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Howsy

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Howsy makes renting better. For everyone. We are building the #1 serviced marketplace for renting.

938%
 - 
Funded 24 Jun 2020
£250,000 target
£2,346,770 from 664 investors
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Business overview

Location London, United Kingdom
Social media
Website howsy.com
Sectors Property Digital Mixed B2B/B2C
Company number 08845607
Incorporation date 15 Jan 2014
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Investment summary

Type Convertible
Discount 20%
Share price N/A
Tax relief N/A
Co investor Future Fund
49% raised from Future Fund

Matched funding applied for from Future Fund. See Key Information Tab for more information.

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Business highlights

  • Applying for Future Fund, not conditional - see Key Info
  • Award winning startup and the UK's "Best online agent"
  • Over 7,000 properties on the Howsy marketplace
  • Join institutional investors in this convertible note
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Key features

  • Secondary Market
  • Seedrs nominee min. £10.00 +
  • Pay by Bank payments not accepted
  • Idea
  • Key Information
  • Team
  • Updates
  • Investors 664
  • Discussion
  • Documents

Learn more about convertible loan campaigns.

Idea

Introduction

Nobody associates the rental market with change or innovation. The UK’s 4.5 million private rental properties are serviced by either tenant-find-only online services, high street agents or landlords do it themselves. Same model, same players, same terrible service.

Now there is an alternative. Howsy has challenged the traditional over-priced & under-serviced lettings model. We have created a digital marketplace that removes traditional agents, bringing down the cost of managing a property by an estimated 75% & delivering great customer service.

Howsy taps into half of the 4.5m private rental properties let each year. This is considerably higher than the 1m residential properties sold per year.

We want our customers and friends to join us in scaling Howsy to become a household name and make renting better for everyone.

Substantial accomplishments to date

Over the past 4 years, we have assembled a world-class team coming from companies like PayPal, Zoopla, AxelSpringer, Propertyfinder, Microsoft, and Endsleigh. Howsy's team of 81 operate across three locations, 2 in the UK and 1 in South East Asia. We also work in partnership with self-employed viewing and inventory clerks.

We have now scaled our marketing channels and developed a proven customer acquisition strategy that has resulted in a 48% growth rate over the past two quarters.

Howsy recently acquired the second and third largest online agents in the UK. This has substantially increased deal flow for our fully managed proposition and has unlocked one of the largest landlord databases in the UK.

This year Howsy completed its C-Suite.

We have had a strong response from the press, featured in Forbes, The Guardian twice, in TechCityNews, Startups.co.uk.

Even during unprecedented global health and economic crisis, April 2020 was the second-biggest month in our history for new properties.

What our customers say

Monetisation strategy

Howsy generates revenue from charging a fixed fee from £39 per month outside London right through to £115 per month in London with additional insurance services provided.

We also generate up to £1,000 per managed property by finding tenants, conducting viewings and taking photos. These additional services are delivered by our on-the-ground Howsy Hosts or trusted suppliers.

We are preparing to trial additional revenue services such as cleaning, furnishings, utilities, flower delivery and high-speed internet

Use of proceeds

Howsy has always grown with its community. We are inviting you to join this investment round because we want you to share in our growth.

Times are tough everywhere, but Howsy’s services can help, even in lockdown. We’re building a digital service that makes renting 100% faff-free.

We’re aiming to qualify for the “Future Fund”, a government support package for start-ups like Howsy. You can find out more information about this scheme here: https://www.gov.uk/guidance/future-fund, and also in the Key Information tab.

It is a co-investment support package - meaning that the Government will match any qualifying investment 1-1. We are aiming to qualify for the Future Fund with this Convertible Loan Note.

Investment funds will form part of a planned larger investment round in 2020. In the short-term funds will be used for working capital and growth marketing.

Disclosures

The company has the following outstanding loans:

1. £50,000 Bounce Back loan at an interest rate of 2.5% per annum. The loan is to be repaid on over the course of 6 years, and repayments will start in 2021.

2. A secured £3.1m debt facility with The Prism Income Sp LTD with an interest rate of 15% per annum, of which £1.64m has been drawn down so far. This loan also has a 1% administration fee payable every 6 months on any outstanding loan amount. Each tranche is repayable 12 months from the date of drawdown. A fundraising round of a minimum of £3.1m will trigger the repayment of this loan.

None of the funds raised from this investment round will be used to repay these loans.

Key Information

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:

Discount: 20%

Interest: 15% 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

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.

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).

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.

You will see that we have now reflected the Future Fund investment as part of the round as we have received confirmation the application has been accepted. It is distinguished in pink in the progress bar of the campaign. This is to give investors an indication of the potential total size of the funding round (and potential dilution on conversion), but to also distinguish it from regular investment through the Seedrs platform.

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 the 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.

4. Risks

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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If you successfully purchase a share lot of this business, you will be granted access.

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Only shareholders can access this page

If you successfully purchase a share lot of this business, you will be granted access.

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Only shareholders can access this page

If you successfully purchase a share lot of this business, you will be granted access.

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Investing involves risks, including loss of capital, illiquidity, lack of dividends and dilution, and should be done only as part of a diversified portfolio. Please read the Risk Warnings before investing. Investments should only be made by investors who understand these risks. Tax treatment depends on individual circumstances and is subject to change in future.

This webpage has been approved as a financial promotion by Seedrs Limited ("Seedrs"), which is authorised and regulated by the Financial Conduct Authority. It is not intended to be a promotion of any individual investment opportunity and is not an offer to the public. The summary information provided about investment opportunities on this webpage is intended solely to demonstrate the types of investments available on the Seedrs platform, and any investment decision should be made on the basis of the full campaign. Full campaigns are available to investors who have become authorised to invest on the Seedrs platform. All investment activities take place within the United Kingdom, and any person resident outside the United Kingdom should ensure that they are not subject to any local regulations before investing.

Seedrs does not make investment recommendations to you. No communications from Seedrs, through this website or any other medium, should be construed as an investment recommendation. Further, nothing on this website shall be considered an offer to sell, or a solicitation of an offer to buy, any security to any person in any jurisdiction to whom or in which such offer, solicitation or sale is unlawful. Seedrs does not provide legal, financial or tax advice of any kind. If you have any questions with respect to legal, financial or tax matters relevant to your interactions with Seedrs, you should consult a professional adviser.

Tax Relief (SEIS)

This business is eligible for SEIS relief - providing qualifying investors with income tax relief of 50% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

Tax Relief (EIS)

This business is eligible for EIS relief - providing qualifying investors with income tax relief of 30% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

Valuation (pre-money)

Valuation rounded from Convertible

This is the fully-diluted pre-money valuation of the business (i.e. before the new investment comes in and including issued options and other equity interests). In contrast, the post-money valuation is based on inclusion of the new investment in the value.

It is calculated as the pre-money valuation plus the amount of new investment. e.g. If Company A is ascribed a pre-money valuation of £1,200,000 by prospective investors investing £300,000, its post-money valuation is £1,500,000.

Pitch type

There are 5 types of investment pitch available on Seedrs.

  • Equity
  • Convertible
  • Fund
  • Cohort
  • Secondary

Investing in a convertible campaign allows you to invest today, with your investment converting into equity in the future, at a discount compared to other investors.

Learn more about pitch type on Seedrs

Equity Offered

The equity offered is the percentage of the company’s shares being issued in return for the amount of investment raised.

When the amount raised is less than 100%, the equity offered is based on the target raise. Once the company has raised over 100% it is based on the total raised.

In some scenarios, entrepreneurs may accept additional direct investment after closing their Seedrs campaign. Provided this is within 6 months of the closing and on the same terms, we do not typically offer pre-emption rights on that extra investment (where you have the opportunity to invest again to maintain your percentage shareholding).

Learn more about investing and pre-emption rights.

Seedrs nominee

This shows if you are able to choose, when making an investment, that you be represented by, and your shareholding be managed by, the Seedrs nominee.

Find out more

Custodian

If you invest in this Campaign, Seedrs will act as Custodian rather than provide our standard nominee service. This is due to the fact that the business is not directly involved in the share sale and Seedrs will not benefit from any rights under a shareholder agreement. As a result, Seedrs will handle administrative tasks as we do normally, but you will not have information or voting rights, updates from the business, preemption on future fundraising, or ongoing support about business trading activity.

Learn more about Custodian here

Secondary market

This shows if the business has opted-in or opted-out of allowing its shares to be bought and sold on the secondary market.

Find out more

Direct investment

This is an option to invest and hold shares 'directly' in the company (rather than via the Seedrs Nominee). This option is only available to those investing over the threshold amount, which is determined by the fundraising company.

If you choose to hold your shares directly, you will be responsible for any contractual or administrative arrangements with the company you are investing in.

Find out more

Payment options

We are not able to accept card payments for investments into this sector. You can pay for your investment by creating a bank transfer, using funds in your investment account or create a Pay by Bank payment. Your investment will only be completed once the funds have reached our account.

Business Involvement

This Campaign offers shares for sale in business that is not directly involved in this Campaign or the sale. As a result, the Campaign and post-investment experience, including investor rights, will differ from a business-led campaign on Seedrs. Most notably, the business will not engage with investors in the discussion forums both during and after the sale or provide any updates to investors.

Learn more here

Payment options

We are not able to accept Pay by Bank payments for investments into this sector. You can pay for your investment with a card payment, by creating a bank transfer or by using funds in your investment account. Your investment will only be completed once the funds have reached our account.

Drawdowns

This campaign offers the ability to pay for an investment by drawdowns.

Warning

You are following a link outside of www.seedrs.com.

None of the information in constitutes part of the campaign and it has not been approved or reviewed by Seedrs.

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