan to be profitable during 2023.
Most of our customers have a payback period of less than 3 years, with some off-grid sites experiencing a payback in as little as 4 months.
Monetisation strategy
Propelair's core business is the innovation and design of a low water-flush toilet system, which is produced by trusted suppliers in Thailand, China and the UK, with a global network of distributors who install and maintain on our behalf. This structure allows us to scale rapidly with little growth in overheads. Our in-house sales and marketing teams support our partners continuously, whilst our technical team ensures our partners are up-to-date with the latest innovations and best practices.
Currently, our primary revenue source is the sale and installation of toilets, supplemented by maintenance and spares income. Our plan is to launch a smart, IoT-connected toilet in the next year, allowing us to roll-out a "Savings-as-a-Service" model, through which customers pay a monthly fee, instead of the usual upfront cost of the toilet, and receive year-round maintenance, support and real-time analytics. This will allow us to capture longer term, contracted revenues to supplement our core business.
Use of proceeds
As we plan to scale rapidly, we will require working capital and stock acquisition funds to enable our growth. Over the next two years, we plan to grow our footprint in the UK and South Africa, as well as launching into other water-stressed markets, including the 6 GCC countries (Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain & Oman).
As well as scaling and growing, we are working on new innovation and product development. These plans include the development and roll-out of:
- The introduction of a smart, IoT-connected toilet, allowing us to roll-out a "Savings-as-a-Service" model, including low-capex financing options. Since our last crowdfunding round, this tech has been prototyped and tested in live environments to 200,000 cycles. It is ready to convert into live production.
- Automated open/close lid, supported by an Innovate UK grant
- Lower product and installation cost.
- Grow product range, allowing us to cater to a larger range of customers needs.
*based on unaudited management accounts
Key Information
Convertible Key Terms
As bridging finance to the close of a 2021/2 larger fundraise, this investment round is being raised by way of a convertible equity investment structure, in this case a "convertible loan note". The Company is to create up to 1,500,000 convertible loan notes of £1 each. 750,000 of these have been issued to NSF, the Company’s second largest shareholder and the lead investor of this round, and the other 750,000 are initially being offered to all existing shareholders, including the current 851 Seedrs investors. This will then be followed by an extension of the offer to other potential investors.
The key terms that apply to these convertible loan notes (the “Notes”) are set out below, but please read these in conjunction with the Key Terms Document attached in the Documents section for further details.
1. No interest will be payable on the principal amount of each Note.
2. Redemption Premium:
Upon conversion or redemption of the Notes, a Redemption Premium will apply, to be repaid or converted with the principal loan. The Redemption Premium will be an amount equal to:
- 25% of the amount of principal to be converted or redeemed if the conversion or redemption occurs on or before 30 July 2022;
- 50% of the amount of principal to be converted or redeemed if the conversion or redemption occurs after 30 July 2022 but before 30 July 2023;
- 100% of the amount of principal to be converted or redeemed if the conversion or redemption occurs after 30 July 2023
3. Conversion Discount: in the case of an equity fundraising round, the Notes will be converted into Shares at a 20% discount to the price per Share paid by the investors in that round
4. Valuation Cap: £17.35m, such that the price per share after the 20% discount shall not be more than a pre-money valuation of £13.88m divided by the Company’s fully diluted share capital (i.e. substantially the same as the price of the last (Nov 20) raise, being £0.060557 per Share)
5. Maturity Date: 30 July 2023
6. Automatic Conversion: the Notes will automatically be converted into Shares (together with the Redemption Premium) if the Company raises at least £3,250,000, including the value of any loan notes issued as part of this round
7. Where less than £3,250,000 is raised: in the event that NSF exercises its option to convert, then all Noteholders will convert; in the event that NSF elects to not convert, then the Noteholders other than NSF will either all convert or all not convert, which will be decided on the basis of the election of the majority of the Noteholders other than NSF.
Maturity Date or Insolvency Event:
On the maturity date or the occurrence of an insolvency event, the Notes plus the applicable Redemption Premium will be repaid to the Noteholders. However, at any point of redemption, the Noteholders can choose to rather convert in the same manner as described in point 7 above. Where there is such a conversion that is not accompanied by the price-setting of a fundraise, the price per Share will be at a pre-money valuation of £13,880,000.
Prepayment:
The Company may prepay the Notes together with their applicable Redemption Premiums prior to the Maturity Date in full, or in part (in tranches of £100,000) to each investor, subject to the consent of that investor. In such circumstances, investors will also have the option to convert their loan and Redemption Premium as described above.
Share classes
Please note the business currently has 3 share classes. At the time of conversion, Seedrs will receive the same class of share that is issued as part of the round.
B Ordinary
- Each share is entitled to one vote in any circumstances
- Each share is entitled to dividend payments or any other distribution
- Each share is entitled to participate in a distribution arising from a winding up of the Company ranking ahead of the ordinary shares and equal to the convertible preferred shares
Ordinary
- One vote per share
- In respect of dividends all shares rank pari passu
Convertible Preferred
- One vote per share
- In respects of dividends all shares rank pari passu
- Liquidation preference: on distribution of assets in a liquidation or return of capital, convertible preference shares rank ahead of ordinary shares
- Conversion into B ordinary shares on 1 for 1 basis
Outstanding debt
Please note that the business has a bounce back loan:
- Outstanding balance £50,000
- 60 monthly repayments
- First monthly payment will be on 02/02/2022
- Final repayment date will be 02/01/2027
- Interest rate 2.5%
- Monthly repayment will be £898.61.
Funds raised as part of this round will not be used to repay outstanding debt.
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