Football INDEX

Gambling
London, United Kingdom

The world's first football stockmarket where you can trade top players with real money.

28th May

£800,009

Investment sought

15.1%

Equity offered

£4,497,270

Pre-money valuation

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What is Financial Readiness?

Financial Readiness is an indication of how much visibility a company's management team has into the company's near-term performance.

Financial Readiness is an indication of how much visibility a company's management team has into the company's near-term performance. Low financial readiness is not atypical of early-stage companies and is not necessarily a prohibitive investment factor. Nevertheless, management teams with low financial readiness risk allocating resources inappropriately, thus making inefficient use of investors' capital.

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Football INDEX Financial Readiness: 5.0 / 5

Football INDEX has provided a sufficiently thorough overview of its near-term financial plan.

Football INDEX has provided a sufficiently thorough overview of its near-term financial plan. Below is an overview of the available key company financials.

/ Latest available Nov-15
Oct-16
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Oct-18
Sales 1 1 1
Cost of Goods Sold / 1 1 1
Operational Expenses 1 1 1
Capital Expenditure / 1 1 1
Debt 1 1 1 1
Capital invested to-date 1 / / /
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Key Projected Financials

Revenues
Operating Cash Flow and Capital Expenditure
Net Cash Flow
Cash Balance
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How does Football INDEX intend to use the funds raised?

Web Development, Mobile App Development, Marketing / PR, Salaries, Legal and Recruitment.

Football INDEX plans to use the funds for £80.0k on Web Development, £80.0k on Mobile App Development, £640k on Marketing / PR, £43.2k on Legal, £6.0k on Recruitment and the rest on Salaries.

Total Funds Needed:STATIC

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What milestones does Football INDEX intend to reach with the current funding round?

20% of funds will be used to develop technology and infrastructure and 80% towards the marketing...

20% of funds will be used to develop technology and infrastructure and 80% towards the marketing budget to scale the platform. There is an outstanding loan to the company by the CEO of £78,724. This sum is being repaid to him in lieu of salary. The funds raised may also be used in respect of this.

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What is the company's indebtedness currently and post-funding?

£4.7k owed to trade creditors. No net debt post funding.

Football INDEX currently has gross long-term debt of £108k, including £108k of loans from company Directors/shareholders. Investors should diligence the possibility that Football INDEX uses a sizeable portion of the funds raised to repay Director/shareholder loans (plus any accrued interest). It is generally preferable that Director/shareholder loans are interest-free and get converted to equity prior to completion of the fundraising. The company owes £4.7k to trade creditors. Accounts indicate other liabilities of £23.0k. The company has cash of £255k, implying a net cash balance of £148k. By the end of Year 1 Football INDEX is expected to have zero net debt.

Indebtedness Ratio
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How much cash will Football INDEX need in the next 12 months (pre-funding)?

Expected to need approximately £413k.

In Year 1, the company expects to have approximately £609k of net cash outflows from operations (i.e. excluding funds received from investors or borrowed). The company does not expect to acquire physical assets (e.g. equipment, etc.) in the coming year. The company also plans to repay £60.0k of debt. The company has existing cash of £255k that it can use. This creates a net funding shortfall of £413k.

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How will the company meet the £413k funding need?

Planning to raise £800k from Seedrs.

To cover near-term funding needs, the company plans to raise £800k from equity investors this year. £800k (100%) will be raised via the current Seedrs campaign.

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Will Football INDEX require additional funding within less than a year?

Most likely not. Football INDEX is expected to have positive cash balance at the end of Year 1.

If the fundraising target of this Seedrs round is met, the company's forecast implies positive cash balance at the end of Year 1.

Year 1 Cash Flow (Nov 15 - Oct 16)

Total Year 1 Cash Outflows:

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What other funding sources does Football INDEX plan to use?

Seedrs is the primary source of funding.

Seedrs appears to be the company's primary source of financing. Investors should diligence any other funding options that management believes it has at its disposal, such as access to business loans, grants or access to other equity investors.

Total External Funding Planned (Year 1):

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How important is it that they meet their Year 1 revenue target?

Football INDEX will be able to cover Year 1 expenses if they generate revenue of at least £2.1m. Funds raised can cover approximately 34% of Year 1 expenses.

Assuming this funding round is successful, Football INDEX will be able to cover Year 1 expenses if they generate revenue of at least £2.1m at 77% gross margin. Achieving this would place the company in the 'Hero' category. If the company generates no revenue next year, they will have a cash shortfall of £1.5m.

In Year 1, the company will incur expenses and other outflows totaling £3.1m. The Seedrs campaign together with existing cash of £255k can cover approximately 34% of that. The company relies on sales to cover the remaining 66% . The minimum revenue that the company needs to generate is £2.1m, compared to no sales last year. The company could require additional funding this year if it incurs the projected expenses without generating sufficient revenue. It is therefore very important that investors diligence the Year 1 revenue forecast, particularly considering the company is still at the early revenue stage.

Total Year 1 Expenses:

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How optimistic is their projected revenue growth?

Significantly above peers. Achieving such high growth would place the company in the 'Hero' category. Revenue model still not fully proven.

Within the next 12 months, the company expects to grow sales by £2.5m. This amount is significantly above the median revenue growth that peers expect to deliver within a year. Consider that the business is at the early revenue stage, and thus the revenue model is still not fully proven. Achieving such rapid sales growth would place the company in the 'Hero' category. The minimum revenue that the company needs to generate within the year is £2.1m, compared to no sales last year. This is significantly above the median Year 1 growth of peers and would again place the company in the 'Hero' category.

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What is the outlook for the next 2-3 years?

Projected sales growth is very high ('Hero' category)

Within 2 years, the company expects to have sales of £15.9m, which is significantly above the median sales growth that peers expect over the same period. However, achieving such rapid sales growth would place the company in the 'Hero' category. By Year 3, the company expects to have sales of £36.5m. This is below the median corresponding growth of peers and would again place the company in the 'Hero' category. Operations are projected to be profitable in Years 2 and 3.

In total over the next 2-3 years Football INDEX also plans to repay debt of £47.6k. This leaves a funding surplus of £6.7m in Year 2. The company expects a funding surplus of £24.8m in Year 3.

Year 2 Cash Flow (Nov 16 - Oct 17)
Year 3 Cash Flow (Nov 17 - Oct 18)
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What does Return On Investment (ROI) measure?

ROI measures investor returns relative to the amount invested, assuming all equity claims in the firm are equivalent.

ROI measures investor returns relative to the amount invested, assuming all equity claims in the firm are equivalent. ROI is expressed as a ratio and therefore can be easily compared to returns from other investments.

For the purposes of this analysis, ROI is calculated based on the company's future retained earnings and dividend potential. This can be a good proxy of investor returns in cases where the company does not get acquired at a significant premium to its retained earnings and instead returns cash to shareholders only via dividends.

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What is the projected blended ROI for all Football INDEX shareholders?

14.2x blended Return On Investment in Year 3.

Assuming Football INDEX does not get acquired, the blended ROI indicates how much the company might be able to return to all its shareholders in aggregate, as a proportion of the total equity invested.

In the case of Football INDEX, and assuming investors in this round receive 30% tax relief (EIS), blended ROI is projected to be 14.2x in Year 3.

Blended Return On Investment (ROI)
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What is the projected 3+ year ROI for the shareholders who enter in this round?

3.7x ROI after 3 years.

For the purpose of this ROI calculation we assume that Football INDEX does not get acquired and does not raise any more equity. Further, we assume investors in this round receive 30% tax relief (EIS) on their investment.

This implies Year 3 ROI of approximately 3.7x. In other words, after 3 years, net returns attributable to the shareholders who join in the current funding round will be approximately 3.7x what these shareholders have invested.

Return On Investment (ROI) for Current Funding Round
Future Funding Rounds
% Ownership of Investors Entering in this Round
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What is Cash Return on Capital Invested (CROCI)?

CROCI is a way of looking at a company's capital efficiency.

CROCI is a way of looking at a company's capital efficiency. It measures annual cash generation in proportion to the company's aggregate invested capital (debt and equity). High CROCI implies high cash generation relative to the company's assets.

When looking at CROCI, it is important to consider how it develops over time. Its volatility is an indication of how rapidly the company's capital efficiency is forecasted to change.

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What are the projected cash returns for Football INDEX?

Top quartile of peers.

In the case of Football INDEX, cash returns are projected to grow from -1.3x of invested capital in Year 1 to 0.7x in Year 3. This return is in the top quartile of Year 3 returns projected by other companies currently fundraising or that have fundraised in the last 12 months. The projected volatility is relatively high, implying a rapid improvement in the operational efficiency of the business.

Cash Return on Capital Invested
CROCI Year-on-Year Expansion
CROCI Volatility
LTM (Nov 14 - Oct 15) Year 1 (Nov 15 - Oct 16) Year 2 (Nov 16 - Oct 17) Year 3 (Nov 17 - Oct 18)
n/a n/a n/a relatively high
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Will the company be paying a dividend?

The company is not planning to pay dividends in the next 3 years.

The company is not planning to pay dividends in the next 3 years.

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Benchmarking Football INDEX's valuation vs. peers

Pre-money valuation of £4.5m compared to peer valuation mid-range of £1.5m to £4.2m.

The following chart compares Football INDEX's £4.5m pre-money valuation to the pre-money valuation levels of companies that are currently fundraising or have recently fundraised successfully.

Valuation Benchmarking
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A different way to estimate Football INDEX's valuation

Calculate how much Football INDEX should be valued today, based on how much it could be worth in the future.

1) How much do you think Football INDEX will be worth from now (future value)? £

2) What is your confidence level?

3) Assumed tax relief on intial investment:


Note: Valuation assumes all equity claims in the firm are equivalent, and no dividends.

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