Learn more about convertible campaigns.
We all know that irrespective of income, we can be bad at managing our money.
More than 16m people in the UK have less than £100 in savings. 28% of UK adults have nothing at all in the bank. Yes, it’s mind-boggling! But what makes money management hard? The answer is friction, temptation and mediocre existing solutions.
We’re building a better, effortless experience using world-class technology, data and behavioural science.
Meet Plum – your witty financial butler.
Plum links to your bank, analyses your activity and helps you manage your money across these 3 key pillars.
• Saving: Our smart algorithm, driven by AI, identifies opportunities to save small amounts of money which it moves directly into your new Plum savings account.
• Return: We’ve partnered with RateSetter and built a seamless experience for investing your Plum savings, averaging a 3% return*. We intend to offer a broader variety of investments: from higher-risk investment-interest options to themed-based ETF portfolios.
• Don’t get ripped off: Plum aims to ensure you are not overpaying on your bills by suggesting cheaper alternatives. Starting with utility bills, we intend to quickly expand to cover additional products.
*This represents the average rolling rate as provided by RateSetter, when investing your capital is at risk.
This investment round is being raised by way of a convertible instrument. The key terms that apply to the Plum convertible are as follows:
• Discount – conversion at a 20% discount to the valuation set by a Trigger Event.
• This convertible has a valuation cap of £5m.
• Conversion is triggered by ("Trigger Events"):
A. An Equity Fundraise – defined as the Company raising investment capital of at least £300,000 from one transaction or a series of transactions, in exchange for the issue of equity shares. The Seedrs fund raise does not count as a transaction;
B. If there is an equity fund raise of less than £300,000, then conversion is optional. In this case, the Seedrs Nominee would make the decision on behalf of investors, and would follow the lead investor in this round (500 Startups), unless there is a clear reason not to do so;
C. A Change of Control of the company (transfer of more than 50% of the share capital); or
D. 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 of £4.25m.
Our mission is to make personal finance smart, fair and unboring. We want to put a digital financial assistant in everyone’s hands, and in the future, homes.
Plum was born after an experiment between our founders, Victor (33) and Alex (30). Realising that their finances were, to put it mildly, “not that great”, they embarked on an experiment to see if technology could help.
Victor would save some money at the beginning and end of each month. Alex, being a geek at heart, downloaded his bank statement and built an algorithm that would predict his excess balance at the end of the month. Using this algorithm, Alex was able to move small amounts every couple of days in a way that did not impact his lifestyle. After 3 months they found that, shockingly, Alex had saved more than Victor, thus formulating our belief that data is the core to better financial decisions.
At Plum, we're looking to solve one of the root causes of financial instability, a lack of savings. Using this as a starting point, we want to ensure that our customers are putting their money to work in the best possible way.
Substantial accomplishments to date
• April 2016: The first line of code is written.
• August 2016: We close a £350k seed round from notable investors like OneFineStay Founder Demetris Zoppos and the 500.co microfund.
• November 2016: We onboard our first users in private Beta and the BBC identifies us as a compelling solution to saving.
• January 2017: 4.5k users are on the waitlist when we open the product to the public. The FT calls Plum an AI driven solution to savings.
• February 2017: We announce our partnership with RateSetter, offering our users the option to invest and earn a return of 3% on their savings*.
• March 2017: We release saving moods, allowing users to adjust how aggressively Plum is saving for them. 30% of users increase their saving mood.
• April 2017: Robert Powell, growth lead at HelloFresh, joins us to lead marketing.
• May 2017: We are named “Tech Company of the Year” at the National Technology Awards.
• June 2017: RateSetter goes live for all users. We also launched a first version of our analytics feature, providing week-on-week and daily spend breakdowns.
• June 2017: We partner with Octopus Energy, a green energy provider and releases an alpha version of our “switching”, offering the potential to save over £200 a year.
• August 2017: We will join the 500.co pre-series A accelerator in Silicon Valley to fuel further growth.
*This represents the average rolling rate as provided by RateSetter, when investing your capital is at risk.
There are 3 main sources of potential revenue for Plum which allow for a well-diversified and resilient revenue stream.
• Return on savings: Interest earned on the savings would be fairly split between us and the users. This isn’t in place currently.
• Return on investments: We currently offer one investment option (RateSetter) to our users, from which we already generate revenue via affiliate fees. In the future, as we expand our investment range, we intend to also charge a management fee (priced at £1/month and 0.5% of invested funds) for certain investment products.
• Return on switching products: We intend to identify ways that our users can save on their big bills (utility, insurance, debt) and recommend new cost-effective alternatives. We will then receive an introductory fee from the provider. As a benchmark, MoneySuperMarket generates £316m in revenue a year by following a passive approach (customer reaches out first). We believe that our proactive approach (we reach out first) will be much more convenient and will result in larger switching numbers.
Use of proceeds
Raising this round will extend our runway and we expect it to take us to a Series A in 2018. The proceeds will be used to continue the development of the product and the growth of the user base. Specifically:
• New features: We believe that we've built a solid foundation both on a product but also on an operational level. It’s now time to deliver more advanced features like automated bill detection, smart saving goals and better natural language understanding.
• Grow the team: we intend to hire 3 software engineers, 1 operational lead, 1 designer, 1 paid marketing exec, 2 support agents.
• Grow our revenue: Currently we earn revenue from RateSetter. Within this year we aim to be earning referral fees from utility bill switching and add 2 more referral revenue streams, primarily in lending.
• Expand marketing activities: Experiment with more paid channels and affiliates.
Plum seeks to address and improve the management of personal finance for the estimated 12 million individuals aged between 20-40 and earning £16-80k within the UK.
These individuals, whose number rises to 91 million across the EU, are digital natives who are left both underwhelmed and underserved by the lack of innovation within the financial sector. Having experienced the financial crisis, they are suspicious of high street banks yet have few other options to turn to for advice on how best to financially prepare for the future.
Plum is dedicated to fill this void by bringing the latest technology to a stagnant sector, providing a single a tool to manage and optimise savings, investments and spending.
The UK’s savings ratio for 2016 stood at 3.3%, implying that our demographic should be saving an annual figure of at least 11 billion. Plum will help optimise this through the application of AI to provide a saving solution that adapts to their lifestyle.
In 2014 UK household savings were estimated to stand at £3,545 billion. Given current interest rates and inflation, this money is idle and earning no return. Plum intends to offer users the ability to earn interest across a variety of investment options.
It is estimated by the Competition and Markets Authority that UK households are overpaying on their energy bills by more that £1.4 billion annually. By applying data science, Plum intends to identify and resolve these cases with no friction to the user.
Characteristics of target market
Plum’s algorithm does not discriminate and has mass appeal. Our user base spans all age-groups, income levels and backgrounds, yet share the following characteristics:
• Busy, sociable and living for the moment, with little time for “life admin”;
• Untrusting of banks and unsure of who to turn to for financial advice; and
• Comfortable and expectant of using technology to simplify their lives.
This demographic has become accustomed to the disruption and advances that technology has driven across all other aspects of their lives. They demand a solution to financial management that is flexible and fits into their lifestyle. A solution that embraces technology and removes the friction and hassle from a task that is mundane and boring.
We consider that these demands are woefully unmet and the current offering has changed little since the time of their parents. Finally, with the chatbot interface users can now have a conversation with their finances once again!
Whether they are already saving, or contribute to the 24% of millennials that PWC states possesses only “basic financial literacy”, Plum will provide them with the tool that they are looking for to improve their financial management and increase their financial well being.
There are two fundamental principles that drive our marketing strategy, influenced by our team’s collective experience in high-growth companies like TransferWise, Tictail and HelloFresh.
• Listen and measure: We religiously measure the value of our product by measuring our users’ willingness to share with their friends. To quantify this, we use the Net Promoter Score method, currently standing at 62.
• Product trumps all: We believe that growth hacks aid, but are not the core driver of our growth. We focus on the product and aim to build features that deliver substantial value to our users. Increasing value will naturally increase word-of-mouth.
Based on these two principles we break down our marketing across 3 channels.
• PR and buzz: Plum has a story to tell so we make sure we are getting mentioned in national press and building our profile within the numerous relevant communities. We already had good coverage by the BBC, The Telegraph, Business Insider and the Financial Times, and our plan it to continue fuelling these.
a. Paid: Through a unique link, our users can invite their friends to sign up and start saving on Plum. For every 3 successful referrals (defined as a fully onboarded user) we give £25 as a gift.
b. Unpaid (word-of-mouth): By building a product that people love, Plum makes sure users go out of their way to tell others about it. This is seen by various twitter posts such as “Woop! In a month you've done more saving for me than I have in a year”. Such social media activity drives very strong organic growth.
• Paid Marketing: Plum believes that every good product can accelerate its growth by using paid marketing. Plum is experimenting with paid Facebook ads which are a very natural way for Plum to acquire users given that it lives in Facebook Messenger.
We will continue to invest money and effort into all three of these channels on a constant basis. As Plum grows we will expand each to have its own dedicated team.
We believe that we’re a first mover in the digital financial advisor space which is now emerging.
We distinguish ourselves from the competition in the following dimensions:
• We sit on top of all major banks: We’re not a bank so we don’t need people to switch to us from their current bank. We can deliver our product no matter who you bank with, and most importantly, connect all your banks in a single interface. As a consequence, consumer stickiness and loyalty is increased.
• Great customer experience: Traditional financial institutions are notoriously bad at customer service. We obsess over every touchpoint we have with our customers, from how we craft our chat messages to how long it takes for our support agents to reply.
• New, edgy interface: Our target market is chat-obsessed so having a conversation with your money, more so over Facebook Messenger, makes Plum unique.
• Team: Our team has a strong background across technology, finance and growth. We went from no product to launching a fully functioning automated savings platform with thousands of users in under a year.