The new way to save for and purchase your first home.
Business overview
| Location | Glasgow, United Kingdom |
|---|---|
| Social media | |
| Website | getnude.com |
| Sectors | Finance & Payments Digital B2C |
| Company number | 10761771 |
| Incorporation date | 9 May 2017 |
Investment summary
Business highlights
- A stunning, engaging app that our 1,000 early testers love
- Designed for the ~13m 18-35 year olds who want to own a home
- Built a data & behavioural science platform to help save faster
- Awarded funding from the Future Fund - see Key info
Learn more about convertible loan campaigns.
Idea
Introduction
We're building the foundations for a new kind of bank. We’re tackling one huge problem at a time, and that starts with fixing a part of society we think is unfair - the barriers that stop young people from buying a home.
The climb to buying your first home is daunting. In most cases, no-one helps you to save your deposit, it’s the Everest of life’s financial challenges.
The existing process hasn't changed in decades: you go to one place to save, another for mortgage advice, another for the mortgage then another to make it all official.
We’re rebuilding the home-buying experience to make it easier and more enjoyable than ever before. From saving that first £5, to sending champagne to celebrate on move-in day, we guide you all the way. You’ll have your keys in no time.
Our ambitions are large and global, including applying for a banking licence to launch Nude mortgages* and to support people through all of life's big moments, like weddings, children's accounts and retirement too.
Substantial accomplishments to date
• In 2019 we raised £1.7m and were awarded an innovation grant of ~£440,000 from Scottish Enterprise.
• Awarded funding from the UK government's Future Fund as part of this investment round.
• Nude is registered with the Financial Conduct Authority to provide account information services. We have also submitted an application to the Financial Conduct Authority for the permissions we need to offer a Lifetime ISA and other solutions.
• Built our proprietary data & behavioural science platform to analyse our user's income and spending so we can offer insights & ideas to help them buy their home faster and easier.
• Built an early version of our app which we’ve tested and developed with 1,000 users, who gave overwhelmingly positive feedback on our interactive onboarding and goal setting process.
• Completed extensive messaging, content & paid advertising testing to optimise acquisition cost down to <£3 per onboarded user, which we believe we can improve further.
• We've prepared detailed plans on how we build our savings platform and who with.
• Built a queue of 1,900+ people waiting for early access to Nude, before having kicked off any significant marketing activity, on top of our 1,000+ early VIP testers.
• Passed 7,500 subscribers on our Adultish newsletter, which features interviews with exciting young(ish) people who work at companies like Airbnb, Bumble, Soho House and Rains - you can subscribe too, right here: https://adulti.sh.
Monetisation strategy
Our business model is a transparent one; the more we help our users save, the more money we make. No hidden fees, no sketchy small print, no selling data - just making our customers and community wonderful with their money.
We help people save their money and in return, we take a share of the interest earned on those savings. Then, once we’ve helped our users save their deposit in record time – we’ll earn fees by offering them the mortgage* that’s best for them.
We believe we can acquire users for <£20 while enjoying high levels of LTV to generate a fantastic CAC:LTV ratio.
There are other ways we can diversify and grow revenue too:
• Marketplace - we can assist our customers in other areas and earn commissions and fees.
• Platform as a service – licence parts of our proprietary platform.
• Expansion – our business model is scalable across socio-economic demographics and geographies.
Dive into the details further in our pitch deck.
Use of proceeds
50% - Building our savings platform to allow us to offer savings solutions, in particular our Lifetime ISA, giving our customers a 25% Government bonus on their savings (up to £1k per year.
20% - Operational costs including salaries and overheads.
20% - Marketing spend to acquire and delight new Nude users to help reach our target of 1m users by year 5.
10% - Continued build of our data & behavioural science platform, allowing us to analyse our users' spending and offer insights and ideas to help them buy their home sooner.
Please note that there is a loan of £443,499 due to the founder, Crawford Taylor. A loan agreement is in place which includes limited events of default and states that the loan shall not be repaid until the earlier of (a) 31 May 2029 and (b) such other date agreed between the company and Crawford Taylor. The funds raised in this round will not be used to pay this loan.
*In order to lend mortgages to customers, Nude would need to apply for further regulatory permissions. Nude may submit an application for a banking licence in future.
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....
As this campaign forms part of a Future Fund investment round, the terms are based on those prescribed by the Future Fund. 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: 30%
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: £20m
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 has been approved for funding by the Future Fund and this investment has been reflected as part of the amount raised. It is distinguished in pink in the progress bar of the campaign. This is to give investors an indication of the total size of the funding round (and potential dilution on conversion), but to also distinguish it from regular investment through the Seedrs platform.
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.
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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