A premium home-stay service for homeowners & guests providing hotel quality in the comfort of homes.
Business overview
| Location | London, United Kingdom |
|---|---|
| Social media | |
| Website | www.underthedoormat.com |
| Sectors | Property Mixed Digital/Non-Digital Mixed B2B/B2C |
| Company number | 08968561 |
| Incorporation date | 31 Mar 2014 |
Investment summary
Business highlights
- Delivered £4.7m* Gross Revenues from 59,000 guest nights to date
- 84% YoY growth in Gross Revenues & EBITDA 28% better YoY*
- Scalable B2B technology arm generated >£700k to date in pilot*
- Applying for Future Fund, not conditional - see Key Info
Learn more about convertible loan campaigns.
Idea
Introduction
UnderTheDoormat is an award-winning luxury home accommodation business, offering guests the quality of a hotel in the comfort of homes.
The company’s asset-light model of individual homes with guaranteed high-quality cleanliness means we are well-placed to capitalise on opportunities created once travel restrictions ease & emerge as a winner as the hospitality industry consolidates.
We aim to uniquely combine 3 features to thrive in a post-Covid world:
1. Asset-light model which protects against financial risks that serviced apartments and master-lease companies face.
2. Guaranteed quality & cleanliness standards which P2P stays (e.g. Airbnb) typically don't provide.
3. Socially distant stays in homes, unlike hotels.
Our flexible business model, sound financial position (current burn is circa £30k pcm* and a cash balance of £344k as of 31st March 2020*, with a net asset position of £232k as of this date*) & industry-leading NHS Homes programme means we are well placed to capitalise on opportunities, scale our B2B tech-led arm, & play a leading role as the world adapts to Covid-19.
Substantial accomplishments to date
Financial
· More than £4.7m gross booking revenues to date*.
· Last FY gross booking rev: £2.35m, up 81% on previous FY*. EBITDA -£442k, ahead of Budget by £135k and 28% up on previous FY*.
· Flexible cost structure enabled cost reduction of 38% in March alone*.
Key achievements
· The NHS homes industry initiative we initiated became the leading voluntary provider of accommodation to NHS staff in the UK - delivering over £17m in estimated value.
· First company in the UK accredited by the government-backed Quality in Tourism Safe, Clean & Legal scheme.
· Selected by Marriott International to supply London homes for their Homes & Villas platform.
· Among the first 3 companies to partner with Expedia in our sector in the UK.
· Founder & CEO, Merilee Karr, is elected chair of industry body, the UK Short Term Accommodation Association. She is also regular speaker at industry events including IHIF (Berlin), VRMA & the Short-Stay Show. She sits on Expedia's EMEA Industry Quorum.
Commercial
· Delivered 59,000 guest nights hosted since 2017 across 350+ homes.
· Market-leading Lloyds of London insurance for all stays.
· Advanced custom tech-stack underpins website & automated operations.
· Delivered over £700k in Gross Booking Revenues for first partners in our B2B Distribution arm, Hospiria*.
Press
· Covered by national media for the NHS homes initiative including pieces by the Times, BBC, Guardian & Sky News plus Evening Standard, Huffington Post & Which?
· 1 of 100 companies identified by Skift as globally shaping the short-term rental industry.
*Figures based on unaudited management accounts.
Monetisation strategy
UnderTheDoormat has two business arms, our fully-managed service for B2C & B2B owners, & our Distribution arm Hospiria.
In our fully-managed service we professionally market on 30+ platforms, verifying & checking guests into homes. Guests are provided with a safe, clean home, with quality linens, towels, welcome pack & personal check in. Homeowners receive a proportion of the income.
We have 350 individual owners signed up to this model plus B2B partnerships including Savills & LaSalle Asset Management.
Our second arm, Hospiria, provides a tech stack & distribution service to high-quality partners who host the stay in line with our standards. We receive a commission on each successful booking taken, providing a risk-free way for smaller companies to market their properties. We anticipate this scaling significantly as the industry recovers & companies search for new routes to market.
We expect Hospiria income to equal that of our established managed arm within the next 5 years.
Use of proceeds
The funds will enable UnderTheDoormat to:
1. Grow the company through the recovery when we believe P2P & hotels will struggle (20%).
2. Scale the tech-led distribution arm, Hospiria (50%).
3. Maximise future business opportunities in the sector (30%).
We believe that professional home-stay operators with proven standards will emerge as winners in the hospitality market.
Specific growth areas include:
· Expand managed portfolio with both B2B & B2C owners.
· Develop larger B2B partnerships in the property industry - the sector will be seeking opportunities to increase yield.
· Diversify stay types – combining short & mid-term stays to maximise occupancy & income, alongside flexible terms for guests.
· Scale B2B Distribution Arm – enable smaller providers to recover by providing a tech-driven model that reduces their overheads & increases their occupancy.
· Maximise future opportunities – industry consolidation will accelerate & we feel that we are in a strong position to emerge as leaders in the sector.
Key Information
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: 25%
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
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.
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).
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. 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’, 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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