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YellowDog

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YellowDog securely harnesses underutilised computer power, enabling enterprises to save $00ms.

100%
 - 
Funded 28 Nov 2017
£600,004 target
£606,335 from 352 investors
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Business overview

Location Bristol, United Kingdom
Social media
Website www.yellowdog.co
Sectors SaaS/PaaS Digital B2B
Company number 09381071
Incorporation date 9 Jan 2015
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Investment summary

Type Equity
Valuation (pre-money) £6M
Equity offered 9.16%
Tax relief

EIS

  • Idea
  • Market
  • Team
  • Updates
  • Investors 352
  • Discussion
  • Documents

Idea

Introduction

YellowDog believes there is already enough computer power in the world. But there is an imbalance between supply and demand.

YellowDog securely harnesses underutilised computer power, enabling organisations to deliver incredibly quickly and cost effectively, through leveraging this limitless compute on demand.

There are multiple markets and applications. YellowDog has started with the computer graphics and 3D animation industry – this alone is forecast to be a $40bn industry by 2019 growing globally at 17.89% CAGR.

The next market YellowDog will address is enterprise Data Centre Systems and Public Cloud Management – where the worldwide spend was expected to be $174bn in 2016.

Intended impact

It is estimated that the average enterprise server utilisation is between 6% & 12%, with 30% of servers in data centres being turned on and then never used.

Despite this large amount of underutilised computer power, enterprises have batch applications that run late, for example:

•Banks have applications that run nightly to understand their stock market position. Often they run behind which means that trading starts before they complete. This risk is measured as a % of their balance sheet.
•Telcos run regression tests before changes. Speeding them up improves time to market.
•Financial service institutions run complex models that can take weeks to run, delaying decision making.

By increasing the utilisation of these existing servers, and then carefully managing how these applications burst to the public cloud, we believe that large banks and corporations could save substantial amounts of money per year.

Substantial accomplishments to date

•Joined SETsquared – the Global #1 University Startup Incubator.

•Raised £1.2m through crowdfunding and angel investment.

•Achieved a commercial launch of its rendering product in November 2015.

•Over 1,000 users signed up online with activated accounts.

•Through its relationships with public cloud providers has access to more than 198,000 cores.

•Won six awards: Oracle Excellence in Innovation & Disruptive Technology Category winner; Bristol Life’s Technology & Innovation Award; South West Business Insider’s award to Gareth Williams for being one of the 42 entrepreneurs to watch under the age of 42, Bristol Post’s Startup of the Year Award and Bristol Life’s Technology & Innovation Award.

Monetisation strategy

YellowDog On Premise is monetised by:

•A license for each on premise and on demand node used by YellowDog for processing the customer’s batch jobs. In a typical deployment for a global bank, there would be tens of thousands of nodes.

•A license for each batch application deployed on YellowDog.

Use of proceeds

This investment will help YellowDog deliver three proof of value projects where at least one of these will be in a new sector for YellowDog.

•R&D: 51%
•Staff recruitment, pension & training: 18%
•Office Costs: 9%
•Management Team: 5%
•Travel: 5%
•Sales & Marketing: 4%
•Other costs: 7%

Please note that the company currently has a £250k overdraft facility with an interest of 15% per year. The money raised in the campaign will not be used to pay this loan.

The team at YellowDog have been in discussions with 01Ventures for an investment of up to £2m at the same valuation as this campaign. They have recently signed a non-binding term sheet and conversations are ongoing for a potential investment in the coming months. The investment is subject to further negotiations and conditions and there is no guarantee that this will go through. The investment would be formed of two equal tranches, the first being paid on completion and the second on contracting the first paid proof of concept to a customer for YellowDog On Premise. The investment would be for preference shares which enjoy 1x non-participating preferential return on exit or liquidation. Closing of this additional funding will not be a precondition to closing of the Seedrs funding round.

Market

Target market

The target market for YellowDog On Premise is enterprise businesses, with more than 500 employees, that have large batch processing applications.

YellowDog will start with our current customers in the media/ visual effects and architectural sectors, then moving to banking, then to telecommunications.

Characteristics of target market

The characteristics of the target market for YellowDog On Premise can be summarised as:

• Enterprise organisations with more than 500 employees.

• On a daily basis, run large, time-critical, batch processing applications.

• Those large, time-critical batch processing applications run late due to lack of availability of compute.

• Sophisticated IT set up, including experts in-house.

• Are considering multi-public cloud adoption.

Sectors include: banking, telecommunications, media & entertainment, retail, healthcare, automotive, advanced engineering, oil & gas.

Marketing strategy

The go-to-market for YellowDog On Premise is different to the rendering product in that:

• It requires a dedicated and vertical-focussed enterprise sales team, based in each geographical region YellowDog, including customer acquisition, delivery and retention.

• Promotion will be through direct marketing, targeted industry events with analyst outreach, and networking.

• The YellowDog On Premise Platform will be licensed per application, with individual licenses for each on premise and on demand node used by YellowDog.

Competition strategy

There are many organisations that help enterprises deploy applications on premise, to the cloud, or to a hybrid cloud. Notable examples include Microsoft, Oracle, HPE, Cap Gemini and VMWare. None help enterprises extend their compute resource to any machine, to any public cloud provider and to burst in a way that automatically optimises price/ performance decisions for that business; there are none like YellowDog.

The differentiators for YellowDog can be summarised as:

1. Allowing enterprises to reuse existing compute stock for applications – at limitless scale.

2. Normalising public cloud compute enabling consistent performance, regardless of provider.

3. Advanced machine learning to determine how much compute resource is needed to complete the processing on time, before the job starts.

4. Portability of applications between public cloud providers.

5. Uses an estimated >50% less carbon than other solutions as takes advantage of under-utilised servers and PCs rather than powering up new servers.

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If you successfully purchase a share lot of this business, you will be granted access.

Buy shares

Only shareholders can access this page

If you successfully purchase a share lot of this business, you will be granted access.

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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 YellowDog has been approved by Seedrs Limited (trading as Republic Europe) ("Republic Europe", "us" or "we"), as of 26 September 2017 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.

Republic Europe does not make investment recommendations to you. No communications from Republic Europe, through this website or any other medium, should be construed as an investment recommendation. Further, nothing on this website shall be considered an offer to sell, or a solicitation of an offer to buy, any security to any person in any jurisdiction to whom or in which such offer, solicitation or sale is unlawful. Republic Europe does not provide legal, financial or tax advice of any kind. If you have any questions with respect to legal, financial or tax matters relevant to your interactions with Republic Europe, you should consult a professional adviser.

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 £5,998,089

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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Equity Offered

The equity offered is the percentage of the company’s shares being issued in return for the amount of investment raised.

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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