Disrupting the way young professionals live, work and engage.
- Applying for Future Fund, not conditional - see Key Info
- £410k revenue to date (since Oct 2019)*
- Pipeline of projects in London, Barcelona and Paris
- Over 25 years of combined real estate & hospitality experience
Learn more about convertible loan campaigns.
Gravity is a tech-enabled co-living brand creating a global community of young professionals by offering beautifully designed living spaces with a strong focus on delivering the best possible lifestyle experience for members. Gravity is a catalyst for personal and professional development.
The company was launched to address the needs of today's mobile young professionals by offering design-led living spaces with all-inclusive, flexible contracts, typically between 3 to 12 months.
At present Gravity operates 3 locations in Camden Town and 1 in Finsbury Park with over 100 beds. The team is currently working on a number of potential projects with strategic real estate partners in Paris, Barcelona, and Milan aiming to develop a global network of co-living spaces in major business hubs globally.
Being regarded as one of the leading co-living brands in London, Gravity is well positioned to become the leading co-living brand in Europe.
Substantial accomplishments to date
Team Gravity has experienced a steady growth and recognition since launching and its Finsbury Park space was nominated amongst the best co-living developments at the Serviced Apartments Awards 2020. Gravity was also recognised as one of the most stylish co-living spaces in London by Culture Whisper.
Below is a brief snapshot of Gravity Co-living in numbers, based on unaudited management accounts:
Gravity operates by securing master lease agreements of typically 5 to 15 years or management contracts on existing residential / purpose built buildings ranging between 1,500 and 5,000 m2 in up and coming city centre locations.
The team typically works alongside developers and landlords from inception, to make sure the final product reflects the Gravity brand and at times offers its real estate partners a financial contribution towards the fitout of buildings.
Gravity monetises by offering flexible contracts (average stay of 6 months) inclusive of council tax, utilities, fast wifi and cleaning to young professionals. Gravity community curators make sure all members are quickly integrated in our communities and make the most of the cities they live in. Via a dedicated mobile application, Gravity members can book non-complimentary services such as room cleaning, laundry, events and activities which helps the company generate alternative revenue streams.
Use of proceeds
Gravity plans to use the proceeds of this fundraising to boost the expansion of the business in London, expand the core team in sales and operations capacities, and prepare for a larger Series A in Q1 2021.
The company has the following outstanding convertible loan totalling US$400,000 from an investment fund, which will be repaid or converted in accordance with the following key terms:
- Interest rate: 6% per annum, only to be paid on repayment of the principal loan.
- Conversion trigger: the principal loan will only convert into ordinary shares upon the Company raising more than £1,500,000 at a valuation of no higher than £12,500,000 before 17 January 2022.
- Discount: convertible noteholders will receive a 25% discount if they are existing shareholders at the time of conversion, otherwise they will receive a 20% discount.
- Repayment: unless converted, the loan and accrued interest is payable upon the earlier of the following:
Change of control of the Company or a winding-up event.
- Material breach of the terms of the convertible loan.
- Maturity date of 17 July 2022
The Company may choose to repay all or part of the loan including accrued interest at any time
Convertible Loan Note
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....
In order for a company to be eligible to seek matched funding from the Future Fund, this investment round must be on the convertible loan terms that have been prescribed by the Future Fund for this purpose. 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:
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: £12,500,000
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 intends to apply to the Future Fund for matched funding on the total eligible amount invested in this funding round. Subject to eligibility criteria and the Future Fund's approval, the Future Fund will “match” the funding raised via Seedrs or other eligible sources, subject to a minimum investment of £125,000 and a maximum investment of £5m. The Future Fund is to be allocated on a ‘first come, first served basis’ to eligible and approved businesses, so there is no guarantee that a company will receive the Future Fund matched funding.
This campaign is not conditional upon receiving matched funding from the Future Fund. Seedrs will complete the investment and transfer the funds raised even if the application for Future Fund investment is rejected. We will ensure an application is made to the Future Fund for matched funding and will not complete until we know the outcome of the application. But if the application is rejected, the company will still be permitted to complete the investment round.
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.
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.
The Future Fund is to be allocated on a ‘first come, first served basis’ and there is no guarantee that a company will be successful in its application to receive the Future Fund matched 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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