Bringing together your favourite content all on one app – simplifying access and saving cost!
Business overview
| Location | Newcastle, United Kingdom |
|---|---|
| Social media | |
| Website | www.screach.com |
| Sectors | Content & Information Digital Mixed B2B/B2C |
| Company number | 07007633 |
| Incorporation date | 3 Sep 2009 |
Investment summary
Business highlights
- Launched 'First of its kind' live streaming & on demand platform
- FREE app that combines streaming services to save money
- Already generating revenues from subscriptions and advertising
- Approved Future Fund application for £1.5m match funding.
Learn more about convertible loan campaigns.
Idea
Introduction
Our mission is to make the video streaming experience better for everyone (…just like Spotify have for music).
Screach is a global live streaming and advertising platform that aims to bring together whatever people want to watch on one App!
The video streaming revolution is here... there are now over 300 streaming services, such as Netflix, Amazon Prime etc. The average US household already has 3.4 subscriptions and global spend on streaming services is forecast to reach $130bln by 2022.
This rapid shift to streaming leaves consumers with more subscriptions, more cost and more apps, and businesses (such as pubs) increasingly left behind as more content goes online when they are still using outdated satellite or cable technology to show live sports.
Through our proprietary software and by working in partnership with the content providers and advertisers, we aim to bring all the different services together on one App - with the intention of delivering access to all, simplicity and cost savings.
(Please note, not all of the specific third party services shown above are available on the Screach platform and are used here for illustrative purposes.)
We’ve started building content partner relationships and launched in the B2B market, we’re now looking to launch our consumer App and push our international growth, initially focused on sports then across all categories of content.
Substantial accomplishments to date
People
Internationally experienced, talented, hard working, dedicated team committed to making the business a success.
Technology
· Launched first of its kind B2B content streaming and advertising platform and App, consolidating streamed content from multiple providers accessible by any device (Smart TV, tablet, mobile) anywhere in the world, with combined digital signage capabilities.
Customers & Revenues
· Reached £121k* of business subscription revenues from 352 venues across some big name customers, who present a large growth opportunity of circa 10,000 locations.
· Tested a free B2B proposition with BT Sport which delivered a 49.7% telephone sale conversion rate.
·Over 1,150 businesses already using our ‘free-to-try’ service in the UK – launching internationally and monetised through sports subscriptions and advertising.
*Figures from unaudited management accounts.
Content Partners
· As a first step, Screach is currently focused on building relationships with live sports content rights holders.
· Signed agreement with Premier Sports in Nov 2019 (www.premiersports.com) to show live Serie A and LaLiga football, PRO14 rugby matches and more.
· LaLigaTV promotion delivering a free introductory offer to our customers (Jan - Mar 2020).
· BT Sport agreement for Champions League and English Premier League video on demand highlights.
· Final discussions with DAZN to launch in Spain with preferential pricing over cable and satellite operators.
Advertisers
· Screach offers advertisers a network of TV screens in venues and screen time on the Screach App to advertise to consumers.
· Delivered 63 pilot Ad campaigns generating £275k of advertising revenues (Figures based on unaudited management accounts).
· Proved we can provide advertisers with key measurement data and a totally new way to reach a huge number of consumers.
· Diageo agreement to launch localised Ad campaign.
We've also gained strong press coverage - 27 recent articles in the last 12 months (see more www.screach.com/news-centre).
Monetisation strategy
We generate revenues from advertising, monthly subscriptions and sports content packages.*
Acting as a sales channel for our content partners, we receive an ongoing revenue share for each subscription we sell building a valuable recurring revenue stream. We also intend to resell all the major services, delivering a very broad range of attractive packages from which to generate revenues.
Advertising revenues are generated from brands buying advert space on the TVs in the same way they do today on ITV. In the future we intend to pass back some of these revenues to customers to reduce the net cost of the services they buy from us increasing customer loyalty.
We believe that our ‘free to try’ offer reduces the barrier for customers to adopt the service and increases growth rates. We’ve previously tested a free proposition with BT Sport which delivered a 49.7% telephone sale conversion rate.
*Based on unaudited management accounts
Use of proceeds
1. Driving growth.
40% will be used on sales and marketing to drive awareness and growth. We have a clear multi-channel distribution strategy outlined below. We receive leads from content partners who typically have no mechanism to sell to business customers themselves.
2. Technology Development.
36% will be used to advance our technology in areas such as improved programmatic (data-driven) advert insertion into video content and to launch our consumer app.
3. Customer Operations.
24% will be invested in our customer services to engender loyalty and brand advocacy. We already offer a market leading 24/7 support desk and intend further automation and efficiency improvements.
4. International Launch.
Pilot launch our service internationally in Spain through agreeing a formal relationship with DAZN. In parallel we are looking to launch in five english speaking territories through new content provider relationships.
Key Information
Debt
The company has the following outstanding loans.
- £50,000 bounce back loan facility from Barclays. Interest rate is fixed at 2.5%. First repayment is due on 18/7/21.
- Overdraft facility of £25,000 at an interest rate of 5.01% over base and repayable on demand. Currently none of the overdraft is utilised.
None of the funds raised will be used to repay these loans.
Convertible loan note terms
Seedrs is supporting companies who are intending to apply to the Government backed Future Fund. You can read more about the Future Fund here: https://www.seedrs.com/learn/blog/the-future-fu....
In order for a company to be eligible to seek matched funding from the Future Fund, this investment round must be on the convertible loan terms that have been prescribed by the Future Fund for this purpose. These terms differ to our normal ‘advanced subscription agreements’.
Given this product differs from most campaigns on Seedrs, we urge all investors, including regular Seedrs investors, to read the information below and ensure you understand the terms in full before making your investment.
1. Key terms
You will see a term sheet attached to this Campaign in the Documents section which sets out the key terms of the convertible loan and you can see the full document prescribed by the Future Fund here: https://www.british-business-bank.co.uk/ourpart....
A summary of the key terms is set out below, but should be read in conjunction with the term sheet:
Discount: 20%
Interest: 8% per annum, non-compounding. On conversion events, the company can choose to repay the interest or convert it to equity (generally without the discount). See the Term Sheet for more details.
Redemption Premium: An amount equal to 100% of the principal loan amount
Valuation Cap: £5,000,000
Qualifying Equity Financing. The convertible loan will automatically convert on an equity financing raising at least the total loan amount, at the lowest share price of equity financing less the Discount or, if lower, the Valuation Cap share price.
Maturity Date: 36 months from signing convertible loan agreement.
The default position is on the maturity date is that the loan will convert to equity unless the investor majority elect to redeem.
If redeemed, the company will repay the principal together with the Redemption Premium.
If converted, the conversion price will be at the most recent funding round share price less the Discount, provided that funding round happened after 20 April 2020 and was at least a quarter of the size of the convertible loan investment. If no such funding round has occurred, conversion will be at the share price of the last funding round prior to 20 April 2020 (no Discount).
Or, if lower, at the Valuation Cap share price.
Other events of default or conversion: There are various other scenarios in which the convertible loan may convert or be repaid and investors should reference the term sheet:
Non Qualifying Funding Round: The convertible loan can convert on an equity financing round which does not meet the size criteria of a ‘Qualifying Equity Financing”, at the election of the majority of investors under the loan. Please see the term sheet for how this conversion is priced.
Exit: The convertible loan will automatically convert or be redeemed on an Exit, whichever would give investors the higher cash return. Please see the term sheet for how conversion is priced and payments on redemption in this scenario.
Events of Default: The convertible loan is to be repaid on the events of default, such as liquidation or winding up. See the term sheet for more details.
2. Government matched funding
The company intends to apply to the Future Fund for matched funding on the total eligible amount invested in this funding round. Subject to eligibility criteria and the Future Fund's approval, the Future Fund will “match” the funding raised via Seedrs or other eligible sources, subject to a minimum investment of £125,000 and a maximum investment of £5m. The Future Fund is to be allocated on a ‘first come, first served basis’ to eligible and approved businesses, so there is no guarantee that a company will receive the Future Fund matched funding.
This campaign is not conditional upon receiving matched funding from the Future Fund. Seedrs will complete the investment and transfer the funds raised even if the application for Future Fund investment is rejected. We will ensure an application is made to the Future Fund for matched funding and will not complete until we know the outcome of the application. But if the application is rejected, the company will still be permitted to complete the investment round.
Seedrs does not charge any fees in relation to the Future Fund matched funding, application process or for acting as lead investor with respect to applications.
3. Conversion to equity
The convertible loan agreement prescribed by the Future Fund is equity focused and favours conversion of the loan to equity as the default position.
Redemption is only available in certain scenarios and is often subject to the vote of majority of the investors. Where a vote of investors is required, Seedrs will vote on behalf of any investors it represents as nominee.
There is a possibility that the convertible loan will convert in some scenarios without the consent of Seedrs (if we do not make up a majority of investors). It is also Seedrs’ position that this is primarily an instrument for investing in the equity of the fundraising business and our default position would be to vote in favour of converting the loans to shares in the company, unless there is a clear or compelling reason not to.
4. Risks
As always, investors should be aware of and accept the risks involved in investing in early stage and growth focused businesses: https://www.seedrs.com/pages/risk-warnings
In addition to the usual risk warnings included above, investors should be aware of and accept the following with respect to convertible loans:
The convertible loan agreement is intended as bridge funding to a future funding round, but there is no guarantee that a company will be able to secure further funding.
The Future Fund is to be allocated on a ‘first come, first served basis’ and there is no guarantee that a company will be successful in its application to receive the Future Fund matched funding.
There is a risk that the Company may not have sufficient funds to repay the loan on the maturity date, pay interest when it becomes due or pay the redemption premium included in the terms.
Convertible loans are unsecured obligations and in the event of a winding up or liquidation event will rank behind secured creditors of the Company.
5. Secondary market
Investors will not be able to sell their interest in the convertible loans on the Seedrs Secondary Market unless and until they have converted to shares in the company (and then only subject to eligibility and the terms and conditions of the Seedrs Secondary Market).
6. EIS Relief - past, current and future
As noted above, the convertible loan instrument is not compatible with EIS requirements, so no EIS applications will be made with respect to investments in the convertible loan.
The government has confirmed that investing in the convertible loan will not impact EIS relief previously claimed on investments in the fundraising company:
“The government has confirmed that such previous investments will not be affected where the convertible loan converts into shares. Where the convertible loan note redeems, we have been alerted that the government intends to make changes to the rules to clarify that this is compatible with such previous investments.”
However, investing in a convertible loan could impact your ability to claim EIS relief on future investments into the same company. The government has not clarified the position on this and has said it is a matter for HM Treasury and HMRC.
Seedrs is unable to provide tax advice. Tax treatment depends on individual circumstances and is subject to change.
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