- Investment sought:
- Discount offered:
Learn more about convertible campaigns.
eSolidar is an investment opportunity that offers the potential to earn money while doing good, through a platform that has achieved 120% growth in the past six months.
In essence, eSolidar is a global giving marketplace that allows people to shop, sell and donate to their favourite charitable causes. At the same time, the platform enables charities to diversify their fundraising base and reach new audiences through online charity shops, donations and special charity auctions.
At present, eSolidar provides a system built on a few tools that make up the ecosystem’s backbone:
- Charity Auctions: Here celebrities and brands get involved with charitable causes by providing items or experiences (back stage passes, lunches, signed items, etc.) for auction, and where the money raised flows to a charity.
- Charity Shops: Here charities can sell their items, and freely export their shop to a Facebook page or website.
- Social Marketplace: Here everyone can sell their new or second-hand items, setting a percentage of the sale value to be donated to a charity of the seller’s choice.
- Direct donations: Choose a charity you love and make a donation.
They key terms that apply to the eSolidar convertible are as follows:
• Valuation cap - £5m
• Discount - conversion at a 20% discount to the valuation set by a Trigger Event.
• Conversion is triggered by ("Trigger Events"):
o An Equity Fundraise – defined as the Company raising investment capital of at least £750,000 from one transaction or a series of transactions. The Seedrs fund raise does not count as a transaction;
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.
• If conversion has not been triggered by the longstop date (12 months from the date of the convertible investment) shares will be issued based on the lower of a minimum pre-money company valuation of £1.1m (the valuation at the last equity raise by the company) or the price for a share issued during the period.
• At conversion, the investment agreement governing an Equity Fundraise (in particular) shall contain the standard Seedrs investor protections including pre-emption rights, tag & drag rights and information rights.
• At conversion, investors will receive ordinary shares. Please note that the Company has issued preference shares to Portugal Ventures which are senior to ordinary shares. Further detail is set out in the use of proceeds section below.
The world is dominated by social problems, both locally and globally. Whereas these problems can be massive in scale, many of the world’s charities are tiny in comparison. Importantly, it is our belief system that keeps them tiny.
Why is it happening?
- Approximately 90% of all donations to UK charities goes to 5% of UK charities.
- Individuals and the corporate sector struggle to navigate the complexity of the charity world, and are often unable to make informed decisions.
- Four in five small and medium charities struggle to raise the funds needed to survive.
- Many charities have yet to fully grasp the opportunity that technology offers, both to enhance their fundraising strategies, and to boost their ability to engage with individual and corporate donors.
We live in a world where we use the internet to shop, date, and to consume, yet only a small percentage of charitable giving occurs online.
Our goal is to provide a platform that enables all members of the charitable community – particularly the charities themselves, as well as individuals and the corporate sector - to transact in a single marketplace. By consolidating the interaction between these groups, we expect that it will enable charities to increase their resources and communicate with their donors more transparently and efficiently. It will also help individual and corporate donors to make informed choices about their donations.
We believe that eSolidar does more for the industry than conventional charity platforms. It implements an e-commerce-powered fundraising marketplace, paired with a comprehensive social platform for charities and their communities. It is our objective not to simply develop a platform, but foster a global community of giving that connects consumers to charitable causes worldwide.
Substantial accomplishments to date
Since May 20th, 2014:
340K+ unique visitors.
35K+ registered users.
670 registered charities.
€115,000+ raised to charities.
The eSolidar team began working together in 2012 and raised €100K from BusyAngels to start building the concept from scratch and validate it in Portugal.
In 2014, we were selected as "One of the most outstanding digital initiatives for social good of the year!" and received the "Best Business Potential 2014" award from the European Youth Awards.
In April 2015, we raised €500K from Portugal Ventures to consolidate the business model in Portugal, and start operations in the UK. We are now based in the Impact Hub at Kings Cross, in London.
Early this year, we were selected by Forbes “30 under 30 Europe for Social Entrepreneurship in 2016” category.
eSolidar is a fundraiser’s toolbox (or Swiss Army Knife”), with specific features that are made easily accessible and that may not have been thought of before. Data aggregated through transactions in the marketplace - be they donations, searches, purchases or auctions - enable eSolidar to offer donors and charities more options. It also allows individuals to choose which charitable cause they would love to support, and how best to do it.
For now, we apply a small ‘success fee’ to each transaction. When a consumer sell's something through PayPal/Credit Card, we apply a 7.5% commission fee. If there is a successful auction, we apply from 10% to 20% fee on the raised value. When a charity sells something or receives a direct donation, we apply a 5% fee.
As we grow our critical mass, we expect to be able to consolidate our revenue model through SaaS models for the corporate sector and charities. We will do this by providing extra value services that complement our current business model.
We believe that huge success is possible when companies adopt a social impact mind-set. By thinking we-commerce, not me-commerce, all charities have the potential to benefit.
Use of proceeds
Once we have acquired the funds through Seedrs, we intend to grow in the UK market and improve our revenue model. We will:
- Focus on growth and up-scaling. We will improve our UX/UI, implement growth hacking strategies and develop key partnerships, mainly in the UK. We aim to be among the fastest growing giving marketplaces for charities.
- Launch an employee engagement tool for the Corporate sector. We will bring companies onboard to get more involved with charitable causes, motivate their employees and develop their CSR. For example, giving gift cards to use in charity shops or as donations, making match donations of their employees, or giving them hours/week to volunteer. It will allow us to implement a new SaaS revenue stream to consolidate our current business model and provide an easy to use CSR solution for all company sizes.
Portugal Ventures have €225,000 worth of Class A Preference Shares in eSolidar in addition to €275,000 worth of convertible debt, also convertible into Class A Preference Shares. The Class A Preference Shares have a non-participating liquidation preference. This means that in the event of a company liquidation event, Portugal Ventures would receive compensation to the value of €500,000 before other shareholders, and any remaining assets would then be distributed pro-rata amongst all other shareholders.
The convertible debt has the following terms assigned to it;
1. No valuation cap, no discount on conversion;
2. Longstop date is 24 months from the date of signing the contract (November 2015)
3. In the case of a new round of the company's capital increase (capital event), in which a new investor participates, before the 24 months, the conversion will happen under the price conditions and class rights of the shares to be issued following the capital event.
4. In the case of a liquidity event (ensures the transmission of all the Class A shares in the following: (i) the transmission of the company’s shares representing more than 50% of the share capital to the date transfer; (Ii) merger, dissolution or other form of liquidation of the company, or (iii) or initial public offering) Portugal Ventures shall, first and foremost, receive compensation corresponding to the amount of the convertible note.
5. In the case of longstop date, the conversion is already calculated in the agreement by formula and will represent 35% in the cap table.
Why target smaller charities? Big is not necessarily better.
Smaller charities (up to £1M/year) represent 95.5% of UK charities. They are flexible, with specific knowledge of local areas and needs. They have close ties with communities, and close bonds with donors. In many cases, donations proportionally make a bigger difference than when given to a large charity.
Small charities lead the way when it comes to online donations:
- Those with between one and ten members of staff rely more heavily on online support than those with 250+.
- 56% of a small charities' audience are online, compared to 39% for larger organisations.
- Medium charities have a staggering 91% of their audience online.
Impressive figures, but how are charities converting these engaged online audiences into active donors?
Interestingly, it's the smaller charities that are turning online support into tangible donations, with over a third of small charities' total donations are collected online.
The key to survival for many small charities is to successfully diversify their funding sources without losing the essence of what they do and why they are unique. As technology becomes more and more accessible, even the smallest groups now have the opportunity to venture into new areas.
By making use of these new tools and technologies, and simultaneously playing to their individual strengths, small charities can maximise the impact of their messaging, grow their supporter base and start to generate more donations that help to fund their future work. Now that really is a big deal.
Characteristics of target market
In the UK, 195K+ charities raised close to £80bn in 2014. £10.6bn was donated by UK adults in the same year (vs. £9.3B in 2012).
Concurrently, e-commerce as a method to generate donations is set to boom across Europe and North America this year. In 2015 e-commerce sales were up 11% year-on-year, equating to an approximate £114bn expenditure in the UK (the latest figures from the IMRG Capgemini e-Retail Sales Index).
Why use e-commerce to empower fundraising for charities?
- In the UK, 80% of people buy online. The same percentage support a charity each year too, yet only 1 in 8 choose to do this online.
- According to JustGiving, 83% of consumers prefer to buy products associated with a charitable cause and 50% say that they would even spend more with a retailer that is supporting a charity.
- 79% of consumers would like to see retailers doing more charity.
We had over 120% growth in funds raised for charities in the last 6 months, established partnerships with huge music festivals like Rock in Rio, closed a seed investment round, doubled our team and started operations in the UK market.
We've worked with a number of companies, including Rock in Rio, Vodafone, Sport Lisboa Benfica, Volta a Portugal and EDP cool jazz. We’ve also had celebrities involved in charity auctions, such as Mark Knopfler, Katy Perry, Queen, Maroon 5, Metallica, Elton John, Cristiano Ronaldo, to name but a few.
eSolidar has already been used at a variety of international festivals, including Rock in Rio, where Elton John donated an autographed keyboard to charity. Other contributors included Muse, Rod Stewart, Arcade Fire, One Republic, John Legend and Linkin Park. At Rock in Rio, there were 553 offers for only 34 auctions, raising over €35,000 for Conservation International Brazil.
We saw a 700% growth in raised value for charities in 2015 vs 2014. It is our goal to keep establishing key partnerships, mainly with music festivals, in order to attract more celebrities and high value auctions.
Our user base comes mainly from charity communication channels and celebrities endorsements. For example, a charity will share their eSolidar shop with their community, meaning they can sell more items and raise more money. At the same time, when there is a charity auction, the celebrity involved will share it with their community. Consumers can buy and make bids, and can also sell their own items. They too will share with friends, to increase the probability of selling quickly and whilst supporting a charity at the same time.
After that, we intend to establish key partnerships with brands in the corporate sector. We will do this in order to develop their social responsibility, raise more money and awareness for charities, and get more involved with charitable causes. Traditional growth hacking strategies, online advertising and PR also apply.
E-commerce can be a powerful fundraising tool for charities. It occupies a new space in the European market that we believe is not currently filled. It is based on a business model that takes advantage of the user-oriented and community focused potentials of a digital platform.
Unlike others in the space, our platform is user-centred and is designed to accommodate a supportive community. It provides services both to those who need help and those who want to help. Some companies who offer services similar to our own include eBay for charity, Omaze, Charitystars, Crowdrise, Prizeo and GiveAsYouLive. We feel that the one-stop-shop nature of eSolidar makes our system’s functionality greater than the sum of its parts, and being easy to use will keep charities and donors coming back for many different reasons.
This project promotes a transparent social market economy and offers an innovative response to the current economic crisis that has affected many charities. It does this by developing and establishing a unique marketplace for the interaction of charities and their communities. It will allow charities to improve the way they fundraise, and enhance their ‘toolbox’ into a single solution. We intend it to boost individual spending on goods and services that support charitable causes. We also believe that it will help companies make the most of their CSR strategies.
What we believe sets our model apart, however, is the multitude of services we offer in one, easy-to-use platform. Instead of simply focusing on donations or auctions, we provide an online marketplace in which users can bid on experiences, buy charity items, donate or sell. This means that charities only need to deal with, learn to use and pay for one system. For donors, there is a single marketplace that allows them to access every charity they want. The data the system collects allows targeted two-way communication too. Donors therefore only ever receive messages relevant for them, and charities can focus their efforts where they are most likely to generate results.