CityFALCON

Follow-on

Personalised Financial News. Clients include BNP Paribas. Accelerated by Microsoft, Octopus Investments.

EIS

Location: London, United Kingdom

www.cityfalcon.com

Categories: Finance & Payments Digital Mixed B2B/B2C

Investment sought:: £150,001

Equity offered:: 3.12%

Funded 16 Jun 2017

Investment amount:: £566,488

Valuation (pre-money):: £4,661,414

Idea

Introduction

CityFALCON provides personalised financial news by leveraging artificial intelligence, push notifications, and voice technologies. We do NOT create content but focus on user and business experiences using existing content and emerging technologies. Our clients include BNP Paribas, FinTech companies, and retail traders and investors. We have been accelerated by Microsoft and £6bn under management Octopus Investments. We are already revenue generating and are expected to be cash flow positive in the next 18 months.

Toutiao, a personalised news and video provider in China is now worth $11bn. The company was started only in 2012! We believe that we have similar opportunities here in the West. See more here http://money.cnn.com/2017/06/12/technology/chin...

Our clients can access financial news, tweets and research for stocks, indices, foreign exchange, commodities, sectors, private companies, macro news and other financial topics. Our proprietary technology creates a personalised news feed for every person based on their profile, their interaction, and their preferences.

Our key client BNP Paribas Wealth Management explains their FinTech strategy and why they are working with us:

Our web platform, Android and iOS apps, and API for businesses are already live. Voice is one of the hottest new trends in tech, and we are hoping to take the first mover advantage. We are expecting to launch our voice services on Amazon Echo, Google Home, and Microsoft Cortana by July 2017.

This is the experience we want to achieve:

How far are we willing to go to support the business? Our founder tossed all doubts aside and jumped into freezing water in an ice hole in the frozen Baltic Sea, just for the exposure (and a shot at the competition’s prize):

Intended impact

Lacking access to quality data and real-time news sources, our founder built the first version of the product from his bedroom to solve his own data problem while investing in the stock markets. This need grew into a passion and blossomed into CityFALCON.

Traditional financial news feeds and systems are expensive, provide poor user experience and are based on legacy technologies. They rely on manual curation in contact centres and cover limited social media activity.

While there are several solutions for rich traders and investors, some audiences are underserved. These include wealth managers, financial advisors, corporate treasuries and long-term investors. Yahoo Finance which is more than a decade old, is the number one Finance site and records 125m visits a month. Therefore, there is a huge market for us to tap.

MIFID II rules will take effect from Jan 2018, and we are hoping that several independent research houses will provide affordable research. We will look to onboard this content onto our platform for our premium subscribers.

Our focus is what we call in the team A.C.D.C.

Substantial accomplishments to date

We've built scalable technologies that process millions of stories in real-time. The scalable way in which we have built our products will allow us to onboard and manage new clients with limited or no manual work and support. Try our products out!

B2B and B2B2C - BNP Paribas Wealth Management has integrated our curated content in their platform - https://goo.gl/ES1oKK. More than 10 businesses are testing our API, and most of these will start paying us on the commercial launch.

Voice technology - We'll be one of the first financial services company to offer a quality solution on devices such as Echo, Cortana, and Google Home. In fact, we are one of the early partners for Microsoft - https://goo.gl/QzumJX.

B2C - With limited marketing, we still manage to generate 11K monthly uniques, 8.5K registered users, and 1K users who logged onto the platform in May 2017.

We've graduated from Microsoft Accelerator and Octopus Investments Accelerator and receive continued support.

We have received several awards and recognition: second at Twitter’s global start-up competition, won ‘The Next Big Idea in FinTech’ from Ontario, final ten at the Standard Bank Challenge, and final ten in EMEA at the UBS Competition. See all the awards and press here - https://www.cityfalcon.com/press.

In the physical realm, we launched London Value Investing Club (http://www.meetup.com/london-investing/) in Aug 2015 and now command more than 1.6K members with an average of 2 events per month.

Monetisation strategy

We already generate revenue, have a strong pipeline of deals, and are looking to be cash flow positive in the next 18 months.

We are targeting 3 key streams of revenue:

1. B2B and B2B2C API licensing fees- Businesses pay us a monthly recurring fee or revenue share for licensing our curated content and tech. Analysts expect this market to be worth £15bn.

2. Premium subscription - We'll offer premium content and if possible without any paywalls for a seamless consumption experience. Imagine a Spotify for financial news where content owners get 70% of the subscription revenue while we keep 30%. This feature is relevant for both B2C and B2B2C. Businesses can provide access to their employees via single sign-on.

3. Affiliate revenue from brokers and others who are interested in targeting our audience of investors and traders. We already have affiliate deals with major brokers in the UK.

We'll look for other revenue opportunities to monetise our increasing database of news content with meta-tags and user consumption data.

Use of proceeds

We have stayed lean, and our average monthly cash burn at £21K in 2016-17 is one of the lowest for a FinTech company of our size. We have spent a total of £615K in funding plus about £110K in R&D credit to reach this stage.

Our primary objective is to become cash flow positive and self-sustainable in the next 18 months. We need a minimum of £150K but ideally aim to raise £540K in this round, which we anticipate will provide us a runway of 18 months. Our revenue and R&D tax credits provide us with some margin of safety.

We spend c. 50% of our cash on product and technology and will continue to do so going forward. We want to remain at the forefront of leveraging emerging technologies especially artificial intelligence and voice. Our competitive advantage relies on these, and we intend to remain leaders. Remaining funds will be used to grow the team, to add additional (premium) content onto the site, and to market and sell our products.

Our basis of valuation is explained in detail here: https://www.cityfalcon.com/blog/the-startup-jou.... Also, we commit monthly updates by the 10th of next month and more to our investors. Read here: https://www.cityfalcon.com/blog/the-startup-jou...

The company has an outstanding loan of £8K to the founder. However funds from this round will not be used to repay this. In fact, the founder took a salary of only £11K last year and invested £5K in the last round on Seedrs.

Market

Target market

Our target audience is anyone who is consuming financial or business news. Currently, we are focusing on the needs of retail traders and investors, wealth managers, financial advisors, asset managers and FinTech companies, but we are also looking to target consulting, accounting, private equity and venture capital firms, and corporate treasuries.

Here is how our API can be embedded in another platform:

Have a look at a live implementation at StockInvest.us. The news feed over here is embedded using our API - https://stockinvest.us/news/AAPL

Furthermore, we could have opportunities to leverage our technology (especially around voice) to support solutions for content publishers and even aggregators.

Even voice technology providers such as Amazon, Google, Microsoft and Apple might see value in licensing our content and white labelling it for their users.

Characteristics of target market

In finance, data is money, and quality curated data is a lot of money. Analysts put the size of the financial information and news market at £15bn per annum, and the big players make billions of Pounds in revenue each year.

While Bloomberg and Reuters terminals and solutions dominate the market, they only address a small part of the market that can afford to pay high fees. Several potential clients including wealth managers, smaller brokers, and retail audiences struggle to obtain access to or are unable to afford quality data and services. Several of these unserved segments rely on the very basic services of Google Finance, Yahoo Finance, etc. These services are good but not anywhere near sufficient for proper and informed investing. Especially in today’s rapidly evolving financial landscape. Furthermore, they do not personalise, score, and integrate like we do.

Financial institutions and major corporations have not been happy with the poor and expensive services provided by the incumbents, and are now more willing to work with FinTech companies. That means they are now more willing to work with FinTech companies to circumvent said incumbents. Why pay expensive, slow, manually-curating companies when inexpensive, fast, automated services are available.

Amazon, Google, Microsoft, and Apple are betting big on voice-enabled speakers such as Amazon Echo, and the fierce competition amongst these giants will only help companies like ours that develop using these technologies. As evidence of their intense interest in voice-tech, Amazon has even started sending cheques to developers who build for Echo. See here - https://goo.gl/c1uw6m.

Marketing strategy

Our business model is mainly B2B2C, and we'll work with partners to grow our users and make revenue. Our B2C platforms are a marketing channel for SEO and to demonstrate the capabilities of our products to businesses. We have hardly spent any money on advertising to reach the current level of traction.

We've scored most institutional and other leads including BNP Paribas through inbound marketing. When teams have a need for our product, they search on Google and typically find us on the first two pages. Try searching for 'financial news API' on Google, and you'll find us on the first two pages in most countries.

Key online activities:
- SEO, social media marketing, growth hacking.
- Manually on-board influential people who LOVE and promote our products.
- Create quality original content on our blog, and share on finance sites including Master Investor, Seeking Alpha, and Finance Magnates.
- Reach out to proprietary investors and traders, university students and research organisations.
- Twitter automation and bots to tweet out dynamic information every few minutes.

Key offline activities:
- We launched London Value Investing Club (http://www.meetup.com/london-investing/) in Aug 2015 and now have more than 1,600 members with an average of two events per month. These traders and investors not only provide us feedback on our products but also allow us to understand their pain points and needs. Some of these members have become brand ambassadors for us and have also invested in the company. We are looking to roll this concept out to other major cities in the UK.
- Relevant conferences and events.

Competition strategy

Competition would be a more valid concern if we were operating within the general consumer space, where we would face serious competition from the tech giants such as Google, Apple, Facebook, etc. However, in financial services, we've found that our competition is slow-moving and hesitant to implement disruptive technologies. Rather than worrying about these companies, we focus on staying ahead of the new, nimble start-ups; and keeping up to date with the latest changes in technological trends, especially artificial intelligence. We also operate as a lean start-up, maintaining a much more strict cost management strategy which means that we only need a fraction of the resources that the big giants require and control.

Our strengths are innovation, low costs and quality data. Also, where possible, we partner with other FinTech start-ups to compete and provide quality solutions to our clients. This is why several businesses have chosen us as their supplier of financial news compared to other services in the market.

AI promises to be a hugely disruptive service, and we aim to lead the data curation arena with our technologies. Since we are not directly competing with the tech firms, we are less concerned about falling behind here.

Our competition includes:
- Traditional subscription services - they are expensive, unintuitive, focus on rich traders and investors, and have limited social media and crowd intelligence integration.
- Search engines - they provide financial news for free but there can be a 30 minutes delay for breaking news, and feeds are not based on users’ trading horizon and don't cover financial tweets.
- Social media analytics companies - they focus mainly on institutional investors, only on social media activity and ignore other sources of information, and target mostly day / short term traders.
- Social networks- They suffer from a lot of noise and are generally not catering to the needs of a financial audience.