Learn more about convertible campaigns.
This investment round is being raised by way of a convertible instrument.
The key terms that apply to BeeLine convertible are as follows:
• Discount – conversion at a 20% discount to the valuation set by a Trigger Event.
• Valuation cap of £8,000,000
• Conversion is triggered by ("Trigger Events"):
o An Equity Fundraise – defined as the Company raising investment capital of at least £500,000 from one transaction or a series of transactions, in exchange for the company issuing of Ordinary Shares;
o A Change of Control of the company (transfer of more than 50% of the share capital); or
o An IPO – being a listing of the company’s shares on a recognised stock market or secondary market.
• Longstop Date is 12 months from the date of the convertible agreement.
If conversion has not been triggered by the longstop date shares will be issued on the longstop date at a valuation based on the lower of (i) the lowest price of any Ordinary Share issued after the date of this Agreement; and (ii) a pre-money company valuation of £3,000,000 on a fully diluted basis. The convertible would also convert to equity at this price in the event of winding up or liquidation of the company.
Beeline is a connected hardware company on a mission to change the way we navigate, helping people to have better journeys the world over.
Their first product is a beautifully designed connected navigation device for cyclists, that makes finding your way by bike simple, safe and enjoyable via a unique form of navigation. Launched on Kickstarter in late 2015, the Beeline cycling device is now in full production, with over 6,500 units sold. It’s stocked in key UK retailers already (Evans Cycles, Harrods, Firebox, Amazon) with more launching soon.
Having achieved great early traction, the next step is to prove scalability and grow fast, pushing direct website sales, expanding the UK distribution network, and growing internationally.
Beyond this first product the Beeline team intend to revolutionise journeys more widely. This will be through a range of products for various activities, software that evolves based on feedback, and a community platform allowing users to share their experiences.
Our ambition is to make navigation not just about getting from A to B but about enjoying that experience.
o Current navigation hardware tends to be expensive, poorly designed and awkward to use. By using the power of the user’s smartphone, we’re able to create products which are vastly lower priced and a pleasure to use. While our strong design focus results in products which turn heads.
Fun, Engaging & Safe
o Traditionally, navigation is extremely prescriptive, leaving the user a passenger to instructions. Beeline’s first iteration uses what we call "fuzzy navigation", giving a general direction to head in and the distance to get there, giving the user the freedom to pick their own path. It allows the user to choose which turns to take, allowing them to avoid busy, major roads, sticking to the pleasant, quiet back roads which can often be quicker by bike anyway.
We believe this is much more in tune with our instinctive way of navigating and makes riding more fun and engaging. We've heard fantastic feedback to confirm this from existing customers as well as retailers and distributors. Because Beeline requires just the occasional glance rather than extended focus on instructions, it allows the rider to keep their eyes on the road. Combined with the freedom to choose quieter streets, we believe this means Beeline can keep cyclists much safer.
Community & Sharing
o Behind the hardware lies software. On the surface this drives the app and will allow riders to track, share experiences, and play with each other. In the background we will learn from how people ride and the feedback they share, allowing us to provide better routing in future and to help city planners. We believe that together we can make cycling better for everyone!
Substantial accomplishments to date
- Ran a hugely successful Kickstarter campaign in late 2015, hitting our target of £60k in 3 days, going on to raise £150k and sell 3,500 BeeLine devices. This puts BeeLine in the top 0.2% of Kickstarter projects ever (by funds raised).
- Received international press coverage, including mainstream (The Guardian), cycling (Cycling Weekly), Tech (TechCrunch) and Design (Wired). Wired named Beeline as one of their "Top 20 most cleverly designed objects of 2015".
- Built a great Team, with backgrounds in big business, startups, design, engineering, app development, manufacturing and marketing.
- Won the Design Week 2017 Award for best Consumer Product Design and was nominated for the Beazley Design of the Year 2017, exhibited at the London Design Museum
- Accepted into SEEDCAMP and HARDWARE CLUB, arguably one of the world's top early stage funds and the world's top hardware startup community respectively.
- Manufactured 9,000 devices with scalable logistics to deliver products to customers.
- Received investment from institutional investors, accelerators, our manufacturing partner and over 300 private investors.
- Established key retail relationships, the first of which are already live.
There are 3 strands to Beeline's monetisation strategy:
1) Device Sales:
We will sell our hardware devices directly through our own website, through retailers and via distributors to achieve maximum reach. The RRP of the first product is £99 with a gross margin of 60% to accommodate retail. Since shipping in January, we’ve made headway into direct marketing optimisation, with an expert joining the team to hone this to provide truly scalable marketing channels.
2) Premium App Features and Content:
Since launch we have already released new features in the app, in line with our philosophy of constantly evolving the software based on feedback. Features so far have been free, driving towards better engagement, community building and developing a defensive network effects. In future, we will develop paid, premium features, providing a recurring revenue stream to the business.
3) Routing Data:
As we build a large community of users we will learn from the way they ride and the feedback they provide. This will allow us to better understand cities from a cyclist's point of view and to build what we hope will be the world's best cycle routing resource. In the long term we'll be able to monetise this by licensing it to other routing providers, to businesses that use bicycles for delivery in the growing on-demand economy and to cities looking to improve cycling infrastructure. In the long term we expect this data to be a large part of our appeal and valuation driver to potential acquirers.
Use of proceeds
Now that we are in full production, the funds we are raising now will be growth capital to help us find traction and scale. We will use these funds in three key areas:
1) Direct Marketing:
Running marketing tests to understand and optimise our direct sales funnel, developing scalable channels through which know we can grow fast by investing in.
2) Retail and Distribution:
Expanding our network of physical and online retailers by nurturing existing relationships and chasing down new ones, both at home and abroad. This means building and managing relationships, supporting retailers with marketing and in store material and ensuring we can provide stock.
3) Working Capital:
In order to scale fast we will need to manufacture and stock inventory to ensure we can meet demand. This poses a cash flow challenge for which we will use the investment to manage.
Our initial target market is anyone who rides a bike to get around in a city, or would like to. (Later we will target all cyclists and expand into other activities).
Within this group of urban cyclists, our core audience are those for whom cycling is a practical mode of transport and part of everyday life, rather than purely a sport or hobby. These are the people who are most often in need of navigation and are currently vastly underserved. In our experience they tend not to ride extremely expensive bikes, and while the amount they spend on cycling may add up over time, we believe they are less likely to spend vast sums on very high end individual items such as performance cycling computers.
This is the segment of cycling that we believe is growing fastest. This can be illustrated by the rise in city cycle hire schemes around the world, the growing importance of e-bikes which made up 30% of over 130M global bike sales last year and the efforts being made by cities around the world to encourage and accommodate cyclists as the world urbanises. For example, London has a £1B plan to improve it's provision for cyclists.
Initially, while BeeLine will be available to buy anywhere in the world, we will concentrate our marketing efforts on London to build a strong initial community and to focus our data collection to quickly prove how we can use it to create much better routing and guidance. Beyond this we will push into more cities across Europe, the US and Asia, prioritising based on the size of the cycling markets in each.
As we develop our products we will expand beyond urban cycling into all kinds of cycling, and from there into more activities. We believe that Beeline navigation will be applicable to a multitude of activities outside of driving, but we don't want to dilute our focus on cycling for now.
Characteristics of target market
In London nearly 10% of people (~1M people) ride a bike at least once a week. 2% of all journey are made by bike. In the UK we spend £3B/year on cycling, of which around half is on accessories. We estimate the global cycling accessory market to be $36B p.a.
Cyclists tend to spend a large amount on accessories and upgrades to their bikes. Be these new wheels/saddles, on trend products such as the latest bike lights or, at the top end, devices such as Garmin cycle computers. We have found that cyclists are competitive and enjoy gathering data on their own performance, e.g. see the growth in cycling tracking apps such as Strava.
Cycling is growing at an enormous rate and is being pushed hard by government (London has committed £1B to cycling improvements, e.g. cycle super highways and hire schemes).
In our opinion this growth is driving a shift towards cycling being a lifestyle choice, not a sport, with more focus on design and affordability.
To reach the market, we will use various channels and marketing approaches to sell Beeline hardware products:.
o Sales Channels
Direct sales: through our own website and, in future, the app which is free to download to trial the Beeline concept. We are currently running experiments and analytics to optimise the direct sales funnel (an ongoing process) with the goal of making this truly scalable channel with margin positive CPA (cost per acquisition).
Retail (traditional and online): retail will be a key channel to reach more customers and give physical presence, while maintaining more control and margin than through distributors. We are already in Evans Cycles online, Harrods, Firebox as well as several independent UK bike stores. From the end of June we’ll be launching with Halfords, Wiggle, Cycle Republic, Tredz and Ribble.
Distributors and sales reps (US) to give us a huge reach. These take us a step further from the customer and eat into margin, but give us a much wider, global reach than we could achieve on our own. We’re currently in discussions with our first distributors, aiming to close deals in time to take orders for Christmas.
1) Paid online marketing: Social and Google PPC and retargeting, driving towards sales and to email sign ups.
2) Email marketing: automated drip campaigns and newsletters engaging and selling to subscribers.
3) Content marketing: Blogs, videos and in app guides.
4) Referrals: Both financial incentives (discount codes) and through building software features that make Beeline fun to use with others, encouraging "organic" referrals. The standalone Beeline app combined with in app hardware purchase option will be a key enabler of this.
5) PR and influencers: particularly for online reviews.
As well as Beeline device sales, we will push for:
- Standalone app downloads: we will aim to convert these to hardware sales but even app only users (including smartwatch) will contribute to the community and data and premium services.
- Partnerships: hardware collaborations with city cycle hire schemes, bike manufacturers, sportswear companies etc.
Our current competitors are:
- dedicated SatNav devices e.g. Garmin (often £200+).
- phone based navigation apps e.g. Google maps (free + mount cost).
- other connected bike navigation startups. e.g. Hammerhead (£70+).
Beeline distinguishes itself against these competitors on several aspects:
- Price: at an RRP of £99 BeeLine is more affordable than any other dedicated hardware. While phone based navigation apps are free, they require mounting a ~£500 device vulnerable to damage and theft.
- Type of navigation: Beeline's fuzzy navigation is completely different to standard turn-by-turn navigation so appeals to a different audience. The feedback we've had so far suggests there is a large market for this more liberal, fun and engaging type of guidance.
- Rich features updates: we will develop and release engaging new features through the app and bluetooth updates to enhance the Beeline experience beyond navigation.
- Simplicity: everything about Beeline has been designed with simplicity and ease of use in mind. From the simple, intuitive user interface of the device and the app to the long battery life and clean, elegant attachment solution
- Design and brand: the Beeline device has been beautifully designed specifically for the target market of urban cyclists rather than competitive sports cyclists. This is also reflected in our brand.
- Battery life: Beeline is designed to last for around 30 hours of standard use, far longer than any competitor solution.
Going forward, there are 3 layers to Beeline's defensibility:
1) Patents: we have patents pending on the hardware and navigation method with international priority.
2) Software: the network effect of our software means that if people replicate the hardware, there will still be a compelling reason to be a BeeLine user.
3) Data: as we learn from our community, we will use this to enhance the products. When we can do this it will become very difficult for others to replicate what we can offer.
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